Our roadmap to decarbonisation
New Zealand is embarking on a major energy transition. As part of our drive to cut greenhouse gas emissions to net zero by 2050, we must reduce our consumption of gas, coal, petrol and diesel.
This means that electricity will be increasingly relied on to power all aspects of our lives — how we heat our homes, cook our food, travel and produce goods and services. While it will take time to phase out fossil fuels, it is inevitable that electricity will soon provide the bulk of our energy needs.
So, what does this mean for you? The good news is that it is cheaper to run a household entirely on renewable electricity than using gas, petrol or diesel. By making this switch, your total energy spend is going to drop. To support you, we need to invest.
10-year asset management plan
Over the next 10 years, at TLC we expect to spend an extra $50 million on our network as more customers phase out fossil fuel use and demand for electricity grows.
This money will contribute to upgrading our infrastructure to increase the amount of electricity we can supply over our network, as well as incorporating new technology to support the growing use of rooftop solar, electric vehicles and smart appliances.
The coming years are going to be both exciting and challenging.
TLC is one of the smallest lines companies in the country when measured by customer numbers, managing one of the largest network areas in Aotearoa. Our network costs more to build and run, on a per customer basis, than lines companies serving urban centres like Hamilton, Tauranga or even Taupo.
In 2022 we generated just under $40 million in revenue after customer discounts were applied. As we embark on the transformation of our network, our prices will need to increase to pay for it.
This is a long-term, multi-generational game and we need to think that way. Our focus is on future-proofing the infrastructure our communities need to transition to a low-carbon lifestyle while enabling regional economic growth.
On this page, you will find information on what changes in technology and energy use mean for TLC as a company and how we will manage the first stages of this transition over the next decade in a sustainable and cost-effective way.
Investing in the future
Our network serves over 18,000 customers with around 24,000 connection points (ICPs) covering 13,700 square kilometres.
In recent years, the amount of electricity supplied over our network has grown at a steady rate of 0.5% on average per year. Electrification of the economy is set to spark a major change in this demand.
We modelled three different scenarios for our network. Taking the mid-point as most likely, electricity demand is set to increase at eight times the historical rate – that equates to an average of 4% a year through to 2032. We expect the biggest jump in demand to occur by 2026 as our large industrial customers switch from gas or coal to electricity.
At the same time, we know we need to build greater resilience into our network. Because of our rural profile, more than 90% of our power lines are exposed to the risk of falling trees. Outages and faults are increasingly driven by storms, which we have noticed are becoming more frequent and intense over time.
As businesses and households rely more on electricity in the future, there is a risk that outages become more disruptive to our lives. Upgrading key infrastructure, investing in new systems that give us better visibility of our network and upcoming changes to regulations that govern how we can manage trees will all help us to keep the lights on and restore power quickly when storms do occur.
Network investment
Boston Consulting Group has estimated that Aotearoa New Zealand’s 29 lines companies need to invest a combined $15 billion in their networks by the end of this decade to facilitate and secure the forecast growth in electricity demand.
This investment is called capital expenditure (or capex) and is the amount we spend on physical assets like poles, wires and substations, as well as the new IT technology needed to modernise our systems.
Across the 10 years ending in 2022, we invested $136 million in our network. Over the next 10 years, we have forecast our capex will total $210 million. The bulk of this spending is on replacing existing assets, with roughly $50 million directly tied to the coming switch from fossil fuels to electricity.
As you can see, we expect to invest pretty heavily for the next five years to grow the capacity of our network. This cost is not recovered immediately but spread over decades.
Operating costs
While we will be investing a lot more in our physical network, we expect our operating costs (maintenance, tree management, office and staff etc), to stay comparatively flat at around $14m per year.
Growing our digital capabilities
With the role of electricity growing in importance for all aspects of our economic and household activity, we also need to improve the way we work. As part of this, we plan to invest $5 million upgrading our digital capabilities.
This includes developing an advanced software system (known as an ADMS) that is used to monitor and control the flow of electricity on our network. The benefits of investing in this system include:
- The ability to collect real-time data on the flow of electricity on the grid and quickly identify potential problems or outages
- Optimising supply by re-routing electricity around faulted areas to keep customers’ lights on
- Helping to integrate renewable energy sources, such as solar panels and wind turbines, into the grid.
Overall, this investment is designed to help make us more efficient and provide ongoing reliability improvements for all our customers.
Our approach to sustainability
Our purpose is to make electricity accessible for all so our communities can grow and thrive in a sustainable way. Sustainability is more than just working in harmony with our natural environment. It is about ensuring that the decisions and actions we take are in the best interests of the communities we serve, both now and looking 30 years ahead.
The shift to an electrified economy is going to bring huge benefits, but not everyone is able to access these advantages just yet. Electric vehicles are an obvious example, as the upfront cost of buying one is out of reach for many families in our region and will be for some years yet.
On that basis, we need to balance our investment to ensure our network is set up to support customers who are able to embrace an electrified life now, while also retaining an affordable energy supply service for those whose transition will come later.
Delivering customer choice
As the transition to a low-carbon economy will take place over time, we are focused on providing our customers with the information and opportunity to choose what options work for them.
Our approach can be summed up in the following three objectives:
- Engage – help our customers to understand the benefits of switching to electricity
- Encourage – ensure customers know what choices are available to them, including non-network solutions
- Create value – deliver new electric options while balancing sustainability, cost, reliability, and ease of use
Different options and solutions are going to suit different customers at different times. For some, it will mean participating in energy efficiency or community solar schemes. Others are swapping out gas heaters for electric heatpumps, buying smart appliances and EV chargers that turn on during off-peak hours, or looking to install rooftop solar and home battery systems as their primary energy sources. In remote areas we can work with farms to provide entire off-grid systems where maintaining a line connection is becoming uneconomic.
As part of this, we will be developing a programme for residential and business customers that details how we can share our skills and expertise to help drive the shift to electrification. We also plan to provide households with simple steps on how they can reduce both their energy consumption and carbon emissions.
The EV revolution
Aotearoa New Zealand’s net zero carbon journey has the advantage of beginning with a high proportion of renewable energy powering our grid. This means we are already well-placed to adopt electric vehicles (EVs) as an emissions reduction tool.
As battery technology improves and production ramps up, the cost of EVs is coming down. It’s estimated that by the end of this decade, the price of a new EV will be roughly the same as a similar petrol or diesel vehicle. But because EVs are so much cheaper to power (equal to 40c a litre of petrol when charged off-peak), considering the purchase price and running costs the real transition point could be as soon as 2026.
These savings will lead to an acceleration in the number of EVs hitting the roads over the next 10 years. To bring this EV revolution to reality, we have a key role in delivering a comprehensive charging network – in homes, businesses and on our roads.
Our EV Highway
As of March 2023, we had installed over 45 public EV charging units across our region with financial support of the Energy Efficiency and Conservation Authority (EECA) and the Low Emission Vehicles Contestable Fund.
Our charging network is made up of two different unit types:
- AC Charges – these 7 kilowatt units have an estimated charging time of 4 hours, depending on battery
- DC Fast-chargers – these powerful 50 kilowatt units can deliver a full charge in 45 minutes
The majority of our AC charges are located at motels and hotels to support both domestic and international visitors to our region. Our six fast-chargers are situated in Taumarunui, Ōtorohanga, Ohakune, Whakamaru, Piopio and Waitomo and play an important role in enabling EV owners to travel longer distances in a day.
The Government continues to play an important role in delivering the EV revolution and in 2023 released its first national charging strategy. As part of this, it has set targets to provide charging hubs every 150 – 200 kilometres on main highways and public charging at community facilities for all towns with a population of 2000 or more.
We look forward to helping the Government deliver these charging hubs.
Smart charging at home
While public chargers are vital for travel, the bulk of EV charging is going to take place at home. As the numbers of EVs grow, so will the importance of smart chargers. While as yet there are no rules governing the type of charger you need at home, this may change as the benefits of smart chargers become more pronounced over time.
In particular, smart chargers give lines companies visibility of the coming demand when EV owners plug their cars in to charge overnight. Owners have the option of choosing the time they want their car charged by, while we have the flexibility to direct the exact period it happens. This allows us to avoid big peaks in demand during the night and ensure our customers charge when it’s cheapest for them to do so.
Of course, this is a choice. If cost is less important on any given day, you can still charge whenever you like.
EV for business
The transition of business vehicle fleets is already well-underway in New Zealand. If you are looking to make this switch, whether all at once or in stages, come and see us. We can talk you through the best technology solutions for your situation and help you to optimise your charging system.
Making hot water count
Everyone loves a hot shower, and we all pay quite a bit for that pleasure. Depending on your set-up, hot water heating can account for as much as 30% of your household electricity bill.
Making hot water heating more efficient can not only save you money, but it can also help reduce our carbon emissions. To help make this a reality, our metering company Influx launched a load management platform for electricity retailers to manage their customer’s hot water load.
Hot water cylinders can be used like a battery: charged up when electricity is cheap and used when needed – typically during the morning peak. To enable this, Influx draws data from its smart meter network so retailers can react to near real-time price signals and allow their customers to heat up their hot water cylinders when it’s cheapest to do so.
The second benefit is that electricity generated at peak times is more likely to use carbon-intensive fossil fuels like coal and gas. The Influx platform gives energy retailers more of a role in managing around that, which is good for consumers and good for our emissions profile.
What’s a smart meter?
Unlike traditional analogue meters that need to be read onsite to gauge how much energy you have used, smart meters transmit data every 30 minutes that is shared with your power company. This means your monthly bills are always accurate.
Most power retailers offer an app or online account that allows you to track your power usage each day and even predict what your monthly bill will be. Your retailer can also alert you to when electricity is cheap, so you can schedule home appliances like your washing machine or dryer to run at the best time.
This all helps to make our electricity networks more efficient. When consumers spread their electricity use across the day this reduces the peak periods when we typically need to burn gas or coal to meet demand. Less demand at these times, means fewer emissions.
The power of distributed energy
Known in our sector as distributed energy resources (DER), new small scale generation units that provide consumers with their own independent clean energy source are growing in popularity. The main technologies we’re talking about in the New Zealand context are:
- roof top solar photovoltaic units
- wind turbines
- battery storage
- biomass generators
- mini-hydro schemes
As these technologies advance and become more affordable, they present a range of opportunities for homeowners, businesses and community groups.
The benefits of DER are many. For consumers, they can reduce electricity costs and provide energy independence. They can also provide supplementary energy specifically for other households or back to the wider grid, and help to reduce the amount of investment needed in local lines networks, particularly in isolated areas.
Sharing energy
Maximising the potential of DER relies on us being able to use any excess energy generated, which means these consumers need to be able to both import and export electricity on their local lines network. This is called bi-directional flow. New digital technologies, including smart meters and peer-to-peer trading platforms, have now made this process more efficient and economic.
And if you have rooftop solar installed, it can identify when you have more than enough energy and send it to the grid.
Peer-to-peer trading platforms allow individuals or businesses to buy and sell electricity directly with each other, or donate it, without the need for a traditional utility or electricity provider. When set up properly in tandem with a smart meter, the process can be automated and run seamlessly.
We are learning more about how to facilitate this technology on our network through a series of solar pilot programmes. It is going to be a big part of our future.
Energising our Māori communities
Together with Tūwharetoa Health Charitable Trust (THCT), Te Nehenehenui Trust (TNN, formally Maniapoto Māori Trust Board) and Maru Energy Trust (Maru) and the Ministry of Business Innovation and Employment (MBIE), we have commenced pilot programs to trial community solar schemes on our network. One trial is enabling Māniaroa Marae in Mōkau and Taarewaanga Marae in Ōtorohanga to gift surplus solar energy to households of their choice anywhere on our network.
Another trial includes the installation of solar panels and new hot water cylinders in houses at Tūrangi. Four homes have been set up with rooftop solar and when excess energy is generated, it is being used to heat hot water cylinders in an additional five households. With as many as 16 solar panels on each home, up to 5920 watts of energy will be produced by each solar installation – generating more than the typical 3000 watts needed to heat a hot water cylinder
With hot water heating accounting for around 30% of household electricity costs, these nine pilot households are set to benefit from significant cost savings while helping to support renewable energy targets. The solar solution’s optimisation tool, PowerGenius, combined with a peer-to-peer trading platform that allows energy sharing across households can reset how solar energy can benefit those living in public and Māori housing.
Large load heat conversion
Within our network there are a number of energy-intensive facilities that have relied heavily on coal and gas for process heat. As they transition away from fossil fuels, electricity will play a bigger role in filling their energy needs.
We surveyed these customers in 2022 to get an indication of the timing of their transition.
While not forming the bulk of their energy consumption, by 2035 the step-change in electricity demand is significant for our network. To provide some context, the roughly 8 megawatt being estimated would be enough to power around 5000 homes.
Handling this amount of additional electricity will require significant investment. While these customers do contribute to the cost of upgrading their connections, much of the investment needed is further upstream in our network and falls to us.
We’re also aware that any changes in the economy and emissions reductions requirements can have major impact on how our large customers approach the transition. Because of this we must weigh the risks in making large investments for industrial growth weighed against our ability to recover those investments over the long term if the industrial markets change.
The Government Investment in Decarbonising Industry (GIDI) Fund was set up to help mitigate this very risk and we encourage our large customers to apply for it.
Our climate journey
Like every business in Aotearoa New Zealand, we are on a journey to reduce our own carbon emissions. We intend to take a deliberate approach that is captured in a long-term environment plan, which will keep us accountable and ensure we prioritise initiatives and activities that deliver the greatest environmental good.
Engagement frameworks for working with landowners, carbon bench-marking, environmental audits, and other sustainability efforts will all form part of our over-arching plan.
We acknowledge the connection mana whenua have to the land and will seek to actively partner with them to protect and care for our environment. Our sincere efforts to embed te ao Māori within the organisation will continue so that we better reflect our workforce, our community and ngā kaupapa (principles) we are seeking to role model.
As a role model, we want to champion climate-friendly behaviour. This includes transitioning our vehicle fleet to hybrid and fully electric models as soon as practicable. We now have a number of electric passenger vehicles and expect to have the majority of our fleet powered on clean energy soon.
We also work with Maru Energy Trust (Maru) across the entire region to support warmer, drier homes with in-home insulation and heating programmes — along with the provision of LED lightbulbs and effective showerheads to support greater energy efficiency.
Like the communities we serve, we are constantly learning and striving to be better stewards of the environment. Our mokopuna are counting on us.