Sign In
New Zealand
Media release
From:
A real win-win: Rewiring Aotearoa’s ‘Electric Homes’ report shows household electrification can save New Zealanders money and reduce emissions
18 March 2024: New Zealand is one of the first places in the world where electric appliances and vehicles are now more affordable than their fossil fuel equivalents.
A new report has shown that, on average, homes currently using gas appliances and petrol vehicles could save thousands every year if they went electric and got their electricity from a combination of rooftop solar, home battery and New Zealand’s already highly renewable grid.
The ‘Electric Homes’ report from independent energy transition charity Rewiring Aotearoa shows that New Zealand is one of the first countries to reach what’s called the ‘electrification tipping point’, where electric appliances and vehicles are more affordable than their fossil fuel equivalents over the lifetime of the machine, even with the upfront costs and finance built in. Homes currently using gas appliances and petrol vehicles could save around $4,500 per year with a low-interest loan and around $1,500 per year at average home loan rates.
The report also shows that household electrification can play a surprisingly large role in reducing the country’s carbon emissions.
“Electrification is a real win-win for New Zealand and reaching this tipping point is a big deal,” says Rewiring Aotearoa CEO and ‘electric cherry’ grower Mike Casey. “While our lights, dishwashers and ovens are mostly electric, there are still a lot of households that burn fossil fuels for water heating, space heating, driving and cooking and because our fossil fuel prices are so high, electrification of households and businesses is now a smart economic decision, not just a smart environmental decision. Electric appliances and vehicles are much more efficient, and that’s where a lot of the savings come from.”
The report also shows decisions made by households account for a much larger share of the emissions in our domestic economy than conventionally thought and are an underappreciated opportunity for emissions reductions.
“While our electricity grid is around 80% renewable, only around 30% of the country’s total energy use is renewable because we are so reliant on fossil fuels for transport, heating and industry. Electrifying appliances and vehicles gives individuals the power to make a difference on climate and is likely to have a bigger impact on emissions reduction than any other decision you make. You can do it right now with technologies that exist today. When your fossil fuel machines need replacing, your next purchasing decision should be electric.”
The New Zealand specific modelling used to inform the report was commissioned by EECA (The Energy Efficiency & Conservation Authority). The technical data – that Rewiring Aotearoa has built on with further analysis – examined cost-of-living impacts of electrifying New Zealand homes, compared individual appliance and vehicle economics, and counted the emissions that can be attributed to decisions made by households.
Casey and his wife Rebecca have firsthand experience of electrification. They bought land near Cromwell and planted a cherry orchard in 2019, electrified their home and purchased more than 20 electric machines instead of fossil fuel-powered machines, even importing the country’s first electric tractor. They are saving over $60,000 per year on diesel and have reduced their carbon emissions by around 60 tonnes per year.
“I’m an orchardist, so I love low-hanging fruit. And electrification is low-hanging fruit that can lead to more profit for businesses, lower bills for homes and reduced emissions for the country.”
While Casey is using almost nine times more electricity than the previous farmer, he has not increased electricity use at peak times, which means no public infrastructure upgrades were required. He also generates significant amounts of energy from his rooftop solar.
“We’ve proven the economics of electrification stack up at our orchard. And this report shows that it stacks up for almost everyone else too. We just need to look at it from the customer’s point of view. That’s what Rewiring Aotearoa is all about. We’re focused on helping the people who use the energy system and making sure communities save on their energy bills and increase their resilience.”
Where New Zealand gets the extra electricity to power our increasingly electric lives is a strategically important question, Casey says. Historically, there has been a focus on building large-scale power plants and the poles and wires to support it, both here and around the world.
“We will certainly need more renewable generation and some grid upgrades, but customer generated energy from rooftop solar and battery storage is likely to play an important role and needs to work alongside the grid. Rooftop solar is the lowest cost delivered energy available to homes in New Zealand today and it is vital to take this into account when planning for and building out our energy system.”
Globally, the cost of heat pumps, electric vehicles, solar panels and batteries continues to fall, while the price of fossil fuels and grid electricity has increased and is expected to continue rising. Casey says this means the economics of electrification will continue to improve, both for households and for the country as a whole because we won’t need to import as many expensive fossil fuels.
Casey believes New Zealand has all the ingredients required to become one of the world’s most electric economies. And to do that, we need four main things: 1) make finance available to every New Zealander, no matter their income level, so they can access the economic and environmental benefits of electric technology; 2) recognise the lowest cost energy will come from communities; 3) fairly reward homes for their contribution to the energy system; and 4) make electrification a primary focus of our emissions reduction plan.
“With New Zealand’s history of electrical innovation, longstanding love of self-sufficiency and plentiful natural resources, we have a unique opportunity to build the most affordable, most renewable and most resilient energy system in the world. So let’s make New Zealand more electric.”
Expert Reaction
These comments have been collated by the Science Media Centre to provide a variety of expert perspectives on this issue. Feel free to use these quotes in your stories. Views expressed are the personal opinions of the experts named. They do not represent the views of the SMC or any other organisation unless specifically stated.
Ralph Sims, Emeritus Professor of Sustainable Energy, Massey University
Many houses in NZ use natural gas (North Island) or LPG (South Island) for heating rooms, heating water and cooking. In addition most have one or two cars outside running on petrol or diesel.
This report compares the cost savings and greenhouse gas (GHG) emission reductions obtained when a household moves away from consuming these fossil fuels to using more electricity.
It also evaluates the cost and emission benefits from installing solar panels and storage batteries.
With the declining investment costs in heat pumps, solar panels, batteries, cook stoves, wood burners, electric vehicles (EVs) etc, an all-electric household tends to show significant annual cost and emission reductions.
The variations due to geographic location of a house, how many cars are owned, introduction of road user charges for EVs, the projected rise of energy prices over time, the embedded energy when manufacturing technologies, and the wide range of assumptions used in the analysis, are clearly outlined.
Cost comparisons made for space heating, water heating, cooking and vehicles show that electrically-powered appliances and systems are usually the cheapest options (though the increase in electric line charges anticipated for many consumers in the near future and future variations in the carbon price under the ETS were not included).
A comparison of whether the electricity demand comes solely from the grid or around half comes from installed solar panels (rather than a household going totally off-grid) also confirms recent analyses that investing in solar systems continues to become more economic. For example, investing say $10,000 in a solar system usually gives a better return than investing the same amount in Kiwisaver.
Given that not everyone can afford such upfront investments, the report also compares systems requiring financing (assuming 5.5% interest payments) with zero finance.
The main conclusions that fully electrifying a home and vehicles could save $1500 to $5000 a year with annual GHG emissions being significantly lower, and that electricity prices from solar can be around one third the cost /kWh when purchased from the grid, are thought provoking. Anyone replacing an old gas cooker or LPG heater should first read the report.
How the electricity industry views the report will be of interest because:
a) using more electrical appliances to replace gas and LPG, as well as changing to EVs, will increase the household demand for electricity;
b) conversely installing a domestic solar system will reduce demand from the grid - which is why the industry has not embraced the concept to date.
Given the cost of reducing GHG emissions in terms of “$/t of CO2 avoided” is likely to be relatively low, or even negative in many cases, and we urgently need to reduce our total domestic emissions any way we can, then how the Government might respond to the analysis is another question.
Professor Shaun Hendy, Chief Science Officer, Toha Science
This is an important and timely report that deserves considerable attention. The report finds that electrification is financially favourable for a typical New Zealand household today, taking into account the current cost of capital. Electrification also generates considerable savings in domestic emissions for these households. Using the report, I estimate that household electrification could eliminate approximately 10% of the current national greenhouse gas inventory. This is significant, but barely accounted for in New Zealand’s Emissions Reduction Plan.
This report also has implications for New Zealand’s future energy system. The impact of local supply via rooftop solar has been greatly underestimated, and rooftop solar plus batteries could and should play a significant role in expanding electricity generation in the grid.
Attachments
Note: Not all attachments are visible to the general public. Research URLs will go live after the embargo ends.
