The electricity sector in New Zealand uses almost entirely renewable energy, such as hydropower, geothermal power and increasingly wind energy. In the fourth quarter of 2025, the country generated 96.4% of its electricity from renewable sources. The strategy of electrification is being pursued to enhance the penetration of renewable energy sources and to reduce greenhouse gas (GHG) emissions across all sectors of the economy. In 2021, electricity consumption reached 40 terawatt-hours (TW⋅h), representing a 0.2% increase compared to the consumption levels in 2010.
The 2011–2021 Energy Strategy of New Zealand aimed for a 90% share of renewable electricity by 2025. In 2023, the Sixth Labour Government government raised its ambition by setting a goal of achieving 100% renewable electricity by 2030.
The Ministry of Business, Innovation, and Employment in New Zealand monitors several key entities in the electricity sector. This includes the independent regulators, the Electricity Authority and the Commerce Commission, which are responsible for the sector's regulation. Additionally, the Crown agent, the Energy Efficiency and Conservation Agency, is dedicated to promoting and managing electricity efficiency programs. History In New Zealand electricity was first generated within factories for internal use. The first generation plant where power was transmitted to a remote location was established at Bullendale in Otago in 1885, to provide power for a twenty stamp battery at the Phoenix mine. The plant used water from the nearby Skippers Creek, a tributary of the Shotover River.
Reefton on the West Coast became the first electrified town in 1888 after the Reefton Power Station was commissioned, while the first sizeable power station—the Horahora Power Station—was built for the Waihi gold mines at Horahora on the Waikato River. This set a precedent that was to dominate New Zealand's electricity generation, with hydropower becoming and remaining the dominant source.New Zealand Historical Atlas; McKinnon, Malcolm (Editor); David Bateman, 1997, Plate 88 From 1912 to 1918, the Public Works Department issued licenses for many local power stations. By 1920, there were 55 public supplies, with 45 megawatts of generating capacity between them.
Early public electricity supplies used various voltage and current standards. The 230/400-volt 50-hertz three-phase system was chosen as the national standard in 1920. At that time, 58.6% of the country's generating capacity used the 50 Hz three-phase system; 27.1% used direct current systems while 14.3% used other alternating current standards.
While industrial use quickly took off, it was only government programmes in the first two-thirds of the 20th century that caused private demand to climb strongly as well. Rural areas were particular beneficiaries of subsidies for electrical grid systems, where supply was provided to create demand, with the intention of modernising the countryside. The results were notable; in the 1920s, electricity use increased at a rate of 22% per year. In fact, the "load building" programmes were so successful that shortages started to occur from 1936 on, though a large number of new power stations built in the 1950s enabled supply to catch up again.
After the massive construction programmes had created a substantial supply of energy not dependent on international fossil fuel prices, New Zealand became less frugal with its energy use. While in 1978 its energy consumption per unit of economic output hovered around the average of all OECD countries, during the 1980s New Zealand dropped far behind, increasing its energy use per economic unit by over 25%, while other nations slowly reduced their energy usage levels. Based on this economic comparison, in 1991 the country was the second-least energy-efficient of 41 OECD countries.New Zealand Historical Atlas – McKinnon, Malcolm (Editor); David Bateman, 1997, Plate 98
All of the government's energy assets originally came under the Public Works Department. From 1946, the management of generation and transmission came under a new department, the State Hydro-Electric Department (SHD), renamed in 1958 as the New Zealand Electricity Department (NZED). In 1978, the Electricity Division of the Ministry of Energy assumed responsibility for electricity generation, transmission, policy advice and regulation. Distribution and retailing was the responsibility of local electric power boards (EPBs) or municipal electricity departments (MEDs).
New Zealand's electrical energy generation, previously state-owned as in most countries, was corporatised, deregulated and partly sold off over the last two decades of the twentieth century, following a model typical in the Western world. However, much of the generation and retail sectors, as well as the entire transmission sector, remains under government ownership as state-owned enterprises.
The Fourth Labour Government corporatised the Electricity Division as a State Owned Enterprise in 1987, as the Electricity Corporation of New Zealand (ECNZ), which traded for a period as Electricorp. The Fourth National Government went further with the Energy Companies Act 1992, requiring EPBs and MEDs to become commercial companies in charge of distribution and retailing.
In 1994, ECNZ's transmission business was split off as Transpower. In 1996, ECNZ was split again, with a new separate generation business, Contact Energy being formed. The Fourth National Government privatised Contact Energy in 1999. The Electricity Industry Reform Act 1998 required the separation of ownership between lines and energy businesses (either generation or supply). As a result, most of the former Electric Power Boards and Municipal Electricity Departments established electricity distribution businesses, and sold their electricity retail businesses, typically to generating companies.Martin, p325 From April 1999, the remainder of ECNZ was split again, with the major assets formed into three new state-owned enterprises (Mighty River Power (now Mercury Energy), Genesis Energy and Meridian Energy) and with the minor assets being sold off. MBIE published a chronology of reforms up to 2015. Marked "This document outlines the main developments in New Zealand's electricity reforms since the mid-1980s."
Organisation New Zealand's electricity sector is split into six distinct parts: Generation – Generation companies generate electricity at power stations, injecting into either transmission lines (grid-connected generation) or distribution lines (embedded generation). The electricity generated is sold via the wholesale market to retailers. Numerous companies generate power, but 92% of the generation sector is dominated by five companies: Contact Energy, Genesis Energy, Meridian Energy, Mercury Energy and Manawa Energy. Transmission – Transpower, a state-owned enterprise, operates the national transmission network, consisting of of high voltage lines that connect generating stations with the grid, and supply distribution networks and large industrial consumers (direct consumers) in each of New Zealand's two main islands. The HVDC Inter-Island is a high voltage direct current link which connects the transmission networks of the two islands. Transpower as System Operator manages the electricity system in real time to ensure generation matches demand, in accordance with the rules of the electricity market. Distribution – Distribution companies operate of medium and low-voltage lines interconnecting grid exit points with consumers and embedded generation. There are 29 distribution companies each serving a set geographic area. Retail – Retail companies buy electricity from generators and on-sell it to consumers. Numerous companies retail electricity, including many generating companies (sometimes called gentailers), but 95% of the retail sector is dominated by the five big generation companies: Contact Energy, Genesis Energy, Mercury Energy, Meridian Energy and Manawa Energy. Consumption – Nearly two million consumers take electricity from the distribution networks or the transmission network and buy electricity from retailers for their use. Consumers range from typical households, which consume on average 7 MW⋅h per year, to the Tiwai Point aluminium smelter, which consumed 5,000 GW⋅h in the 2017 year, representing 13% of total energy demand. Regulation – New Zealand's Electricity Authority (formerly the Electricity Commission) is responsible for regulation of the New Zealand electricity market. Transmission and distribution are regulated by the Commerce Commission. Policy and consumer protection is managed by the Ministry of Business, Innovation and Employment, and the promotion of energy efficiency is led by the Energy Efficiency and Conservation Authority.
Regulation and policy
Renewable energy sources generate much of the nation's electricity, with the New Zealand energy industry for example reporting a 75% share in 2013. The Fifth Labour Government of New Zealand had the goal of increasing this to 90% by 2025, the subsequent Fifth National Government put priority on security of supply.
New Zealand's Labour government introduced a number of measures in the 2000s as part of the vision of New Zealand becoming carbon neutral by 2020, and intended to collect levies for greenhouse gas emissions from 2010 onwards, to be added to power prices depending on the level of emissions. However, the incoming National government quickly tabled legislation to repeal some of these measures, such as obligatory targets for biofuel percentages, a ban on construction of new fossil fuelled generation plants and a ban on future sales of incandescent light bulbs.
From 1 January 2010, the energy sector was required to report greenhouse gas emissions under the New Zealand Emissions Trading Scheme (NZETS). From 1 July 2010, the energy sector had formal compliance obligations to buy and surrender one emission unit for every two tonnes of reported emissions. As of December 2011, there were 78 energy firms compulsorily registered in the NZETS and five voluntary participants. Energy sector firms in the NZETS do not receive a free allocation of emissions units and they are expected to pass on to their customers the costs of buying emission units.
In April 2013, the Labour Party and the Green Party said if they were to win the 2014 general election, they would introduce a single buyer of electricity akin to Pharmac (the single buyer of pharmaceutical drugs in New Zealand), in order to cut retail costs. The Government responded by calling it "economic vandalism", comparing it to the Soviet Union, but Greens co-leader Russel Norman said it would boost the economy and create jobs. By the following day, shares in privately owned power company Contact Energy had fallen by more than 10%.
New Zealand's energy policy sets targets to achieve 90% renewable electricity generation by 2025, with an aspiration to reach 100% by 2030. This is further supported by the Emissions Reduction Plan, which aims for 50% of the country's total final energy consumption (TFEC) to be sourced from renewables by 2035, encouraging widespread electrification across various sectors.
Formed in April 2018, New Zealand's Interim Climate Change Committee highlighted the importance of electrifying transport and industrial heating in its April 2019 "Accelerated Electrification" report. In response, the government launched the NZD 70 million Green Investment Finance (GIDI) Fund to facilitate the transition from coal and gas to cleaner electricity and biomass for major energy users. This initiative, designed to reduce emissions, recognizes it will both improve energy efficiency and lead to higher electricity demand.
Electricity market
Electricity is traded wholesale on a spot market.