Building a secure and sustainable energy system 10 th Annual National Power Conference February 2008 Hon David Parker Minister of Energy

Renewable electricity target 90 per cent of electricity from renewable sources by 2025

Renewables future makes economic sense New Build Generation Costs

Forecast electricity generation

Role of fossil fuel generation Fossil fuel generation has a role to play (particularly gas) But: Changes to Electricity Act being introduced to limit new fossil fuel baseload generation for next 10 years

Renewable preference 10-year restriction on the construction of fossil fuel thermal generation above 10 MW whose fuel source contains 20% or more fossil fuels. Exemptions allowed if: –Plant has emissions profile or load factor less than prescribed level (in regulations) –Plant necessary for Mitigating an emergency Reserve energy Small isolated community Cogeneration that improves energy efficiency –Generation based on waste material –Related retirement of existing thermal significantly reduces emissions

Key actions on renewables Emissions Trading Scheme Pricing emissions National Policy Statement on renewable energy to provide guidance to councils Call-in powers available

Using energy more efficiently

Energy efficiency An untapped virtual source of energy Strategy covers whole of economy Long-term major savings possible

Oil prices Almost doubled in 12 months Improved urban design Improved transport efficiency and better options Improved broadband Contingency plans Support for exploration

Great South Basin exploration Around 500,000 square kilometres Remoteness/weather means high risks/costs Seismic survey indicated large petroleum volumes $1.2 billion of exploration in first five years Government policy of funding data acquisition vindicated

The future for coal Huge lignite coal reserves Potential to power hydrogen vehicle fleet Carbon capture/storage still poses questions Much international research underway Government policy group coordinating issues Identified CCS issues:  Storage liability  Ownership of CO 2 and pore spaces

Emissions Trading Scheme Internationally favoured measure NZ scheme in line with others Will include every sector of economy – forestry, liquid fossil fuels, stationary energy/industrial processes, agriculture/waste/others Linked to Kyoto trading markets Gradual introduction

Future cost of carbon

Electrical substitution in transport Low carbon future for transport essential Goal - take advantage of highly renewable/low carbon electricity supply Plug-in vehicles recharge from mains supply Battery range around 60 km – supplemented with conventional engine Modelling assumes they arrive around 2015

Longer-term predictions Slow ramp-up from 2015, for new light vehicles 17% of light vehicle fleet plug-in hybrid or electric by 2030, rising to 60% by 2050 Eighty percent of travel in full electric mode Likely consumption around 8 TWh (14 percent additional load) in 2050 Potential to draw energy from batteries during peak grid load periods

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