The Government says households and businesses are a step closer to power bill relief and greater energy security, as its plan to deliver a liquefied natural gas (LNG) import facility for New Zealand moves ahead.
The Government has today confirmed two providers will now move to a Request for Proposal (RFP) to deliver the import facility and says it intends to sign a contract with a preferred provider this year, with the facility expected to be operational in 2028.
“We are rebuilding New Zealand’s energy system after years of neglect and destructive policies like the banning of oil and gas exploration,” said Energy Minister, Simeon Brown.
“Kiwis deserve reliable power at prices they can afford, an economy backed by secure energy, and jobs protected from avoidable shocks. That is exactly what this Government is delivering.”
The LNG import facility is a key part of the Government’s Securing Affordable Energy plan, providing the physical back-up New Zealand needs to get through a dry year. Alongside it, the Government is requiring the electricity sector to take greater responsibility for managing the dry year risk, through a new Winter Energy Reliability Obligation now out for consultation.
“Kiwis need a backup source of power when the wind isn’t blowing, the sun isn’t shining, and the lakes are low. You can’t run an energy system on weather forecasts, and without firm, flexible energy to back up our renewables, the next dry year will bring higher power bills, potential factory closures and job losses, and rolling blackouts across the country,” said Minister Brown.
“As New Zealand’s indigenous gas supplies run down, that squeeze only gets worse. Without LNG to fall back on, a dry year leaves us with unacceptable choices. Either wholesale prices skyrocket and power bills climb for every Kiwi household, or businesses are forced to shut their doors and lay off workers as gas is taken from industry to produce electricity.”
He said the Government was not prepared to let that happen.
“An LNG import facility is the fastest and most affordable way to cover the dry-year gap, keep the lights on, and protect thousands of Kiwi jobs. Every other comparable country in the OECD either has access to abundant natural gas or access to gas imports. New Zealand is an outlier, and it is time we caught up.”
“For Kiwi families, this means less pressure on power bills and real relief from the cost of living. For our businesses, from manufacturers to dairy processors, it means secure, affordable energy so they can keep running and keep employing Kiwis.
“For our economy, it means the secure foundation we need to grow, invest, and create jobs.”
Since the Government announced the LNG facility in February, wholesale electricity prices for 2028 and 2029 have fallen by around $20/MWh, delivering savings of up to $800 million a year that will flow through to Kiwi households and businesses.
“Recent events in the Middle East are a timely reminder that New Zealand needs secure, diversified fuel supplies. Despite the conflict, LNG remains the fastest, cheapest, and most flexible dry-year solution that can be put in place this decade,” said the Minister.
“Delivering LNG takes coordination that only Government can provide, and we are providing it. I have asked MBIE and NIFFCO to work through the detail of how the facility will be paid for, including engaging with the gentailers on a fair funding model, and will have more to say in due course. Kiwis can be certain of one thing – it will not be funded by a levy on power bills.
“Responsibility for keeping the lights on sits squarely with the electricity sector, and that is the principle guiding our decisions on funding.”
The Minister said the chosen developer will be subject to rigorous domestic and international health and safety regulations.
