Affordable offshore wind will accelerate our clean electricity future

Offshore renewable energy is an option that is being considered as contributing to Aotearoa New Zealand’s goal of reach net-zero for long-lived gases by 2050. The government has set a target that 50 per cent of total energy consumption will come from renewable sources by 2035, with an aspirational target of 100 per cent renewable electricity by 2030 (MBIE, 2022). Beyond providing a more stable, constant, and predictable energy generation, offshore renewable energy has a high potential for contributing additional economic benefits throughout its lifecycle. By 2035 electricity generated by wind power (including that from the OWI) is expected to contribute 25.6% of total electricity supply (Calculating NZ’s Renewable Electricity Gap, 2021).

Electricity’s share of final energy consumption is set to grow. Having increased from 15% in 2000 to 24% today, the final consumption of electricity has increased by 41.6% between 1990 and 2020 (IEA, 2020).[1] To meet anticipated demand in New Zealand, each year from 2025 renewable electricity generation that can supply over 1 TWh per year will need to be built. Renewable electricity will be critical in decarbonising the broader New Zealand energy system substituting current fossil fuel use. New generation facilities will need to be built rapidly to meet rising electricity demand. Increasing wind and solar power generation can lower the yearly duration when fossil fuel generation is necessary while, flexible gas and hydro generation can offer support during periods of intermittent energy supply.

The potential for offshore wind in New Zealand is significant, with Ishwar & Mason (2019) identifying at least 7GW of potential capacity from fixed foundations wind turbines in South Taranaki alone, with additional capacity from floating turbines and other locations. Other notable locations with wind capacity in New Zealand include Waikato and Southland. However, barriers related to consenting and investment certainty must be removed for this generation’s potential to be realised and build delays will both directly and indirectly impact emissions (Climate Change Commission, 2023; Principal Economics, 2021).

Securing the advantage of offshore wind energy will require new policies and significant investments from public and private sectors across the supply chain. A wide-scale rollout of offshore wind turbines has challenges, including ensuring the availability of ports, ships, and turbine components including blades and nacelles. Further hurdles include scarce transmission interconnection points and pinpointing appropriate sites for turbines, ports, and production plants.

Renewable electricity will play a key role in decarbonising the wider energy system. New generation will need to be built rapidly to meet an increase in electricity demand. However, building new renewable generation, such as hydropower, wind and geothermal, can be at odds with other outcomes, such as protecting and restoring waterways and Iwi/Māori rights and interests. Overall, the climate commission’s report suggests that the transition to a low-emissions society will lower the level of GDP by 0.5% lower in 2035 and by 1.2% lower in 2050 than it would be otherwise.[2] This reduction in GDP (compared to the 2050 level) will have implications for electricity demand and supply. Also, as highlighted in the climate commission report, ‘investing in low emissions technologies and practices now will open up new opportunities and reduce the risk of damaging the country’s reputation due to a lack of credible climate action. However, delaying key actions like the move to EVs and embedding more efficient farm practices could result in the level of GDP in 2050 falling by around 2.3%.’ (Climate Change Commission, 2021, p. 14)

[1] Statistics available here.

[2] Under current policy settings, GDP is projected to grow to $388 billion by 2035 and $487 billion by 2050. Whereas meeting our recommended emissions budgets through the demonstration path would result in GDP growing to about $386 billion by 2035 and would put Aotearoa on track for GDP to grow to $481 billion by 2050.

Business Development Capacity Assessment for Dunedin City

Dunedin City Council appointed Principal Economics to provide a comprehensive assessment of the sufficiency in development capacity of business land within Dunedin to fulfils requirements of the the National Policy Statement on Urban Development (NPS-UD 2020), including an investigation of:

In our assessment of demand and sufficiency we identified existing businesses across New Zealand and their locational attributes including but not limited to land size, shape, access, reverse sensitivities and other market-based factors. We use industries’ revealed preferences to assess the features of land that they have determined as being suitable. This was then matched with the supply of business land in Dunedin City after applying a range of spatial analysis techniques.

Read the report here.

Reforms to the resource management system

This report examines the expected costs and benefits of the reforms. Changes are currently articulated mainly as broad principles and high-level descriptions of the institutional arrangements. Much of the detail is still to be developed, and the benefits of the reforms will depend on the physical outcomes that result, eg how much will pollutant emissions reduce, housing affordability improve, or Māori engagement increase?

It focuses on understanding the nature of costs and benefits under the different domains and how these are expected to change at the margin, eg whether increased environmental quality will yield positive net benefits. We provide an indication of the potential for benefits in different domains. The realisation of these potential benefits is dependent on the final design and implementation of the reforms.

Read the report here.

Incorporating distributional impacts (equity) into the CBA framework


Transportation decisions can have large and varied impacts on travellers and their communities. It’s important to measure these effects and consider their impact on various groups when planning projects.

Waka Kotahi uses a framework to decide which transport projects and programmes to pursue. The economic business case must contain a cost–benefit analysis (CBA). CBAs assess the economics of a proposal by valuing (monetising) the costs and benefits to all members of society. However, CBAs sum across a wide range of people and don’t calculate inequities between groups or individuals, or who ultimately benefits from the project.

Transport equity discussions focus on social justice. Equity impact analysis helps policymakers to make good decisions for a wide range of people. Distributional impact analysis needs to be complemented with wider investment and planning considerations. This includes any comprehensive policy framework that accounts for the overlapping effects of transport, housing and taxing policies.

Read the report here.

Cite this article

Torshizian, E., Byett, A., Isack, E., Fehling, A., & Maralani M. (2022). Incorporating distributional impacts in the cost–benefit appraisal framework (Waka Kotahi NZ Transport Agency research report 700).