Natural Gas Transition Plan

The state of the New Zealand gas market is posing serious challenges for energy users across the nation.

Industrial users and other large consumers are facing difficulty to secure stable and affordable gas supplies.

This page provides an overview of the current situation, offering strategic guidance to help you navigate these obstacles.

NZ's Natural Gas Situation

The Current Situation:

New Zealand is experiencing a major gas supply challenge, impacting piped natural gas in the North Island. Gas supply is struggling to meet demand, both in the short and medium term.

Rising Prices:

Spot and contract prices for natural gas are increasing substantially, with some users seeing prices doubling or even tripling. Wholesale spot rates are up 300% compared to 2 years ago, showing no signs of reducing in the short term.

Short-term security of supply:

Some suppliers are not offering new contracts, complicating efforts to secure energy needs.

Long-term supply concerns:

The long-term gas supply remains uncertain and will be challenging without significant new investment. Even with such investments, new supplies will take time to materialise.

Recommenadtions for Natural Gas Users

Recommendations for Natural Gas users:

To manage your natural gas needs and mitigate risks, consider the following strategic steps:

Short Term Strategies:

1. Review your current contract:

Determine how long you have left on your current gas contracts. If you contract is near its end, start planning for the renewal process now.
Understand the terms and conditions, especially clauses related to price adjustments, contract extensions and maximum volumes.

2. Engage with suppliers:

Contact your existing supplier early to discuss potential contract renewals or extensions. Existing customers are more likely to secure better terms.
Your current supplier may be constrained and unable or unwilling to commit to supplying you moving forward. Engage other suppliers as well.

3. Understand your Energy Usage:

If you don't already know what your main energy uses are, consider installing metering to identify key consumption areas and peak loads. A Time of Use (TOU) meter at the main connection point will provide invaluable information.
Check your connection size. You may be oversized for your gas requirements moving forward. Consider downsizing if possible as suppliers may be more willing to provide supply to smaller users.

4. Implement Energy Management Quick Wins:

Ensure your processes are operating efficiently. Eliminate any hot water or steam leaks, consider lowering temperature set-points and arrange boiler tuning if overdue.

5. Invest in Energy Efficiency:

Implement measures to reduce overall consumption, lower costs and reduce reliance on gas.
Consider engaging an expert to undertake an energy audit
If you've already undertaken an energy audit, update it with the latest gas prices. Efficiency investments that didn't previously stack up might now be financially viable.

How can Lumen help

Longer-term Strategies:

1. Diversify Energy Sources:

Investigate options to switch (fully or partially) from natural gas to renewable energy sources such as electricity (especially heat pumps) or biomass.
If you have multiple facilities, consider shifting production to locations with more stable energy supplies.

2. Monitor Market Trends:

Stay informed about market trends and regulatory changes to make more informed decisions and anticipate future developments.

3. Long-Term Planning:

Invest in resilience by exploring opportunities for on-site generation capabilities (solar) or energy storage solutions to buffer against supply disruptions,
Build strategic partnerships with other energy users to share knowledge and explore collective purchasing agreements.

how can lumen help?

Our Energy & Carbon Team has over 20 years experience working with energy users to help them secure energy supply, improve energy efficiency and develop a long-term strategy.

We can help you navigate these energy supply challenges in several ways:

Energy contracting / tendering
- We are experienced in running energy supply tender processes to help you secure the best energy contract possible.
- We provide this service for Electricity, Natural Gas, LPG and solar.
Energy audits
- Identify, quantify and prioritise energy efficiency, process improvement & demand reduction opportunities to reduce energy costs and reduce your carbon emissions.
Natural gas transition feasibility studies - identify the best alternative to natural gas, and develop a detailed plan and business case to support a transition away from natural gas.
Energy supply risk minimisation - we can help you develop a long-term strategy (10+ years) to ensure your ongoing access to energy and minimise future price and supply risks.