New Zealand increases fossil fuel generation as hydropower hits decade-low

New Zealand has ramped up its fossil fuel generation to meet electricity demand, as hydropower generation drops to its lowest level in nearly a decade. According to energy think tank Ember, electricity generated from fossil fuels between January and July reached 4.36 TWh, marking a 67% increase from the same period in 2023. This 1.75 TWh increase in fossil fuel generation closely mirrors the 1.86 TWh decline in hydropower output over the same period.

Hydropower is New Zealand’s primary source of electricity, accounting for 59.29% of the total generating capacity in 2023, compared to 13.13% from fossil fuels, according to GlobalData. However, extreme weather conditions, including droughts, have significantly reduced hydropower’s contribution, dropping to 48.6% in July. This has forced the country to rely more on fossil fuels to manage rising energy prices and ensure energy security.

With limited hydropower supply, electricity prices in New Zealand have nearly doubled compared to those in Australia. To address these rising costs, the New Zealand government has announced plans to reverse a previous ban on offshore oil and gas licenses and to fast-track imports of liquified natural gas.