One event at which Lena Parker, General Manager Energy Solutions shared her insights was the Facilities Management Association New Zealand annual conference held in Christchurch. 

Her presentation focused on how asset owners and managers can unlock opportunities that already exist within their business, for sustainable success. Here are some of Lena's observations. 

Q: What is the state of the Australian and New Zealand markets from an energy solutions perspective? 

Structural and permanent changes to energy supply and demand are leading to long-term and unprecedented pricing volatility for grid-supplied electricity.

The New Zealand government has set targets to achieve net zero by 2050, and while over 80% of New Zealand’s electricity comes from renewable sources, converting the final 10-20% of electricity supply is the most difficult.

On top of that, we are expecting demand to increase 78% by 2050, between the increase in population and the transition of assets like vehicles to utilising electricity.

The supply and demand of electricity are currently tight but manageable, although the energy security problem may arise in the future, as they will need to find new sources of electricity to match increasing demand. No new gas licences are being issued, and there’s historically been an underperformance of hydro due to water supply issues. Realistically, we’re heading toward a situation where blackouts will become common.

The energy transition is not just about going from coal to renewables. The second issue related to energy security is the stability of the grid. Our expertise lies in taking this challenge and communicating it to government and enterprises, so they understand the role they have to play in their own energy security and the steps they need to take.

Q: We hear about the Inflation Reduction Act in the US, how does that impact us here in New Zealand? 

This act is a threat and an opportunity for us in New Zealand.

The single biggest opportunity here is electrification.

There are significant dollars to be invested in greenfield projects through the Bipartisan Infrastructure Laws (BIL) – to the tune of USD$80 billion. If the US are investing in the energy transition, this has the effect of making projects more affordable globally. This benefits us here in New Zealand also.

Realistically, if there are dollars invested in innovation, the US is a much bigger market and will attract more dollars than New Zealand will.

In part, it is about stimulating investment for the US through subsidies. As an identified partner to the US, it’s an immense opportunity for us to build an industry that can supply to the US.

Q: What is the biggest single opportunity for governments and businesses in Australia and New Zealand to effect change when it comes to energy security? 

The price of electricity is only going to increase. Increased demand along with increasing electrification will constrain supply. Businesses are incentivised now to cut costs and improve the sustainability of their assets.

However, realistically we’re still in the education stage in Australia, in particular. Those who are moving now are the early adopters. By 2025, more organisations will start to realise there is a lot to be done in order to address demand and shore up their energy supply. Development and strategy cycles are three to five years, meaning anyone that starts planning in 2025 is looking at a 2030 go-live. 

I worry that there will be too many organisations in that bucket. 

In terms of adding value to our clients, there are two elements we focus on at Ventia.

• Energy security – reducing reliance on grid electricity and hedging against price volatility; and
• Emission reductions – abating CO2 to achieve emissions targets and reducing exposure to the escalating cost of carbon offsets. 

The way we achieve both of these outcomes is by reducing demand for electricity (by implementing efficiency programs, like upgrading lighting to LEDs or installing variable speed drives), and by increasing supply, but installing small-scale renewable generation, like rooftop solar. The security piece is underpinned by battery storage, which allows estates to be self-reliant even when renewable sources aren’t available.

Q: Why has ‘behind-the-meter’ activity not been a focus for businesses as they seek to reduce costs and emissions? 

There are a lot of players in the front-of-the-meter space, building renewable assets to backfill the retiring coal supply.

If you consider the amount of work required by 2033 to backfill the supply and augment the grid, there is no surprise that this is where the energy sector has focused to date...because this is where capital has been invested.

Unfortunately, we have left our run a little late and there is a good chance that there will be a period when supply and demand are out of alignment. And what I mean by that is that coal assets may retire before we’re able to build enough firm energy in its place. 

‘Firm energy’ refers to energy supplies that can generate when the sun isn’t shining and the wind isn’t blowing.

While all of this activity is happening in front of the meter to ensure there is enough electricity going into the poles and wires, responsible boards and executives have recognised this risk as they take long-term views on energy security and climate change risk. It is now apparent to them that there are actions they can take on their own assets to improve their energy security and reduce their emissions in case the likely scenario plays out where there is a gap.

This must start with rightsizing demand and optimising efficiency.

This could be the switch to LED lighting, variable speed drives, HVAC optimisation, heat pumps and IoT sensors to name a few.

And with relatively low levels of penetration for behind-the-meter generation in New Zealand, there is a real opportunity to install rooftop solar and small-scale wind generators.

For Defence Australia for example, something relatively simple like upgrading to more efficient lighting can have a massive impact on energy bills, energy consumption as well as the environment. We’re predicting a return on investment in under five years, with a reduction in carbon emissions of approximately 24,000 tons.

Behind-the-meter is a key factor when it comes to keeping the industry going whilst we transition from fossil fuels to renewables. 

Q: What are some of the benefits of the transition to businesses? 

A reduction in energy cost and a reduction in emissions are the two most obvious benefits that get talked about. But there are many others.

The cost of asset management comes down in many cases, as does the frequency of replacement. For example, LED lights are replaced 5 times less frequently than traditional globes. So there’s the cost of the globes, but also the cost of having someone come to the site and do the work.

Related to that is the decrease in safety risk. If you’re sending someone up a ladder four fewer times a year, for example, that’s four fewer times they’re at risk of working at height.

As you’re replacing assets less frequently, there’s also less waste. 

Let’s not forget the expectations of shareholders, employees and the community.

In fact, there is evidence to show that both shareholders and employees will vote with their feet and their wallets if they don’t feel an organisation’s values when it comes to climate change and energy efficiency is aligned with their own. CEOs are being held accountable, and this can only be a good thing, as far as I am concerned.