Publications: Research reports and publications

Energy security for the Top-of-the-South: Part 1 scoping the risks: A 2012 viewpoint

1 October, 2012
Cawthron Report 2204. Prepared for Ministry of Business, Innovation and Employment, Science and Innovation Group. Part of the Soft-Urban Infrastructure for Sustainable Settlements (SUISS) project.

Energy is the lifeblood of modern economies. It is essential to our households, industry, commerce and transport, while our ability to continually source energy is dependent on the natural resources from which we derive it. To maintain a healthy economy, society, and environment into the future, requires ready access to secure, reliable, and sustainable energy at an affordable price.

This report provides a high level assessment of energy security issues in the Marlborough, Nelson, and Tasman regions of New Zealand’s South Island; the ‘Top-of-the-South’. It broadly scopes the energy security issues by reviewing and discussing the projections of respected institutions. The report chiefly focuses on two forms of energy—electricity and liquid fossil fuels—as these comprise the majority of energy consumed in the Top-of-the- South.

Please note that this is a snapshot of the energy security issues based on the information available in 2012.

Energy security is defined in this report, based on a definition from the Asia Pacific Energy Research Centre, as comprising four dimensions: availability, accessibility, affordability, and acceptability – the four A’s of energy security. It is these dimensions around which the report is structured, and the risks to energy security are identified.

Using this framework, this report has found that the Top-of-the-South is exposed to many potential energy disruption events that could seriously impact the economy for days or weeks.

  1. The Top-of-the-South is generally doing well in terms of availability, in that there are vast amounts of energy resources of both electricity and oil that the area sources locally, nationally, and internationally which appear sufficient to meet future demand. However, the high per capita reliance on petroleum leaves the area more vulnerable to oil price rises and supply disruptions than other areas of New Zealand.
  2. The area faces most of its energy security risks in terms of accessibility. The lack of diversity of energy supply lines to the area, with supply chain bottle-necks such as the Marsden Point refinery and the electricity transmission lines that cross the Alpine Fault, are the main risks.
  3. Sudden price spikes pose the greatest risk under the affordability dimension of energy security. This is particularly the case for oil, the price of which is predicted to remain high and to experience greater volatility in future. In addition to increasing costs of production, price spikes associated with global oil price volatility will negatively affect customers in the Top-of-the-South’s export destinations, with negative effects on the local economy. Electricity prices are also predicted to rise, placing added pressure on businesses and the community. The affordability dimension of the Top-of-the-South’s energy security, therefore, is tracking towards lower energy security in future.
  4. While the Top-of-the-South’s electricity supply is projected to exhibit lower greenhouse gas emissions in future, emissions from petroleum look set to increase. Primarily, this is due to the global switch to unconventional oil sources that have higher greenhouse gas emissions per unit of energy. The biggest challenge regarding the acceptability dimension of the Top-of-the-South’s energy supplies therefore relates to the greenhouse gas emissions from the transport sector.

A key recommendation of this report is for discussion between local stakeholders about the energy security risks facing the Top-of-the-South. Should it be agreed that the risks are of sufficient magnitude to warrant action, a first step could be the collaborative development of a regional energy strategy. Such a strategy could address the unique risks facing the area, based on specific local knowledge of those risks and the solutions available.

The framework of analysis used in this report – the 4 A’s of energy security – has provided a good starting point for further investigations of risks to energy security. Future efforts to quantify the risks to energy security at the regional or inter-regional scale would benefit from using aggregated indices, informed by regional energy stakeholders.