Net energy consumption

IBISWorld forecasts net energy consumption to rise by 1.1% in 2024-25, to 552.0 petajoules of consumption. Strong population and household numbers growth is expected to drive up retail demand for electricity, particularly during the colder winter months. Motor vehicle numbers are also expected to increase, pushing up energy consumption from oils. New Zealand's GDP is also expected to expand in 2024-25. Increased domestic output will likely require heightened energy usage, further influencing the expected growth trend in net energy consumption.

Net energy consumption is strongly correlated with economic activity, due to the widespread use of energy across most industry processes. Prior to the pandemic, total energy consumption had increased over most of the past decade, driven by growth in the population, household consumption expenditure and government consumption expenditure. Advances in technology also increase the availability of products available for consumers, which require energy to manufacture and use. As a developed nation, New Zealand has high energy consumption per capita due to the prevalence of car ownership and common domestic usage of electric appliances. However, net energy consumption per capita has trended downwards over the past decade, from 118.6 gigajoules per capita in 2015-16 to an estimated 103.5 gigajoules per capita in 2024-25. This decline in per capita terms has occurred due to rising energy efficiency in New Zealand. Efficiency has increased through the uptake of insulation in homes and the implementation of waste heat capture systems in industrial processes.

Net energy consumption strongly declined in 2020-21 due to subdued economic activity caused by the COVID-19 pandemic. Demand from the industrial sector fell sharply at the height of the pandemic, largely due to the temporary closure of factories. Travel bans, lockdowns and border closures also contributed to falling demand. Subdued population growth over the two years through 2021-22, due to migration losses also dampened residential electricity demand. Despite a resumption of relative normality in 2022-23, net energy consumption fell marginally over the year. This was caused by a 1.7% decline in energy consumption by the industry sector, which accounts for over 30.0% of total final energy consumption in New Zealand. This trend was driven by a significant drop in natural gas usage over the year. The residential sector also saw energy usage decline in 2022-23. However, industrial and residential energy consumption declines were largely offset by a 2.3% increase in oil consumption by the domestic transport sector, as domestic aviation, water and land transport activity all increased compared to 2021-22. In 2023-24, the residential sector surpassed the industrial sector as the largest consumer of electricity in New Zealand due to continued population growth and the continued steady decline in industrial consumption. An increase in residential natural gas consumption also contributed to an overall expansion in net energy consumption in 2023-24. Overall, IBISWorld forecasts net energy consumption to decrease at a compound annual rate of 0.9% over the five years through 2024-25.