New report confirms hydropower is the backbone of New Zealand’s energy security

A new report has reaffirmed hydropower’s critical role in New Zealand’s renewable energy future, positioning it as the foundation of long-duration energy security and system flexibility. The Energy to Grow report from Boston Consulting Group identifies hydro storage as the core resource capable of managing extended dry and windless periods – conditions that are expected to occur more frequently as climate variability increases.

According to the findings, low rainfall can reduce hydropower inflows by around 2TWh during an average dry season, stretching over six months, and up to 4TWh in extreme scenarios involving consecutive dry and windless years. The report warns that ensuring affordable energy supply during such conditions will require sufficient long-duration firm energy, including pumped storage, contracted fuel reserves, and demand response mechanisms.

One of the most significant insights from the report is the scale of New Zealand’s contingent hydro storage – currently around 832GWh between October and March and 612GWh during the rest of the year. Of that, approximately 300GWh could potentially be unlocked for general use, provided that sufficient long-duration firm energy is secured elsewhere. The report notes that earlier and more transparent release of contingent hydro could reduce unnecessary fossil fuel use and lower price volatility.

System resilience is expected to improve notably by 2026, thanks to combined efforts across hydro storage, demand flexibility, gas storage, and coal reserves. The report estimates the total available storage and flexibility could increase from 1.6 TWh in 2024 to between 3.9 and 5.1 TWh by 2026, strengthening dry-year security.

The report concludes that as New Zealand increases its reliance on wind and solar, hydropower’s role becomes even more crucial – not just as a renewable generator, but as a flexible, dispatchable energy storage resource essential for balancing the grid in both daily and seasonal contexts.

Hydropower, it states, remains the country’s most strategic renewable asset.