The Interim Climate Change Commission (ICCC) has warned the Government that consumers could pay the price over its goal of 100 percent renewable electricity by 2035.
The ICCC was asked to provide advice to the Government on planning for the transition to 100 percent renewable electricity by 2035 and how it could be achieved.
It came back to say that while 100 percent renewable electricity by that year was "technically feasible", it could only be achieved through "overbuilding" additional renewable generation of wind and solar to cover "dry years".
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The cost would outweigh the result, the ICCC concluded. It said "overbuilding" would "likely result in much higher electricity prices than in the business as usual future".
New Zealand's electricity system is currently about 82 percent renewable, with electricity representing about 5 percent of total greenhouse gas emissions, the Accelerated Electrification report says.
"New Zealand is fortunate to already have such a high proportion of renewable electricity. But due to the heavy reliance of the electricity system on hydropower, its key challenge is coping with a 'dry year' when hydro inflows are low."
The ICCC recommended that instead of focusing on its goal of 100 percent renewable electricity by 2035, the Government should prioritise the electrification of transport and process heat (energy from steam, hot water or hot gases).
Keeping electricity affordable is "vital", the ICCC says, because "consumers will not switch to electricity if it is too expensive compared to fossil fuels, and so potential emissions savings would be less".
First Gas, New Zealand's largest owner and operator of gas networks, welcomed the ICCC's conclusion that any practical electricity-based energy future for New Zealand requires a gas network.
"We must keep our options open for whatever alternatives turn out best for purpose while reducing emissions," the company's chief executive Paul Goodeve said.
But while the ICCC said electrification of transport and process heat should be pursued, "eliminating fossil fuels from the electricity system must occur at some point".
Energy and Resources Minister Megan Woods also welcomed the ICCC recommendations and said the Government accepted them.
Among the ICCC's other suggestions was setting a target to reduce emissions from transport, enabling low-emissions mobility for all Kiwis, and ensuring New Zealand doesn't become a dumping ground for fossil-fuel vehicles.
Woods said the Government will be conducting five-yearly assessments to ensure energy affordability, sustainability and security is well managed.
"An investigation into customer electricity pricing is underway with decisions on that to be released imminently."
Woods said further work, such as exploring a transport emissions reduction target and revising the National Policy Statement for Renewable Electricity Generation, would be investigated.