Electricity, renewables slowly replace fossil fuels in NZ businesses

Fossil fuel use across New Zealand businesses peaked before trending lower in recent years, according to new data from the Energy Efficiency and Conservation Authority (EECA), as electricity and renewable fuels take a growing share of business energy use.

"Fossil fuel use appears to have peaked in 2019 and we're seeing a trend towards electrification - particularly in dairy manufacturing and meat processing," EECA chief executive Marcos Pelenur says.

However, fossil fuels still account for around two‑thirds of the country's total energy consumption - mostly diesel and petrol - although EECA says investment in electricity and renewables is gradually shifting the mix of energy powering businesses.

EECA's Energy End Use Database (EEUD) provides information on energy type and end use in New Zealand homes and businesses between 1 January 2017 and 31 December 2024 - the latest available data - tracking how energy use across the economy has changed.

Fossil fuel use across the business sector has fallen by 4 percentage points since its peak, down to 51 percent in 2024.

The shift has been led by electrification in the dairy and meat‑processing industries, where coal use has declined.

"Transport is the biggest energy user - it accounts for about 39 percent of the country's energy consumption and it's still around 96 percent fossil‑fuel driven," Pelenur says.

Just 4 percent of road transport energy came from electric vehicles. Most of that was from conventional, non‑plug‑in hybrid vehicles, which still rely on fossil fuels, alongside smaller contributions from plug‑in hybrids and battery‑electric vehicles.

Pelenur said data centres - including AI‑driven facilities - accounted for about 0.5 percent of New Zealand's electricity demand but that share was expected to rise rapidly.

From 2022, demand from such centres had risen sharply, reflecting the development of very large facilities.

"Data centres are still only a small share of electricity demand, at around half a percent - but we expect them to become much more material over time," he said.

EECA said the growing focus on how digital infrastructure affected energy systems presented an opportunity for efficiency gains and smarter electricity use, helping enable growth while balancing electricity supply and demand.