The big switch: Electrifying NZ homes could save billions

An average home could save thousands of dollars a year by switching to solar, electric appliances and vehicles, a new report says.

Nationwide, the country could be saving $9 billion a year by 2040, while also cutting greenhouse gas emissions and becoming less reliant on imported fuel.

The organisation behind the report said there was already a climate change argument for electrifying households, but now there is also a strong economic argument.

Rewiring Aotearoa first published a report in 2024 that modelled the household economics of switching a fossil-fuelled home, with average energy use, to electric.

Back then, the annual savings were $1500 if gas heating, cooking and hot water were replaced with electric equivalents, a petrol car was swapped out for an electric one, and solar panels were installed.

The organisation has now updated its model - and said those savings had doubled.

Even taking into account the upfront costs, households could now save up to $3000 a year over 15 years - a total net saving of $45,000.

Removing those upfront costs, the savings on bills were $7600 a year.

"This is not just a climate argument anymore, this is actually an economic prosperity argument and it's a cost of living argument," Rewiring Aotearoa chief executive Mike Casey said.

The savings would vary by household, which often had a combination of fossil fuel and electric 'machines' - including vehicles, heating, cooking, and hot water systems.

Therefore, to accurately estimate what the country could save as a whole, the report used nationwide stocks of appliances and vehicles.

The net savings over 15 years, as homes electrified over time, would be $64 billion, reaching $9.1 billion a year by 2040, it calculated.

There were huge emissions savings to be made, as well.

By 2040, the country would produce 8.7 million fewer tonnes of carbon-equivalent emissions a year.

Rewiring Aotearoa was not advocating for people to replace perfectly good appliances, or electrify all at once, Casey said.

"What we're really arguing for is for every New Zealander to be able to make six good decisions in the next 10 years."

That meant the next time an appliance or machine broke or needed replacing, "that is the point that we need you to make a decision", he said.

"We need to make sure that New Zealander is saying, I know that this is going to cost me $10,000 less over its lifetime if I go the electric one, not the fossil fuel one."

'It feels good to have finally done it'

Auckland man Greg Roughan had solar panels installed on his house last November, after he and his family got "really sick of very, very high electricity prices".

It was something they had considered for a long time, but they were spurred into action when the roof needed replacing.

"It's a really big cost .... your electricity, so it feels good to have finally done it."

The $13,000 system did not include a battery, but Roughan said he earned a "very good" rate of 21 cents per kilowatt for selling back to the grid.

That meant it was less important for the family to use all of the electricity they generated, although they tried to make the most of the system, he said.

Electrification was not the sole answer, but could help address that vulnerability.

"Over the summer months, we basically don't pay for electricity, which is a really nice feeling, and all through the summer and shoulder season we earn a net credit that carries on to the next month ... and then you're burning through [the credit] in the winter months."

He had estimated the system would take six or seven years to break even, but now, with real numbers to work with, expected it to be closer to five years.

Now the solar panels were in place, an EV was the next potential purchase, Roughan said.

"I was interested in whether we could defer not just household bills but also our petrol bill."

Upfront costs remain a barrier - but solutions in sight

While Greg Roughan put the cost of his family's system on the mortgage, not everyone had access to finance, Mike Casey said.

One of the major barriers to uptake at the moment was the upfront capital cost of electric technology, which was often more expensive than the fossil fuel alternative, Casey said.

However, that problem had partly been solved by widespread political support for a Ratepayer Assistance Scheme, which Local Government New Zealand and Rewiring proposed to the government late last year.

That scheme would make low-interest loans available to all homeowners for electric technology, regardless of whether they held a mortgage or not.

Last week, National announced that it would campaign on a Home Energy Fund, based on the scheme.

Following the announcement, Casey urged the government to set up the fund straightaway, noting that Labour, the Greens and New Zealand First had all previously stated their support.

It was important that low-income households and renters were not left behind, he said.

"This home energy fund is still not the perfect solution for renters, so [we're] still figuring out how we can get other complementary policy in place so that we can bring the whole of New Zealand along that journey."

Even without assistance, the economics would still make sense for many people now, he said.

"There are so many examples in New Zealand now where the savings will pay for it, and so it's not an increase in outgoings in the way people think it is.

"Because you're saving money on the petrol, you're able to service the finance on the electric vehicle. Because you are saving money on your electricity bill, you're able to service the finance on your solar system."

A strategic shift

Independent economist Cameron Bagrie, who reviewed the Rewiring report, wrote that New Zealand had a "chronic dependence on fossil fuels".

Electrification was not the sole answer, but could help address that vulnerability.

"Households represent the country's largest energy-consuming sector, and shifting that consumption onto domestically generated renewable electricity reduces the import bill, keeps spending within the New Zealand economy, and delivers further savings through the inherent efficiency of electric machines," Bagrie said.

The economics of solar, especially, were now "compelling".

"Electrification can help both with short term cost of living problems, and also assist in building a more productive energy system underlying a more productive economy in the long term."