Official papers released to the Climate Foundation’s Christina Hood show the Ministry of Innovation, Business and Employment concluded that fuel-switching and energy efficiency could free up to about 10 Petajoules of gas for an estimated infrastructure cost of $19 per Gigajoule.

That compared to estimated build costs of between $28 and $31 per PJ for a conventional liquefied natural gas (LNG) terminal.

Source: MBIE

The accompanying table only records MBIE findings for the five options deemed most viable.

While the cost of adding diesel-powered peaking power stations appears affordable on its build costs, its projected electricity generation cost of between $510 to $570 per MWh was by far the highest of all options.

MBIE described the fuel-switching option as both “scalable” and “impactful as [a] tool for reducing impacts on businesses/employment from declining gas”.

It warned elsewhere that “declining gas will see business closures” – a prediction subsequently borne out by a string of closures by firms using industrial quantities of gas, including Heinz Wattie, McCains and forestry processors.

Hood acknowledged that some industrial gas users could not switch to electricity.

However, the newly released analysis showed that “helping users who are able to switch from gas is the cheapest option and frees up gas for those unable to switch”.

Analysis by the Energy Efficiency and Conservation Authority and the Gas Industry Company also suggested that the 50/50 level of subsidy assumed in the MBIE analysis was higher than it needed to be.

If, as indicated, some 10PJs of gas could be freed up at a cost of $18 to $19GJ, “you wouldn’t need 50% government co-funding,” Hood said.