Net energy consumption

IBISWorld forecasts net energy consumption to rise by 0.3% in 2026-27, to 518.5 petajoules of consumption. This marks a small rebound from 2025-26 consumption, where net energy consumption fell to the lowest level since 2011-12. Stable population growth and an increase in households are expected to drive up retail electricity demand, particularly during the colder winter months. Motor vehicle numbers are also expected to increase, pushing up oil-driven energy consumption. New Zealand's GDP is also forecast to expand in 2026-27, with increased domestic output likely to require heightened energy usage, particularly among energy-intensive manufacturers, further influencing the expected growth trend in net energy consumption.

Net energy consumption is strongly correlated with economic activity, due to the widespread use of energy across most industry processes. Prior to the pandemic, total energy consumption had increased over most of the 2010s, following on from the long run trend dating back to before the 1990s, as population growth necessitated expansions in energy supply. Significant technological advancements over this period also led to higher energy requirements in New Zealand. As a developed nation, New Zealand has high energy consumption per capita due to the prevalence of car ownership and common domestic usage of electric appliances. However, net energy consumption per capita has trended downwards over the past decade, from 118.6 gigajoules per capita in 2015-16 to an estimated 94.3 gigajoules per capita in 2026-27. This decline in per capita terms has occurred due to rising energy efficiency in New Zealand. Heightened efficiency has been driven by manufacturers' development and households' investment in energy-efficient appliances and the implementation of waste heat capture systems in industrial processes.

Net energy consumption strongly declined in 2020-21 due to subdued economic activity caused by the COVID-19 pandemic. Demand from the industrial sector fell sharply at the height of the pandemic, largely due to the temporary closure of factories, while travel bans, lockdowns and border closures also contributed to falling demand. Subdued population growth over the two years through 2021-22, due to migration losses also dampened residential electricity demand. Despite a resumption of relative normality in 2022-23, net energy consumption fell marginally over the year. This was caused by a 1.7% decline in energy consumption by the industry sector, which accounts for over 30.0% of total final energy consumption in New Zealand. This trend was driven by a significant drop in natural gas usage over the year. The residential sector also saw energy usage decline in 2022-23. However, industrial and residential energy consumption declines were largely offset by a 2.3% increase in oil consumption by the domestic transport sector, as domestic aviation, water and land transport activity all increased compared to 2021-22. In 2023-24, the residential sector surpassed the industrial sector as the largest consumer of electricity in New Zealand due to continued population growth and the continued steady decline in industrial consumption. An increase in residential natural gas consumption also contributed to an overall expansion in net energy consumption in 2023-24. In 2024-25, net energy consumption fell by 3.1%, making it the second-largest annual drop in energy consumption since the 1990s, trailing only the pandemic-impacted 2020-21 decline. The decline was driven by a significant downtick in Industrial consumption, where natural gas consumption dropped by 19.8%, coal was down 18.7% and electricity consumption fell 5.1%. A large driver of this fall was a voluntary reduction in consumption from New Zealand's aluminium smelters, in order to free up the electricity market from the burdens of tight supply. In 2025-26, energy consumption continued to trend downwards, as declining natural gas reserves and high oil prices kept demand contained. Coal consumption also fell significantly throughout 2025-26, marking the continuation of ongoing structural fuel switching towards renewables.

Multiple large energy users have entered the economy in recent years. Microsoft's three-facility data centre opened on Auckland's North Shore in December 2024, while Amazon and DCI also opened data centres during 2025-26. Data centres require immense amounts of electricity to operate, placing upward pressure on energy consumption. However, most of this energy has been supplied by renewable sources, as these major energy users look to minimise their carbon footprint to maintain investor relations. Overall, IBISWorld forecasts net energy consumption to decrease at a compound annual rate of 1.0% over the five years through 2026-27.