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Hot water heat pumps: the key to solving New Zealand’s energy Crisis

  • silvereyecomms
  • 5 hours ago
  • 3 min read

New Zealand is facing an energy crunch. The New Zealand Green Building Council (NZGBC) has warned that natural gas and LPG reserves are running out far faster than expected.

In 2023, New Zealand produced 155 petajoules (PJ) of natural gas. By 2024, production had already dropped to 125PJ. By 2035, it is expected to fall to just 36PJ - less than a quarter of today’s levels.


The NZGBC report highlights the risks this creates for households, businesses, and the wider economy. Higher prices, job losses, and reduced energy security are all on the horizon if nothing changes.


But there is a proven solution available right now: hot water heat pumps.


Why hot water heat pumps matter in New Zealand

Water heating is one of the biggest uses of energy in Kiwi homes and businesses. Many properties still rely on natural gas or LPG water heating, while others use old and inefficient electric cylinders.

The NZGBC report shows that switching these systems to energy-efficient hot water heat pumps is one of the fastest ways to cut demand for both gas and electricity - while also lowering household bills.


How much can New Zealand save by switching to hot water heat pumps?

According to EECA data quoted in the report:

  • 18PJ of gas and LPG is used each year in homes and commercial buildings for space and water heating.

  • Old-style electric hot water cylinders consume large amounts of power compared to modern alternatives.


By upgrading to heat pump water heaters, New Zealand could:

  • Save 18 to 48PJ of gas/LPG annually - equal to up to 38% of today’s gas supply.

  • Cut electricity demand by up to 4,000GWh per year.

  • Reduce household energy bills by as much as $1.5 billion annually.


Because hot water heat pumps are three to four times more efficient than traditional electric cylinders, they also ease pressure on the national grid - especially during winter peaks.


Benefits beyond lower power bills

The report notes that reducing household and commercial gas demand has wider benefits. By switching to hot water heat pumps, New Zealand can:

  • Free up more gas for manufacturers and food processors who need longer to transition.

  • Protect jobs in industries that risk shutting down due to fuel shortages.

  • Reduce carbon emissions, moving closer to climate targets.


NZGBC recommendations for government and industry

The Energy Crunch report includes several key recommendations:

  1. Government subsidies for hot water heat pumps - following successful examples in Canada, the US, and Australia.

  2. Ban new gas hot water systems at end-of-life, replacing them with efficient electric options.

  3. Expand Warmer Kiwi Homes grants to include hot water heat pumps.

  4. Offer low-interest finance so upfront costs aren’t a barrier.

  5. Mandate all-electric new builds with efficient heating and hot water included.


Conclusion: hot water heat pumps are the smart choice for New Zealand homes

The NZGBC report makes it clear: every new gas water heater installed today locks households into a fuel source that is running out and becoming more expensive.

Switching to hot water heat pumps is one of the fastest, most impactful actions New Zealand can take to cut bills, protect industry, and prepare for a cleaner energy future.

This blog is a summary of the NZGBC’s August 2024 Energy Crunch Report. For full details, visit the NZGBC website.

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