Wednesday, September 30, 2009

MED's new New Zealand's Energy Outlook

The Ministry of Economic Development have recently released their 2009 Energy Outlook and they have done a good job.

They have, sensibly, released a reference scenario which is a deliberately static analysis. This scenario uses the best trend information to extrapolate out a future scenario. It does not purport to be a forecast because it is not dynamic. However, it is every bit as useful as a forecast because it is the dynamic elements that forecasters rarely get right.

The MED then does a number of sensitivity scenarios around the reference, which helps give a feel for how things could go. These sensitivity scenarios are more useful than a necessarily opinionated dynamic forecast.

On the whole I think MED has done a good job of taking current trends and projecting them forward, especially as the economic recession has introduced a lot of uncertainty in how various aspects of the economy and energy demand might progress in future. They may have erred, slightly, to the politically acceptable in some areas where they had scope to flex the range of their forecasts. On the whole though, given that their reference scenario is also a statement on where current government policy will take us (all other things remaining static), been refreshingly honest.

My primary bugbear is with the categorisation of transport, although to be fair to MED they are using the accepted conventions. For some strange reason the world continues to view transport as an energy category in its own right. This is a pesonal gripe of mine. To me this would be like presenting the electrical losses of the national grid as an energy category in its own right. It implies that transport is an objective in its own right rather than being a derived demand based on residential, commercial or industrial imperatives.

The major misleading problem this casues in when we look at the energy usage categorisation around residential, commercial and industrial. Treating transport as a separate category makes residential enrgy use look like a small proportion of total demand, but most of the transport demand (the largest energy category) is residential demand. It also significantly increases the commercial category.

Generally, though, good job MED. The full report is available at


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