John Denton: Think Big 2

“We’ve golden soil and wealth for toil”, is the anthem of Australia, that modern day El Dorado, as it sings its siren song to Kiwi youth and talent.

Built on the wealth from its twin endowments of agricultural and pastoral space dozens of times larger than that of NZ, and a mineral/energy abundance where one year’s exports exceed NZ’s total GDP from all sources, how can New Zealand ever compete?

Of course, we too are blessed with mineral wealth in the form of gold, bituminous coking coal, and a sea floor strewn with iron sands, phosphates, manganese and sulphide deposits, but, unlike Australia, we lack the political will to properly exploit this bounty.

Despite the best efforts of politicians like Shane Jones to promote overseas investment in our extractive potential, these attempts are regularly thwarted by others like Marama Davidson, commenting as she did in November 2025, that a future Green Government “would revoke fast-track consents or permits granted for:

• coal mining
• hard-rock gold mining
• seabed mining

And her co-conspirator Chloe Swarbrick’s pledge to “to revoke oil and gas permits granted under the present government.”

And so mineral wealth of a value approaching NZ$50 Billion ⁽¹⁾ remains for the most part locked away.

 

However there is one area in which we are world leaders and about which even the environmentalists can’t complain too much, sheltering, as it does, under the sacred korowai of “renewable”, and that is the opportunity for incremental hydro and geothermal power generation. 

 

In NZ, and spread between the water catchments of the South Island⁽²⁾ and the Taupo geothermal area^(3), lies the immediate potential for incremental power generation of 10 to 15 Terawatt hours or more per year.

 

In the future, deep drilling access to superhot/supercritical geothermal activity could offer power generation opportunities that are orders of magnitude greater, but here we are concerned only with what is currently available.

 

And the 10 to 15 Twh immediately on offer is enough to power another Auckland one and a half times over, or, if applied to Datacentre build, to make NZ a major player in AI infrastructure across the Asia Pacific region, supporting as many as fifteen new 100MW hyperscale data centres up and down the country. 

 

Across the AI universe it is increasingly acknowledged that it’s not a scarcity of physical chips, or the capacity to hyperscale compute, it is power alone that is the key constraint to unlimited expansion.

We have that power as yet untapped and we could be world leaders in its application, but to access it we need ‘Think Big’ in its second iteration.

 

But can we afford it? Currently Crown Debt sits at NZ$220 Billion, compared to the ballpark cost of developing all of the untapped potential power listed above at approximately $20⁽⁴⁾ Billion, or 4% to 5% of current GDP.

 

With NZ’s current debt to GDP ratio of 56.7%, only half of the OECD average, and even less than half of that of The USA or Japan, we would seem to have ample opportunity to fund such new developments without driving the country into bankruptcy.

 

To add further perspective, we currently spend around NZ$54 Billion per year on welfare payments and pensions, neither of which could be termed productive investments. 

 

Compared with the proposed hydro-and-geothermal development cost of NZ$20 Billion, this entire incremental energy programme would cost only four months of total welfare and pension expenditure.

 

Not keen on DataCentres? Alternatively there is much to support the idea that an abundance of energy is a public good regardless.

From Thomas Eddison’s comment in 1916 “We will make electric light so cheap that only the wealthy can afford to burn candles.” To Nicola Tesla’s mantra “With every form of energy obtained from the store forever inexhaustible, humanity will advance with giant strides.”

It is true to say that cheap and abundant electricity is not merely another product of a prosperous economy; it is the principal driver of that prosperity.

In the domestic situation⁽⁵⁾ cheaper electricity could save an electrified household several thousand dollars a year; by replacing a petrol car to save roughly $2,500–$3,200 annually in running cost, with cheaper household electricity adding another $500–$900 in savings each year.

At the national level an excess of power would allow NZ to export that same abundant electricity, embodied in the production of aluminium, AI computation, processed minerals, food and manufactured goods, instead of, as we currently do, importing expensive fossil fuels just to keep the lights on.

The key questions are not ‘can we do it?’ or ‘shall we do it?’ But ’why not?’ Every other country exploits its natural resources so why should NZ not do the same?.

 

Instead of wasting our time in endless debates about the best way to redistribute portions of a gradually decreasing economic pie, we could bake an entirely new one instead.

 

Which leads back to the need for this investment in our future, if the requirement is to keep our best and brightest onshore, then the justification for all of it is simply ‘If we build it they will come’.

 

Or even more importantly, they won’t go, to Australia or anywhere else, in the first place.

 

Footnotes:-

(1)   A reasonable estimate is that the major fast-track mineral projects explicitly targeted for obstruction/closure by the Greens represented about NZ$20–30 billions of potentially saleable minerals, rising to roughly NZ$35–50 billion if the now-withdrawn Taranaki seabed-mining project is included.

Project	Estimated mineral quantity	Approximate gross value
Waihi North gold and silver	Around 1.6–1.7 million oz gold, plus silver	NZ$6–9 billion
Bendigo–Ophir gold, Central Otago	2.337 million oz total resource; mine plan produces about 1.25 million oz	NZ$7–13 billion
Buller Plateaux coal	Approximately 20 million tonnes of export coking coal	NZ$5–8 billion
Taranaki seabed iron sands	Up to 100 million tonnes of vanadium-rich concentrate over 20 years	NZ$15–23 billion
Indicative total	—	NZ$33–53 billion

 

(2)   With determined political support, the South Island could probably add 5–7 TWh of major hydro generation annually—roughly another 12–16% of New Zealand’s present electricity supply. A theoretical maximum approaching 10 TWh exists.

The most credible large additions are a revised Waitaki ‘Project Aqua’ development, one further Clutha station, and selected West Coast and Marlborough schemes.

(3)   The wider Taupō Volcanic Zone probably has 500–900 MW of additional conventional geothermal generation potential using existing technology. At high geothermal operating rates, that could produce roughly 4–7 TWh a year, equal to about 9–16% of New Zealand’s present electricity supply.

This potential would come from:

• expanding established fields;
• developing lightly used geothermal systems;
• replacing older plants with more efficient technology; and
• extracting more energy from existing geothermal fluid.

 

(4)   Incremental South Island hydro: build cost approximately NZ$8–13 billion

A reasonable modern cost allowance for the principal schemes is:

Hydro development	Likely present-day cost
Revised Project Aqua or comparable lower-Waitaki scheme	NZ$3.5–5.0b
One major lower-Clutha development	NZ$2.0–3.5b
Mōkihinui	NZ$0.8–1.3b
Wairau Valley	NZ$0.5–0.9b
Waitaha	NZ$0.16–0.20b
Smaller schemes and existing-station upgrades	NZ$0.8–1.5b

Incremental geothermal: build cost approximately NZ$3–6 billion

Recent New Zealand projects allows for even firmer cost evidence:

• Tauhara: NZ$924 million for 174 MW — NZ$5.3m per MW
• Te Mihi Stage 2: NZ$712 million for 101 MW — NZ$7.0m per MW
• Ngā Tamariki expansion: approximately NZ$220–267 million for 46–55 MW — around NZ$4–6m per MW. 

Applying roughly NZ$5–7 million per MW to the estimated 500–900 MW of additional conventional Taupō Volcanic Zone potential gives:

Geothermal development	Estimated cost
500 MW lower case	NZ$2.5–3.5b
700 MW central case	NZ$3.5–4.9b
900 MW upper case	NZ$4.5–6.3b
A programme exploiting the practical South Island hydro and conventional Taupō geothermal opportunities would probably require NZ$13–23 billion, with NZ$20 billion a defensible central estimate. It could add up to 15 TWH annually—enough to supply present-day Auckland plus 50%. (5)        The vehicle saving comes mainly from replacing expensive imported petrol with much cheaper electricity. At about $3.00/litre, a petrol car using 8 L/100 km costs roughly 24 cents/km in fuel; over 15,000 km that is about $3,600 a year.  A typical EV using around 18 kWh/100 km would need about 2,700 kWh for the same distance. Even at today’s roughly 42c/kWh average residential price, that is only about $1,130 a year; with abundant electricity and cheap overnight charging at, say, 15–20c/kWh, it falls to roughly $400–$540.  So the same 15,000 km of driving could fall from roughly $3,600 in petrol to $400–$1,100 in electricity—a saving of about $2,500–$3,200 per vehicle per year. There are additional savings because EVs generally need less routine servicing—no engine oil, spark plugs or exhaust system—but the big gain is simply that an electric motor converts relatively cheap domestic electricity into movement far more efficiently than an internal-combustion engine converts imported petrol Domestic savings. Take a household now spending about $3,000 a year on electricity. If abundant generation ultimately reduced the total retail bill by 20–30%, that household would save about $600–$900 a year.  Recent NZ experience shows why abundance matters: when renewable supply became plentiful in late 2025, average wholesale prices fell from more than $280/MWh to around $30/MWh within two months.  John Denton, a retired Australasian Marketing Director of an American multinational, now pursues the hobby of addressing ill-informed opinions with hard facts.