New Zealand's Geothermal Strategy: Doubling Energy Use by 2040

The Government of New Zealand has taken a significant step forward in its renewable energy journey with the release of the national geothermal strategy titled From the Ground Up

By:Robert Buluma

A strategy to unlock New Zealand’s geothermal potential on March 17, 2026. This comprehensive plan, developed by the Ministry of Business, Innovation and Employment (MBIE), aims to dramatically expand the role of geothermal energy in the country's energy mix, regional development, and industrial sectors. At its core is an ambitious target: to double geothermal energy use by 2040.

New Zealand is already a global leader in geothermal utilization. Geothermal resources currently supply around one-fifth of the nation's electricity, with installed capacity approaching or exceeding 1.3 GW in recent years. In 2024-2025 data, geothermal generation contributed roughly 8,741 GWh annually, representing about 18-20% of total electricity production. This makes it the second-largest renewable source after hydropower. Beyond electricity, direct use of geothermal heat—known as geoheat supports diverse applications in manufacturing, food processing, tourism (such as hot pools and spas), agriculture, horticulture, and even residential heating in geothermal areas like Rotorua and Taupō.

The strategy builds on this strong foundation, recognizing that New Zealand's unique geology in the Taupō Volcanic Zone offers vast untapped potential. While conventional geothermal plants tap into high-temperature reservoirs for power generation, emerging technologies promise even greater yields.

Why Double Geothermal Energy by 2040?

The ambition to double geothermal energy use addresses multiple national priorities. New Zealand faces growing electricity demand from population growth, electrification of transport and industry, and data centers seeking reliable, low-carbon power. Geothermal provides firm, baseload renewable energy with high capacity factors (often 85% or more), unlike variable sources like wind and solar.

Doubling use would enhance energy resilience by reducing reliance on imported fuels and weather-dependent renewables. It supports decarbonization goals, as geothermal is low-emission (especially with reinjection techniques minimizing CO₂ release). Economically, it promises regional growth in the Central North Island, creating jobs, attracting investment, and boosting exports. For Māori communities (tāngata whenua), it offers opportunities to leverage taonga (treasured resources) for economic empowerment while respecting cultural significance.

The strategy envisions New Zealand as a global leader in sustainable geothermal development, delivering innovation, resilience, and inclusive growth.

Key Focus Areas and Practical Actions

The final strategy, refined after public consultation on a 2025 draft, outlines practical steps across sever Bipartisan STEAM Act Set to Unlock America’s Geothermal Potential al pillars.

1. Modernizing Regulatory Settings

Outdated regulations have hindered development. The plan calls for clearer, fit-for-purpose rules under the Resource Management Act and other frameworks. This includes exploring zoning and spatial planning to coordinate geothermal activities, streamline consents, and balance environmental protection with investment. Updates aim to reduce barriers while maintaining sustainability.

2. Improving Access to Geothermal Data

Better data sharing is crucial for explorers and developers. The strategy emphasizes open access to geological, resource, and monitoring data from government agencies like GNS Science. Enhanced databases will lower exploration risks and attract more projects.

3. Reducing Early-Stage Risk for New Projects

High upfront costs and uncertainties deter investment. Actions include risk-reduction mechanisms, such as government support for exploration drilling, feasibility studies, or public-private partnerships. Recent examples include funding for superhot geothermal pilots, like the Rotokawa exploratory well.

4. Boosting Geoheat Uptake

Direct use of geothermal heat (geoheat) remains underutilized compared to electricity generation. Geoheat is cost-effective (often ~$10/GJ including carbon costs), reliable, and low-carbon—reducing emissions by 80-100% versus natural gas in suitable applications.

Industries like pulp and paper, timber processing, food drying, greenhouse horticulture, aquaculture, and dairy processing already benefit. Examples include Fonterra and Open Country sites achieving major GHG reductions.

The strategy promotes business adoption through information packages, incentives, and case studies to transition from fossil fuels.

5. Partnerships with Māori

A major enhancement post-consultation is stronger emphasis on working with Māori. Geothermal is recognized as taonga with deep cultural, spiritual, and environmental value. The strategy commits to genuine partnerships, incorporating mātauranga Māori (Māori knowledge), ensuring benefits flow to iwi and hapū, and respecting ongoing Waitangi Tribunal inquiries (e.g., Wai 2358 on freshwater and geothermal resources).

6. Emerging Technologies for the Future

The plan looks to innovations like supercritical geothermal (drilling 5-6 km deep to access fluids at >374°C and >220 bar), which could multiply energy output 5-10 times per well. Projects like Todd Energy's superdeep well (selected in March 2026) and others signal potential step-changes. Research into geothermal brine minerals extraction and extremophile microorganisms adds value beyond energy.

Broader Impacts and Opportunities

Implementing this strategy could transform regions like the Bay of Plenty and Waikato into hubs of clean energy and industry. It aligns with goals to double exports by supporting energy-intensive sectors with affordable, green power. For tourism, preserving iconic sites like geysers and hot springs while expanding sustainable uses is key.

Challenges remain: environmental monitoring to prevent subsidence or over-extraction, skilled workforce development, and grid integration for new generation. Yet, with New Zealand's expertise—dating back to the 1958 Wairakei plant (the world's second)—the country is well-positioned.

Recent developments underscore momentum. Mercury's $220 million Ngā Tamariki expansion (opened March 2026) adds capacity, while superhot pilots advance.

Conclusion: A Geothermal Renaissance for Aotearoa

From the Ground Up is more than policy—it's a roadmap to harness one of New Zealand's greatest natural advantages for a secure, prosperous, low-carbon future. By doubling geothermal use by 2040 through collaboration, innovation, and respect for cultural values, New Zealand can lead globally while powering its own growth.

This strategy positions geothermal not just as an energy source, but as a cornerstone of sustainable development. As the world seeks reliable renewables, New Zealand's geothermal story—from ancient taonga to future powerhouse—is one to watch.

Source: Ministry of Business

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