Energy Costs

Cost Indicators and Energy Saving Information

In 1990 New Zealand consumer power prices were the eight lowest in the developed world. Over the next 20 years however, Kiwis experienced some of the largest world-wide price increases with the average electricity price increasing more than 15c per kilowatt hour - a huge increase when compared with major trading partners such as Australia (2c / kwh) and the United States (3c / kwh). By 2010 Australians were paying around 15c / kwh, USA 16c / kwh and New Zealand 23-25c / kwh. Since 2010 this trend has continued with prices continuing to rise.

In today's political environment the coming annual increases could be even higher. Now is a good time to consider how you will spend your money on energy over the next few years.

So, what energy source can you use?

There is a wide range of fuels available but which one is best? The truth is that there is no easy answer and a number of factors must be considered.

How efficient an energy source is depends on your homes design, location and siting; the insulation level, and for how long you operate your system.

Energy Operating Costs

How much the different energy sources cost to operate depends on the unit price at the time. Because this fluctuates continually we cannot provide you with exact figures. Below you will find tables with a range of prices within each energy type that will help you to compare how much that energy source costs compared to standard electricity.

A unit of energy is called a kilowatt (kw). All of the costs shown are given in cents per kilowatt and compare with standard electricity prices of 16.0 to 24.5 cents per kilowatt including GST (depending on the supplier and the time of year).

* The unit price on your electricity bill is exclusive of GST; so a 16 cent unit rate is actually 18 cents.


If your heat loading was 10 kw per hour, then standard electricity at 25.0 cents per kw = $2.50. However a quality 10 kw Air to Water Inverter Heat Pump average running only needs approx 2.38 kw* of electricity to provide the same 10 kw of heat output.

2.38 kw at 25.0 cents / kw = $0.60 cents - a saving of $1.90 for every hour of heating

Generally, the more economic a heat source is to operate the higher the capital cost will be.

Night rate electricity can be as low as 11.0 cents / kw resulting 2.62 cents per kw (= 1000 watts running for one hour).

* Toshiba - Efficiency of 3.80 at 7°C ambient temperature.


Very few heating systems are being installed with Coal boilers in 2016 due to public awareness of carbon and sulphur emmissions.

$ / tonne
c / kw
$ / tonne
c / kw
Ohai / Kai
$ / tonne
Ohai / Kai
c / kw
$190 3.46c $60 1.34c $125 2.51c
$200 3.65c $70 1.56c $135 2.71c
$210 3.83c $80 1.78c $145 2.91c
$220 4.02c $90 2.01c $155 3.11c
$230 4.20c $100 2.23c $165 3.31c

Based on boiler efficiency of 85%
Ohai = high heat, Kai = low to medium heat
Some boilers may not operate effectively on Kai coal alone.

Aerothermal Hot Water Heat Pump

The table below is based on normal electricity tariffs. When night rate tariffs are available a large portion of heating input can be achieved at a very low cost. For example: A Genesis Energy night rate tariff in Dunedin of 8.59* cents results in an operating cost of just 2.38 cents per kilowatt of heat output - cheaper than coal!

* (Dec 2010) Genesis rate includes GST and a 10% prompt payment discount.

It should also be noted that the figures below are based on the average performance at 7°C ambient air temperature (efficiencies of 350 to 400%). In practice, higher average efficiencies are being achieved than this, for two reasons.

  1. The physics of radiant floor heating. Once the thermal mass has been established in the floor slab, the amount of energy required to maintain the average temperature is reduced. This means that a lower demand is placed on the heat source. In practice, many heat pumps operate at around 30% of the peak loading for long periods of time, and this results in higher operating efficiency and lower operating costs.

  2. Most heat sources cannot reduce their rate of operation and so their operating efficiency remains relatively static. The inverter technology of heat pumps allows them to operate through a range of rates, for example a 16.0 kilowatt heat pump can vary the electrical input required to between 1.4 and 4.0 kilowatts - when there is less demand they use less electricity. When a heat pump is operating at around 30% of its standard rate, efficiencies can exceed 600%.

c / kw
Heat Pump (Inverter)
COP 4.2 @ 7°C c / kw
Heat Pump (Non-inverter)
COP 3.8 @ 7°C c / kw
16.0c 3.8c 4.0c
17.0c 4.0c 4.3c
18.0c 4.3c 4.5c
19.1c 4.5c 4.8c
20.2c 4.8c 5.0c
21.4c 5.0c 5.4c
22.5c 5.3c 5.6c
23.6c 5.6c 5.9c
25c 5.9c 6.2c


$ / litre
Standard Boiler
(Efficiency 82%) c / kw
Condensing Boiler
(Efficiency 98%) c / kw
$1.00 11.3c 7.6c
$1.10 12.5c 8.4c
$1.20 13.6c 9.1c
$1.30 14.7c 9.9c
$1.40 15.9c 10.6c
$1.50 17.0c 11.4c
$1.60 18.1c 12.2c
* Granada Wood Boilers with Diesel option operate as per standard boilers

Wood Pellets

20 kg sack of pallets (incl GST) in Dunedin as at Nov 2016 is $12.65 or $632 (incl GST) per tonne.

$ / tonne
Pellet Boiler
(Efficiency 85%)
$525 10.8c
$550 11.4c
$575 11.9c
$600 12.4c
$625 12.9c
$650 13.4c
Cost in Dunedin, Jan 09 - freight may result in higher costs in other areas of Otago and Southland

LPG (Gas)

LPG (Gas)
$ / kg
Standard Boiler
(Efficiency 88%) c / kw
Condensing Boiler
(Efficiency 98%) c / kw
$2.40 19.7c 17.6c
$2.50 20.5c 18.4c
$2.60 21.3c 19.1c
$2.70 22.1c 19.8c
$2.80 23.0c 20.6c
$2.90 23.8c 21.3c
Does not include $270 annual bottle hire charge

Pro's and Con's


Usually the most expensive form of energy available (along with bottled LPG Gas in the South Island). Prices have risen by 7% a year since 1985 and by 10% a year since 2003. It is very likely that this will rise to 12 - 15% annually within the next 3 years. Within our heating system types, apart from Gas, any other fuel will provide good savings (including air to water heat pumps).


Coal is a very cheap energy source. New burners now pass the national air emission standards but you still need to check with your local authority. Coal delivers high levels of heat but it is still dirty with dust and ash to deal with. Coal burning releases sulphur and provides a large carbon footprint. Requires a large storage bunker. Dry, quality coal with low dust levels is important. Be prepared to look after it - daily; you need to develop a good understanding of how they work and how to make minor but regular adjustments. You cannot leave them unattended for more than a day! Low operation cost will pay back capital outlay fairly quickly.


Even at today's prices (2016) this is moderately priced and is considered clean burning. Delivers high levels of heat and tank storage makes it easy to deal with. New condensing technology uses about 33% less fuel than conventional boilers meaning that diesel is still cheaper than wood pellets and usually incurs a lower capital cost. Even with increasing prices, diesel has maintained a consistent advantage over standard electricity.

Gas (bottled LPG)

When all costs are factored in Gas is around the same price as electricity and may in some cases be worse (with ongoing pressure on price). Gas may have some advantage in water heating when there are only two people with low water demand / use, but there are better ways. It still has aesthetic value for some people when used in a space heater.


Not allowed in Otago on land less than 2 ha for boiler applications. If buying wood, it's cheaper than pellets and diesel and/or it can take a lot of time to collect and handle. It is carbon neutral though and if you have a supply, our Granada boilers are efficient and effective. (These can also be fitted with a diesel gun for incidental operation from Spring to Autumn).


For boiler applications they are more expensive than they appear due to high freight rates (despite test results, the true cost is higher than diesel). This could get better if other manufacturers enter the market. They burn cleanly but can be a bit difficult to handle and the equipment can incur a high capital cost. Be prepared to look after it - daily; you need to develop a good understanding of how they work and how to make minor but regular adjustments. You cannot leave them unattended for more than a day! New Ecomax burner may offer an advantage to this fuel type and the burner head in the coal burner can be changed to accommodate pellets.

Heat Pumps

Operate at less than 1/4 the cost of electricity for floor heating, savings of approx 60% over electric heating (even better on night rate if available). They are clean and simple. They are prone to icing in cold conditions and this, along with medium heat intensity, means that for heated floor systems they must be sized properly and installed with an effective control system to work effectively - and it's easy to get it wrong! They are not suited to radiator systems unless the radiators are well oversized (around 180%) and that will make radiators a more expensive option compared with floors.

Energy Savings Advice

We use 60% of the energy for heating when it is the most expensive!

It is one of life's paradox's that to save money you have to spend it. Energy efficiency is achieved by spending money on the right technologies to ensure savings over the lifetime of the product. Air to air Heat Pumps are a good example. An average heat pump might cost $3,000 but if it has an efficiency of 3.00 then it will cost 66% less to provide the same heat as a standard electric heater. If the efficiency is 5.00 (as with some Panasonic and Toshiba models) then it will cost 80% less to provide the same heat. Over a 10 to 15 year machine life, It soon becomes obvious that spending $3,000 now will save a large amount of money over time.

Electricity has risen in price by an average of 7% a year since 1985 and by 10% a year since 2003. That means that $100 of electricity in 1985 now costs $502 and by 2015 it would cost $760! Given the huge cost of establishing new power generation and our need to meet Kyoto targets, it is not unreasonable to suggest that it could be even higher than this. Here are some tips about saving money spent on energy.

It's not about what you use - it's about what you lose!

Insulation - the first place to make energy savings is by being well insulated. The low level of insulation in New Zealand homes often shocks those from overseas. This is because up until now the cost of our energy has been low. Heat is lost through every surface in your home (including double glazed windows) and heat loss means that more must be delivered to the house.

Double glazing is an improvement but not a miracle cure!

Check out these insulation factors:

Standard insulated wall Between R 4.0 & R 6.0
Standard Single glazed windowR 0.17
Double-glazed / ArgonR 0.391.3 times better than single glazing
Double-glazed / Low-E glass / ArgonR 0.622.6 times better than single glazing
Well fitted Thermo-drapesR 1.759.3 times better than single glazing
  3.5 times better than double-argon
  2.0 times better than double-low E
Luxaflex Duet Standard Blind*R 2.6314.4 times better than single glazing
  5.7 times better than double-argon
  3.2 times better than double-low E
Luxaflex Duet Nightfall Blind*R 3.8421.6 times better than single glazing
  8.8 times better than double-argon
  5.2 times better than double-low E
* Duet blinds have a honeycomb construction providing an internal air barrier - when well fitted to a window the improvement in the R value is dramatic.


More efficient appliances use less energy but make sure you are comparing apples with apples. The Star Rating (1 to 6) indicates how much energy an appliance uses in a year with the higher the number of stars the lower the energy consumption. Be careful about cheap appliances that have low star ratings because over the life of the machine they will cost much more to operate (generally they are not as well engineered) and it's not too long before they ultimately cost more than the more expensive appliance.


Many people forget that how they live in their homes affects their energy use and wastage. When comparing your power bill to your neighbour you need to allow for your lifestyle factors. How hot do you like your house? What type of drapes and blinds do you have? When do you shut your drapes? Do you leave outside lights on at night? Do you have sensors on hallway lights? What is your level of insulation? There are many ways to save energy and every little bit helps.

The Right Source

Different energy sources have differing applications and efficiencies. Per unit, gas can be as expensive (or more) than electricity when all inputs are considered. Pellets seem cheap until freight costs are factored in (for boiler applications). Diesel and coal offer high intensity heat but can be smelly and dirty. Heat Pumps are less expensive to run but they only offer low intensity heat and may struggle in cold conditions. Solar systems are at their weakest in winter months. The wrong system for your application will cost you money, so getting the right system to achieve your goals is important.


If you take the time to research and plan then getting the right system is just like making a wise investment. Just as many people fail to realise the long term value of paying off a mortgage faster, they also forget that investment in efficient energy now reaps financial saving in the future. Remember the heat pump example above? Buying an efficient machine today could save up to 80% compared to the bill for standard appliances. What was your last winter power bill? Imagine if it was 80% lower - that could even be in the hundreds of dollars per month!

Please contact us about your building / heating project - we would be happy to offer our advice.

Servicing Otago, Southland & Canterbury























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