More than one in three New Zealand businesses have delayed expansion or lost contracts in the past year because of energy costs and supply uncertainty. That finding, from a Schneider Electric survey of around 300 business leaders, should end any remaining pretence that energy is a utilities issue. It is an economic capacity issue. Output that was never produced, jobs that were never created, tax revenue that was never collected.
Schneider Electric country president Oliver Hill put it directly: “It’s a real concern that organisations are just getting by rather than making investments which will make New Zealand more competitive as a country.”
Nearly half of surveyed firms warned of reduced profitability and rising operating costs if energy challenges persist. They will persist.
The government already has the number
The most damning part of this story is that Wellington cannot claim ignorance. A Sense Partners analysis commissioned by MBIE estimated that high electricity and gas prices between 2017 and 2025 left real GDP $5.2 billion lower than it would otherwise have been, a 1.25% hit. Real wages fell 1.4%. Employment dropped 0.5%. The trade balance worsened by $275 million.
The sectoral damage is concentrated where it hurts most. Primary metals GDP sat 15% below baseline by 2025, paper products 7% lower, chemicals 5% lower, dairy processing 1.3% lower. Wholesale electricity prices tell the trajectory: averaging $69/MWh from mid-2014 to mid-2018, doubling to $139/MWh, then climbing to $152/MWh since July 2022, with a spike to $468/MWh in August 2024.
Gas is the more urgent half
Electricity prices are chronic. Gas is acute. Domestic supply has fallen roughly 45% in six years, and Boston Consulting Group projects demand will exceed available gas by around 10 petajoules in 2026, doubling in 2027.
A BusinessNZ Energy Council survey of 66 large gas users found nearly half had already cut operations, raised prices, or shed staff. More than a third reported gas price increases of 20-50%, a quarter reported 50-100% increases, and half said they could absorb at most another 20% rise before their operations became unviable. Four out of five have contracts expiring by 2027 with no certainty of renewal.
BEC executive director Tina Schirr warned: “If we do nothing, a major deindustrialisation crisis could escalate in the next two years.”
SMEs have it worse and fewer options
Large firms at least have energy managers and procurement teams. Small businesses have neither. An Auckland Business Chamber survey found nearly 90% of SME respondents reported higher energy costs, with over 40% reporting large or very large increases. Their responses are textbook demand destruction: 52% raised prices, 25% cut production, 25% laid off staff, and nearly 20% cancelled investment.
A MYOB survey of 237 SME decision-makers found 55% were very or extremely concerned about fuel pricing and supply. EECA’s Richard Briggs acknowledged the structural disadvantage: “Many don’t have energy managers or the kinds of support bigger organisations rely on, which means they’re more exposed when costs rise.”
“Just switch to renewables” is not a plan
The reflex policy answer is electrification. The maths says otherwise. Of 55 large gas users surveyed by Optima, 28 believed they could replace gas within three years, but only with help on consents and capital, at a combined cost of $532 million. The other 23 said they needed up to 15 years. Telling a meat processor or infant formula manufacturer to “just electrify” by 2027 is not a strategy.
The silence that protects the status quo
Perhaps the most corrosive finding sits underneath the data. Auckland Business Chamber CEO Simon Bridges noted that many businesses are afraid to speak publicly for fear of jeopardising future energy contracts with gentailers who control roughly 85% of the retail market. That market concentration suppresses the political pressure that would normally force action. The people bearing the cost are keeping quiet, and the people who could fix it face less heat than the damage warrants.
More than 75% of SMEs believe the government should treat energy as a high or very high priority. The fix requires both more supply and more competition, not just efficiency brochures from EECA. Every quarter of inaction is another round of contracts lost, expansions shelved, and productive capacity that quietly leaves New Zealand for good.
Sources
- RNZ: Energy challenges hold back Kiwi firms’ expansion plans (2025)
- RNZ: Lost in transition – the businesses trapped by NZ’s energy crisis (2025)
- BusinessNZ Energy Council: Gas users warn of business closures, job losses and price increases (2025)
- Scoop: Businesses struggling to keep doors open as energy costs surge (2025-05)
- Building Today: NZ SMEs brace for impact – fuel shocks driving concern and action (2026-04)
- EECA: Industrial sector feeling stuck with expensive energy (2025)
- RNZ: Survey reveals businesses fear upsetting gentailers if they complain about high energy costs (2025)