The Winter Energy Payment and Its Limitations
As New Zealand moves into the colder months of the year, over a million Kiwis have started receiving government-funded top-ups to help with their power bills. This initiative, known as the Winter Energy Payment, was introduced in 2018 to assist pensioners, beneficiaries, and others on fixed incomes with heating costs. However, it has also sparked debate about who should receive it and whether it should be more targeted.
Student associations have suggested extending the payment to tertiary students, an idea supported by research that highlights a clear need for such support. Meanwhile, groups like Share My Super have urged wealthier superannuitants to donate their payments to help children in poverty. Despite these proposals, there remains a larger issue: the pressures the Winter Energy Payment was designed to ease have continued to grow, driven by rising energy prices and a worsening cost-of-living crisis.
The payment has not kept up with the increasing energy costs, making it less effective than intended. Today, nearly one-third of New Zealand households experience energy hardship, with serious consequences for health and wellbeing. Cold, damp, and mouldy housing alone costs the country over NZ$38 million each year in hospitalisations.
Adding to this challenge are the knock-on effects of the Iran war on local fuel, power, and grocery bills. As things stand, the Winter Energy Payment will continue to be a temporary solution that buys less warmth each year. This underscores the need for longer-term solutions that permanently reduce household exposure to high power prices while addressing New Zealand’s energy “trilemma” of security, affordability, and sustainability.
What Works – and What Doesn’t
New Zealand already has several initiatives that demonstrate what more structural solutions can achieve. Successive government-funded insulation retrofit programmes have been very cost-effective, delivering subsidised insulation to over 385,000 homes since 2009 and providing $4.40 worth of benefits for every dollar spent.
The Healthy Homes Initiative has also delivered strong results. The programme supports households with children hospitalised for housing-related illness, connecting them with insulation, income support, energy advice, and practical low-cost measures such as draught stopping. Evaluations show it has reduced hospitalisations by 19%.
The Healthy Homes standards have pushed landlords to improve rental properties, while stronger Building Code requirements are helping newer homes use less energy. While education programmes encouraging people to use less electricity can help, they only go so far. People on very tight budgets already know what drives their power bills.
For those who can’t shop around for better prices because they are locked into contracts or use prepay electricity due to a poor credit history, “choosing” to use heating isn’t possible without support to buy more power. This is where the Winter Energy Payment helps those who are eligible. It reduces bill stress, supports heating use, and as one participant in our research put it, suggests that “somebody cares.”
Yet, as the payment buys less warmth each winter, vulnerable households can be forced to choose between heating and eating. Those we surveyed described constant stress, anxiety, and worry around bills – patterns echoed in other studies. This illustrates why scrapping the scheme would hurt many. At the same time, it’s questionable that taxpayers should accept a policy that delivers diminishing returns each year.
A Solar Solution?
What New Zealand lacks in this policy area is an “off-ramp”: a way to permanently reduce household exposure to rising electricity costs. Research suggests that household solar – rooftop panels that allow homes to generate their own electricity – is one of the few options that can achieve this.
Over recent times, its upfront cost has fallen sharply. Analysis from the non-profit group Rewiring Aotearoa indicates that installing solar could save the average household over $2000 each year on power bills, equating to around $65,000 over standard system lifetimes.
And by generating electricity closer to where it is used, household solar might help tackle each side of the energy trilemma – improving affordability, sustainability, and energy security at the same time.
At a system level, widespread household solar would reduce pressure on hydro and thermal generation, helping keep hydro storage available for peak demand periods and dry winters. This would free up more gas and diesel for industries and machinery that are harder to electrify, rather than relying on them to meet everyday household demand. Solar could also improve resilience during extreme weather outages, with broader economic benefits.
For these reasons, a government-funded household solar package would arguably make strong economic sense. By lowering power bills over the long term and making healthy indoor temperatures more affordable year-round, it could reduce pressure on hospitals, improve household resilience, and help break the cycle of recurring winter support.
Rather than being viewed as a luxury policy, supporting low-income households to install solar could make for a practical investment that eases energy hardship and strengthens energy resilience.
The Winter Energy Payment will still be needed for many households in the years ahead. But, as global instability increasingly feeds into local energy costs, there is a case for policies that reduce reliance on annual bill support and bring household electricity costs down.
Kimberley O’Sullivan receives funding from a Rutherford Discovery Fellowship administered by Royal Society Te Apārangi, and also contributes to a research programme funded by the Ministry of Business, Innovation, and Employment. She has previously received funding from the Health Research Council, Lotteries Health Research, and the Marsden Fund.
