New Zealand has a highly renewable electricity system with more than 80% of our electricity generated from renewable sources. The majority comes from hydro and geothermal energy. However, wind and solar are gaining momentum. Generation capacity and the number of projects in the pipeline have grown rapidly in recent years.

New Zealand is recognised as having some of the best wind resources in the world, onshore and offshore, and is rich in development potential. Wind generation capacity has nearly doubled in the past five years, and ongoing advances in wind turbine technology are expected to further increase generation potential. 

Large-scale solar generation has also grown rapidly in recent years despite utility-scale solar farms being relatively new to New Zealand. Solar farms are proving to be a particularly attractive market for investors due to the relatively low cost to build and long expected operating life of around 30 years. 

Growing demand for renewable electricity, substantial untapped wind and solar potential, and New Zealand’s strong commitment to its sustainable energy goals are making the renewable energy market increasingly attractive to investors. At Baker Tilly Staples Rodway, we’ve seen an increased interest in the renewable energy sector from our clients and act for investors and developers involved in wind and solar projects.  

Historically, wind and solar growth have been slow due to a complex, lengthy and costly consent process. In recent years, the Government has introduced changes to the process and incentives aimed at supporting wind and solar infrastructure development. We outline below some of the key opportunities and pitfalls for investors and developers.

Opportunities in renewable energy

• Strong and growing demand for renewable energy, driven by increasing electricity consumption and New Zealand’s renewable energy goals. The industrial sector and an increase in electric vehicles are anticipated to drive increases in electricity demand. According to the Ministry of Business, Innovation and Employment (MBIE), onshore wind and solar are the most cost-effective ways to meet most future electricity demand.
• Attractive profitability potential, supported by favourable market conditions, long asset lifespans, and strong long‑term demand for renewable generation in New Zealand’s energy sector. Hydroelectricity generation is seasonal and there is an opportunity to take advantage of high electricity market prices during periods of low rainfall.
• Fast‑track consenting pathways for projects of national and regional significance, allowing multiple approvals to be obtained through a single application, thereby reducing development time frames and regulatory complexity.
• Robust government support, with new legislation expected to be enacted in 2026 aimed at simplifying the consent process and speeding up approvals. The Government is also committed to the ongoing Electrify NZ work programme that is designed to drive investment in renewable electricity generation.
• Tax policy changes designed to encourage overseas investment, including reforms to the thin capitalisation regime in relation to large infrastructure projects with effect from 1 April 2026, and the 2025 investment boost measure bringing in an upfront tax deduction of 20% of plant costs are making the sector more accessible and attractive to overseas investors.

Pitfalls to consider

• Complex project structuring considerations, particularly where projects are funded through a combination of overseas and New Zealand investors, requiring careful planning to manage tax, governance and funding outcomes. Engaging expert advice early helps ensure the optimal structure is established from the start. 
• Extended development timelines, with projects often subject to lengthy and complex approval processes under the current legislation, including resource consenting and Overseas Investment Office approvals, which can delay construction and revenue generation.
• Tax deductibility of expenditure, as companies in the initial feasibility stages and project companies may not be carrying on a business for tax purposes until sufficient activity has commenced. Care is required to ensure the correct distinction is made between capitalised and deductible expenditure.
• Depreciation challenges, including determining the relevant items of property and the timing of depreciation deductions across different asset types and components within wind and solar projects. This also includes assessing whether assets qualify for the investment boost (being an upfront 20% tax depreciation deduction).
• Loss carry‑forward limitations, as projects typically take time to become profitable and must meet shareholder continuity requirements or satisfy the same business test to utilise accumulated tax losses. 

If you are looking at entering the renewable energy sector or expanding your current operations, contact your local Baker Tilly Staples Rodway advisor for support with tax, accounting, audit, and due diligence services.