Renewable energy offers several important advantages, including lower greenhouse gas emissions from electricity generation, naturally replenished energy resources, greater energy security, reduced exposure to fuel-price volatility, and potential economic and public-health benefits. It can also contribute to a more diverse and resilient electricity system when supported by suitable infrastructure and planning.
However, renewable energy is not impact-free, automatically cheaper, or reliable in every situation. Solar and wind generation can vary with weather and time of day, while renewable projects may require significant investment in generation, transmission, storage or other forms of flexibility. Environmental impacts also differ between technologies and locations.
For New Zealand, these advantages and trade-offs are particularly relevant. Hydro, geothermal, wind and solar all contribute to the country’s renewable electricity supply, but factors such as water availability, transmission, changing demand and system flexibility also affect how reliably that electricity can be delivered.
This guide explains the key advantages of renewable energy, the challenges to consider, and what they mean in the New Zealand context.
What Is Renewable Energy?
Renewable energy is energy from sources that are naturally replenished. These include sunlight, wind, flowing water, geothermal heat from within the Earth, and some forms of bioenergy.
Renewable energy can be used to generate electricity, provide heat, or fuel certain processes and transport. The technologies work in different ways: solar panels convert sunlight into electricity, wind turbines use moving air to generate power, hydroelectric plants use flowing or stored water, and geothermal systems draw on heat from underground.
Renewable does not mean impact-free. Projects still require materials, land or water, and infrastructure, and their environmental effects depend on the technology and location. This distinction matters when comparing the benefits of different renewable energy sources.
7 Advantages of Renewable Energy
Renewable energy can provide environmental, economic and energy-system benefits, but the scale of those benefits depends on the technology, location and wider electricity system. The main advantages include lower greenhouse gas emissions, naturally replenished energy resources, greater energy security, reduced exposure to fuel-price volatility, economic activity, cleaner air and a more diverse energy system.
The seven advantages below explain what these benefits mean in practice, while also noting the important limitations and trade-offs that can affect them.
1. Renewable Energy Can Help Cut Greenhouse Gas Emissions
One of the main advantages of renewable energy is its potential to reduce greenhouse gas emissions from energy generation. Unlike fossil fuels such as coal, oil and natural gas, renewable sources such as wind, solar, hydro and geothermal do not require the ongoing combustion of fossil fuels to generate electricity.
This can reduce emissions associated with electricity generation, particularly when renewable generation replaces higher-emitting fossil-fuel generation. The size of the reduction depends on the renewable technology, what it replaces and the emissions associated with building and operating the project.
Renewable energy is not completely impact-free. Manufacturing equipment, constructing infrastructure and transporting materials can produce emissions, so the relevant comparison is generally the emissions over the technology’s life cycle rather than assuming zero emissions at every stage.
For this reason, renewable energy is best understood as a way to reduce the emissions intensity of energy systems, rather than as a completely emissions-free solution.
2. Renewable Energy Sources Are Naturally Replenished
Renewable energy comes from sources that are naturally replenished, such as sunlight, wind, flowing water and geothermal heat. Unlike fossil fuels, these resources are not depleted through use in the same way finite coal, oil and natural gas reserves are.
This provides a long-term advantage because renewable energy does not depend on continually extracting a finite fuel supply. However, renewable does not mean that energy is available at all times. Solar and wind generation, for example, vary with weather and time of day, while hydro generation can be affected by water availability.
The key advantage is that the underlying energy sources are naturally replenished, while the amount and timing of energy available still depend on the resource and technology.
3. Renewable Energy Can Strengthen Energy Security
A country’s energy supply is more secure when it can draw on a range of energy sources rather than relying heavily on one fuel or a small number of suppliers. Renewable resources such as wind, sunlight, hydro and geothermal heat can help diversify the energy mix and reduce exposure to disruptions in imported fuel supplies.
This is particularly relevant for New Zealand, where locally available renewable resources already contribute significantly to electricity generation. Using a broader mix of sources can help reduce some fuel-supply risks, although it does not remove every vulnerability. Renewable generation still depends on weather, resource availability, grid infrastructure and how well supply matches demand.
The key benefit is diversification. Renewable energy can reduce dependence on particular fuels or suppliers, but energy security still requires reliable infrastructure, careful planning and enough flexibility to balance changes in supply and demand.
4. Renewable energy can offer more predictable generation costs over time
Wind and solar power do not require fuel to generate electricity, so their operating costs are less exposed to swings in coal or gas prices. Once a project is built, this can make the cost of producing electricity more predictable over time.
That predictability can be valuable for energy planners and businesses making long-term decisions. However, it does not guarantee lower electricity bills. Projects still involve construction, financing, maintenance and grid-connection costs. Depending on when and where electricity is generated, the system may also need transmission upgrades, flexible demand or energy storage.
The benefit is therefore not that renewable energy is always the cheapest option. It is that some renewable technologies can reduce exposure to fuel-price volatility, while their overall cost depends on the project and the wider electricity system.
5. Renewable energy can support jobs and local economic activity
Renewable energy projects need people at every stage from planning and engineering to construction, installation, maintenance and operation. They can also create work for local suppliers and service businesses, particularly when projects use local skills and contractors.
For communities, a project may bring new employment and business opportunities. The scale of that benefit depends on the project’s size, how long construction lasts, and how much work and spending stays in the region. Some roles are temporary, while operations and maintenance can provide longer-term work.
The strongest claim is not that every renewable energy project creates the same economic benefit. It is that well-planned projects can support employment and local activity, especially when communities have opportunities to take part.
6. Renewable energy can reduce some air pollution and water use
Generating electricity from wind and solar does not involve burning fuel, so it can avoid the air pollution produced by fossil-fuel power stations during operation. This can benefit communities when renewable generation displaces electricity from more polluting sources.
Some renewable technologies also use relatively little water while generating electricity. Wind and solar photovoltaic systems, for example, generally need much less water for operation than many thermal power plants, which use water for cooling.
These benefits vary by technology. Hydroelectric projects can change river ecosystems, while geothermal and bioenergy systems have their own emissions, water and land-use considerations. The more accurate point is that some renewable energy options can reduce particular forms of pollution and water use—not that all renewable projects have no environmental impact.
7. Renewable energy can support a more resilient energy system
A resilient energy system can keep supplying electricity when demand changes or parts of the system are disrupted. Renewable energy can contribute by diversifying where electricity comes from for example, by combining hydro, geothermal, wind and solar rather than relying on a single source.
But adding renewable generation alone does not guarantee reliability. Wind and solar output varies with weather and time of day, and hydroelectric output can be affected by water availability. A reliable system also needs well-planned networks, flexible demand, dependable generation and, where suitable, energy storage.
Storage can help shift electricity from times of higher production to times when it is needed. The right solution depends on the duration of the gap, cost and system requirements. Learn more about how energy storage supports renewable energy integration.
The benefit is a more diverse and flexible energy mix when renewable generation is supported by the infrastructure and planning needed to keep supply aligned with demand.
What Are the Disadvantages and Challenges of Renewable Energy?
Renewable energy has important advantages, but it also comes with technical, financial and environmental challenges. These challenges vary depending on the technology, location and wider energy system. Understanding them is important because renewable generation does not automatically solve issues such as reliability, affordability or environmental impact.
Variable Generation Can Affect Electricity Supply
Some renewable sources, particularly solar and wind, do not produce electricity at a constant rate. Solar generation changes with daylight and weather conditions, while wind generation varies with wind speed.
This does not mean renewable electricity is inherently unreliable. It means the electricity system needs enough flexibility to balance changes in generation and demand. Depending on the system, this can involve a combination of different generation sources, stronger transmission networks, demand management, forecasting and energy storage.
Hydro and geothermal generation have different operating characteristics, so the challenges are not the same across all renewable technologies.
Renewable Projects Can Require Significant Upfront Investment
Building renewable generation can require substantial upfront investment in equipment, construction, grid connections and other infrastructure. Large projects may also require new or upgraded transmission infrastructure to deliver electricity from generation sites to where it is needed.
These costs need to be considered alongside the longer-term operating characteristics of the project. A renewable energy project may have relatively low fuel costs once operational, but that does not mean every project will produce electricity at the same overall cost.
Financing conditions, project location, technology, connection requirements and the wider electricity system can all affect the economics.
Renewable Energy Projects Can Have Environmental and Land-Use Impacts
Renewable energy generally has lower operational emissions than fossil-fuel generation, but renewable projects are not impact-free.
Large projects can require land and infrastructure, and their effects can include changes to habitats, landscapes, waterways or local ecosystems. The nature and scale of these impacts depend heavily on the technology and location.
For example, hydroelectric projects can affect river systems, while wind and solar projects have different land-use and ecological considerations. Manufacturing renewable-energy equipment also requires materials and energy, which means environmental impacts should be considered across the project’s life cycle rather than only during electricity generation.
Energy Storage and Other Flexibility May Be Needed
When renewable generation varies, the electricity system needs ways to maintain the balance between supply and demand. Energy storage can help by shifting electricity from periods of higher generation to periods when it is needed later.
However, storage is only one part of the solution. Transmission, flexible demand, different types of generation and improved forecasting can also contribute to system flexibility.
The appropriate combination depends on the characteristics of the electricity system, the renewable technologies being used and when electricity demand occurs.
Different Renewable Technologies Have Different Trade-Offs
“Renewable energy” describes a broad group of technologies rather than a single type of energy generation. Solar, wind, hydro, geothermal and bioenergy have different resource requirements, costs, environmental effects and operating characteristics.
As a result, there is no single set of advantages or disadvantages that applies equally to every renewable-energy project. Assessing a project requires considering the available resource, location, infrastructure, environmental effects, costs and the needs of the wider energy system.
The most useful comparison is therefore not simply renewable versus non-renewable energy, but which technology is appropriate for a particular location and energy need.
What Do the Benefits of Renewable Energy Mean for New Zealand?
New Zealand already generates most of its electricity from renewable sources. In 2025, 88.5% of electricity generated in New Zealand came from renewable sources, the highest annual share since 1981. Hydro remains a major source of electricity, alongside geothermal, wind and the growing contribution from solar.
However, this figure refers specifically to electricity generation, not total energy use. Renewable energy accounted for 47.7% of New Zealand’s total primary energy supply in 2025, which includes energy used across the wider economy.
New Zealand Has a Diverse Renewable Electricity Mix
New Zealand benefits from having several renewable electricity sources with different operating characteristics:
- Hydro: Hydroelectric generation has been a major part of New Zealand’s electricity system for more than a century and continues to provide a large share of generation.
- Geothermal: Geothermal plants provide a relatively consistent source of electricity and reached record generation in 2025.
- Wind: Wind generation has grown over time and provides another renewable source that does not depend on hydro inflows.
- Solar: Solar remains a smaller part of the overall electricity mix but is growing rapidly, with generation reaching a record level in 2025.
Having several renewable sources can help diversify the electricity system because different technologies respond differently to weather and resource conditions.
Dry Years Can Put Pressure on Hydro Generation
New Zealand’s reliance on hydro also creates a particular challenge: hydro generation depends on water availability. In 2024, low hydro inflows contributed to lower hydro generation and greater reliance on non-renewable generation. At the same time, additional wind, geothermal and solar capacity helped support the electricity system.
This shows why a high renewable share does not remove the need for flexibility. The system still needs to manage periods when some renewable sources produce less electricity than usual.
More Renewable Generation Requires System Flexibility
As the electricity mix includes more variable sources such as wind and solar, the system needs ways to balance changes in generation and demand. This can involve hydro resources, transmission infrastructure, flexible generation, demand management, forecasting and energy storage.
Energy storage can help by storing electricity when supply is available and releasing it when it is needed. However, storage is only one part of a flexible electricity system. The right combination of solutions depends on the timing of demand, available generation and the characteristics of the wider grid.
Renewable Electricity Is Not the Same as Renewable Energy Use
New Zealand’s high share of renewable electricity should not be interpreted as meaning that the country’s entire energy system is renewable. Electricity is only one part of total energy use, with transport, industry and other activities also contributing to overall energy demand.
In 2025, renewable energy accounted for 47.7% of total primary energy supply, showing that non-renewable energy sources still played a significant role across the wider energy system.
For New Zealand, the opportunity is therefore broader than simply increasing renewable electricity generation. The benefits of renewable energy also depend on how effectively the country can use its renewable resources while maintaining a reliable, flexible and well-connected energy system.
How Does Energy Storage Support Renewable Energy?
Renewable sources do not always generate electricity at the time people need it. Solar panels produce most of their power during daylight, while wind generation changes with wind conditions. Energy storage can help bridge that timing gap by storing electricity when supply is available and releasing it later.
Storage is one part of a wider set of tools for balancing the electricity system. Transmission can move electricity between regions, flexible demand can shift when some activities use power, and different generation sources can complement one another. The International Energy Agency’s electricity analysis discusses the importance of flexibility as electricity systems change. Each option addresses different needs.
The right storage technology depends on how much power is needed, how long it must be delivered, how often it will cycle, and the project’s costs and site requirements. Batteries can suit some applications, while other storage approaches may be better for longer-duration needs.
Storage does not generate energy or remove every reliability challenge. Its role is to help match electricity supply with demand as part of a well-planned energy system.
How to Assess Whether Renewable Energy Is Right for a Project
Renewable energy can offer significant benefits, but whether a particular option is right for a home, business or community depends on its needs and circumstances. The most useful approach is to assess the full system, not just the energy source.
Consider these questions:
- Which energy source suits the location? Sunlight, wind, water and geothermal resources vary by site.
- When is energy needed? Compare the timing of demand with when the system is likely to generate electricity.
- What will the whole project cost? Include equipment, installation, maintenance, grid connection and any supporting infrastructure.
- What are the environmental and local impacts? Consider land, water, materials, habitats and nearby communities.
- What support will the system need? Depending on the situation, this may include grid upgrades, flexible demand, backup generation or energy storage.
There is no single renewable technology that fits every situation. A good decision weighs the expected benefits against the practical constraints and chooses an approach suited to the location, energy needs and long-term goals.
Conclusion
Renewable energy can bring important environmental, economic and energy-security benefits. It can reduce emissions, make greater use of naturally replenished resources, and diversify how electricity is generated. But those benefits depend on the technology, location and wider energy system.
For New Zealand, the opportunity is not simply to generate more renewable electricity. It is to plan and connect different sources in ways that meet demand while accounting for changing conditions, infrastructure needs and environmental impacts. Energy storage can help with some timing gaps, alongside transmission, flexible demand and other system solutions.
The key takeaway: renewable energy is an important part of a lower-emissions energy future, but the strongest outcomes come from choosing the right technologies and supporting them with careful planning.
Frequently Asked Questions About Renewable Energy
1. What are the main advantages of renewable energy?
The main advantages of renewable energy include lower greenhouse gas emissions from electricity generation, naturally replenished energy resources, greater energy security, reduced exposure to fuel-price volatility, economic benefits and potential public-health benefits. Renewable energy can also contribute to a more diverse and resilient electricity system when supported by appropriate infrastructure and flexibility.
2. What are the disadvantages of renewable energy?
The main challenges include variable generation from sources such as wind and solar, upfront investment requirements, transmission and other infrastructure needs, land and environmental impacts, and the need for flexibility when renewable generation does not match electricity demand. The specific trade-offs vary between technologies and locations.
3. Is renewable energy cheaper than fossil fuels?
Renewable energy is not automatically cheaper in every situation. Wind and solar do not require fuel during electricity generation, which can reduce exposure to fuel-price volatility. However, renewable projects still have construction, financing, maintenance and grid-connection costs. The overall cost depends on the technology, location, financing, infrastructure and wider electricity system.
4. Is renewable energy reliable?
Renewable energy can contribute to a reliable electricity system, but different renewable technologies have different operating characteristics. Wind and solar generation varies with weather and time of day, while hydro generation can be affected by water availability. Reliability therefore depends on the wider system, including a diverse generation mix, transmission, demand flexibility, storage and other forms of firming capacity.
5. How much of New Zealand’s electricity comes from renewable energy?
In 2025, 88.5% of electricity generated in New Zealand came from renewable sources, according to the Ministry of Business, Innovation & Employment (MBIE). This was the highest annual share since 1981. It is important to note that this figure refers to electricity generation, not total energy use across the country.
6. How does energy storage support renewable energy?
Energy storage can help balance renewable electricity generation with demand by storing electricity when supply is available and releasing it later when it is needed. This can be particularly useful when generation from variable sources such as wind and solar changes over time. Storage is one part of a broader flexibility toolkit that can also include transmission, demand response, forecasting and different forms of generation.
