How electricity works

Electricity is created when electrons are transported from one place to another through a conductive medium, by a moving magnetic field from a generator. The electrical force that ‘pushes’ electrons is the 'voltage' and the number of electrons that flow in a wire is the 'current'.

Generators convert kinetic, or moving energy, into electrical energy, usually by rotating. When a magnet is passed close to a conductive wire, it induces electron movement inside that wire. A generator uses a rotating force, usually from a turbine, to pass a number of strong magnets close to coils of conductive wire, to induce an electrical current. This current is then sent along wires to a transformer. This transformer changes the electric current into the transmission grid.

Power is generated at power stations across New Zealand. Generators make electricity from primary energy sources by harnessing water, wind, sun, geothermal energy, coal and gas. The power produced is of immense voltage and current and is too powerful to feed directly into your home - it would immediately destroy all connected appliances!

From power stations, electricity flows through large transmission lines which carry it to substations. This electricity is sent at high voltage, as a small proportion is lost along the way as heat in the power lines. Keeping the voltage high ensures that as little electricity as possible is lost along its journey.

Distribution lines carry electricity from substations to homes, schools and businesses. Transformers at the substation change the electricity current and voltage to make it suitable for local wires and consumption. The electricity enters your home through your meter, where it is measured, and into your power outlets, where it is ready to be used.

Demand for electricity is largely driven by factors such as GDP, pricing, wealth and population size, For example, generally we would expect a growing economy to lead to growing demand for electricity and vice versa.

There are residential, commercial and industrial electricity consumers in New Zealand.

In New Zealand most electricity is generated through renewable energy sources, such as hydropower, geothermal power and wind energy. As of 2021, 82% of electricity is generated from renewable sources¹, making New Zealand one of the countries with the lowest carbon dioxide emissions from electricity generation.

Over the past 20 years, Aotearoa’s electricity market has been praised domestically and internationally – it's considered world-leading. During this time, our work embedding a market-based regime has delivered significant benefits that is the envy of other jurisdictions.

The International Energy Agency said in its 2023 review of New Zealand’s energy policies: "New Zealand has a diversified energy mix, with significant production of both hydropower and geothermal. As the country embarks on an ambitious energy transition, it has many natural advantages, including an enviable renewable resource base. The key challenge will be to decarbonise end-use sectors through clean power and support investments in new technologies to achieve deeper emissions cuts across all sectors in the most economically efficient way. "

New Zealand also regularly features in the top 10 of the World Energy Council’s energy ‘trilemma’ index. This reflects Aotearoa's strong balance of energy security, energy equity and environmental sustainability.

^{1. Energy in New Zealand, MBIE}