Businesses looking to cut their reliance on gas can now apply for support under the Gas Transition Loan Guarantee Scheme, which opened for applications this week. Firms can register interest through five participating banks: ANZ, ASB, BNZ, Kiwibank and Westpac. The Crown will guarantee 80% of the default risk on eligible loans, which the government says will let banks offer reduced interest rates and better terms. Officials expect it to unlock up to $1.2 billion in lending.
The scheme is built for the top of the market. To qualify, a business must be a current user of reticulated New Zealand natural gas consuming at least 1000 GJ a year. An average household using gas for cooking and heating consumes around 25 GJ. The country’s 14 largest gas users each consume more than 300,000 GJ.
Finance Minister Nicola Willis, Energy Minister Simeon Brown and Associate Energy Minister Shane Jones announced the scheme is now taking applications. Willis said rising gas prices and uncertainty over future supply were pushing up costs for firms across the country.
“Businesses across New Zealand are facing higher gas prices and greater uncertainty about future supply,” Willis said. The scheme is designed to help firms lower energy costs and stay competitive by switching to alternative energy sources and improving efficiency.
Jones said it was aimed at protecting regional economies that lean heavily on energy-intensive industries.
“Many of our regional economies are built on energy-intensive industries such as food processing, wood processing, manufacturing and horticulture,” he said. Those industries support jobs, local communities and export earnings, and need practical options to manage rising gas costs. Jones said the scheme worked alongside the government’s wider efforts to encourage new gas investment and improve supply security.
Brown framed it as a jobs measure, pointing to a drop in supply since the previous government’s ban on new oil and gas exploration. “Since the last government banned oil and gas exploration, there has been a significant reduction in natural gas supplies,” he said, citing a 23% fall over the past year alone. He said the loans gave businesses a practical way to meet the costs of moving off gas so New Zealand could keep exporting goods rather than jobs.
Scheme design
Applicants must achieve genuine gas savings of at least 15% while maintaining or increasing production. The scheme runs for three years, with loans expected to be repayable within 10 years, subject to terms agreed between individual banks and borrowers. It is limited to new lending rather than refinancing, and individual loans will be capped. Budget 2026 set aside funding to cover potential losses under the guarantee, alongside further funding for the Energy Efficiency and Conservation Authority to support businesses assessing their options.
EECA has launched a suite of independent support services to run alongside the loans. Brown said the aim was to help firms understand their energy options and build confidence before making major investment decisions. Some businesses need help identifying where their gas is being used and finding quick, low-cost improvements; others already have a project in mind and need technical options or fuel feasibility analysis before committing. Brown encouraged gas users to explore EECA’s tools, register interest in a regional workshop, or talk to one of the participating banks.
Industry groups have been pushing for action on gas costs for some time. Employers and Manufacturers Association advocacy staff have described the scheme as a timely and welcome option, noting that some members had come within weeks of losing gas supply altogether and had weighed closing or shifting manufacturing offshore. Backing 80% of a loan was seen as a way to de-risk funding decisions for firms facing a rapid, largely unplanned exit from gas.
Research commissioned by EECA points to a constraint the guarantee does not address. Surveying small and medium gas users, it found the biggest barrier to switching was not access to finance but uncertainty over how long gas would remain available, whether rationing might be introduced, and how far prices could rise. Many run specialist equipment with no ready electric alternative, so a switch can mean removing working plant and paying for a grid connection upgrade on top of new equipment.
Below the threshold
For the households and small businesses that sit under the scheme’s floor, research from the New Zealand Green Building Council (NZGBC), an industry body that advocates for electrification of buildings, argues the economics are already clear. Its report, Evaluating A Future Beyond Gas for Homes and Small Businesses, prepared by Concept Consulting, finds the case has swung decisively in favour of electricity as gas supplies decline and prices rise.
A typical new-build household would save roughly $17,260 over 15 years using a heat pump rather than gas for space heating, and about $15,900 over 15 years with a hot water heat pump instead of gas water heating. For existing homes, the gains are smaller: switching a typical medium heat-load household to a heat pump delivers around a 17% return and lifts household wealth by about $9,000 over 15 years, with water heating similar. Across the range of household circumstances, the average return runs 20 to 50%. For new homes, electric systems are the lowest-cost option in every scenario modelled.
Transitioning homes and small businesses off piped gas by 2050 would deliver around $7.1 billion in economy-wide benefits, the report estimates, including lower energy costs, reduced health impacts and avoided emissions. It covers reticulated piped natural gas only, not LPG cylinders, barbecue gas or outdoor heating.
NZGBC Director of Market Transformation Sam Archer said the obstacle is not the hardware.
“The biggest barrier isn’t technology. It’s that most households don’t have the time or information needed to undertake a detailed financial assessment of their future gas and electricity costs,” he said. “The evidence shows many households would benefit from switching, but they need clearer signals and practical support to help them make that decision when appliance replacement opportunities arise.”
He said switching now makes good financial sense for most existing households and small businesses. “The technology has improved dramatically, the running costs stack up, and the long-term savings are significant. This isn’t about forcing people to make changes. It’s about helping households make informed decisions as appliances reach the end of their life and need replacing. This is being done successfully around the world – we need to get started here.”
The cost of staying connected
Since early 2023, average household gas bills have risen around 36% in real terms, while electricity prices have risen about 5%. Gas prices are projected to keep climbing while the cost of electric heating is expected to fall.
Annie Jefferson, General Manager of Wairarapa’s A2W Hot Water Heat Pumps, whose business installs the equipment the report recommends, said the findings matched what she was seeing.
“Around 95% of the work we do now is taking households off gas. One of the biggest drivers we’re hearing from customers is the increase in fixed daily gas charges,” she said. “People are looking at what they’re paying just to remain connected before they’ve even used any gas and questioning whether it makes sense anymore. That certainly supports what the report says about the economics of remaining on the gas network as customer numbers and volumes decline.”
As connections fall, the fixed cost of maintaining the network is spread across fewer customers. NZGBC wants protection against pipeline decommissioning costs falling unfairly on remaining consumers, alongside clear long-term signals about the future of residential gas, building standards that make electricity the default in new buildings, workforce training with transition pathways for gasfitters, no new homes connected to the gas network, and targeted support for low-income households and renters.
The research points to Victoria, Australia, as a model. Rather than banning existing appliances, Victoria has focused on long-term planning, targeted incentives, building standards and trade workforce development. Removing gas from homes and buildings also frees it up for industries that cannot yet electrify. The report was reviewed by Professor Alan Brent of Te Herenga Waka Victoria University of Wellington and Christian Hood, Chief Advisor at the New Zealand Climate Foundation.
An unsettled backdrop
Both the scheme and the research land in a period of open argument about how the transition is being planned. Commenting on a recent EECA-commissioned report modelling the electricity system out to 2050, Associate Professor Michael Jack of the University of Otago said the most significant finding concerned demand flexibility and battery storage, arguing greater flexibility could unlock real economic benefits from electrification.
Professor Nirmal Nair of the University of Auckland’s Department of Electrical, Computer and Software Engineering was more critical of how that work was commissioned and released, and argued for an honest conversation about the roles of bodies such as the Electricity Authority, the Commerce Commission and EECA. He said that mattered for public confidence in energy security, resilience and affordability, particularly with the general election in November.
Neither was commenting on the loan scheme, which begins a three-year run, underwriting loans repayable over 10 years, less than three months out from that election.
Further detail on the scheme, including eligibility criteria, sits on the Treasury website, with EECA’s support services and regional workshop registrations on the authority’s site.
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