Business

Cold, dry winters threaten move to renewables

Power shortages during winters when there is not enough water, wind or sun remain the Achilles heel in New Zealand's otherwise huge potential to move most of its fossil fuel-driven economy to renewable electricity, says a new report from the national grid operator, Transpower.

Entitled Te Mauri Hiko, the report suggests fast-starting natural gas power stations should not be closed "without an energy storage solution". Only significant storage capacity could fill the winter supply-demand gap, which is likely to balloon as the electricity system moves towards 100 percent renewable generation.

None of the existing and emerging technologies for electricity storage solutions are obvious solutions, since battery storage will only fill short-term gaps in supply and emerging technologies such as storing hydrogen as ammonia for use in power plants and nano-technological solar power generation are in their infancy. While a geological basin in Otago could be flooded to allow large-scale 'pumped hydro' technology to store water for hydro generation during periods of shortage, such a project would face large environmental and community hurdles, the report says.

It notes New Zealand's abundant supplies of hydro, wind, geothermal and solar resources make it unusually well-suited to shifting its transport fleet and industrial processes away from fossil fuels - oil, gas, and coal - to renewable electricity as it pursues a low carbon future. The report's base case scenario suggests New Zealand would get close to meeting its Paris climate accord goals by 2030 if it did so aggressively.

However, increasing demand for electricity would also increase the risk of shortages during so-called 'dry winters', when low hydro lake levels reduce hydro-electric production. In the past, gas and coal-fired power stations have filled in that gap.

"Under the base scenario, New Zealand's exposure to supply shortages in winter and dry years is expected to grow from 4 Terrawatt hours today, which is comfortably covered by hydro storage and thermal (coal and gas) generation capacity, to 9TWh by 2030 and 12TWh by 2050," the report says.

The base scenario assumes that most energy-intensive industry, including the Tiwai Point aluminium smelter, which uses around one-seventh of all electricity produced today, will remain operating. It also assumes that 85 percent of the national transport fleet - cars especially - would be running on electricity rather than petrol or diesel by 2050.

Industrial heat processes would stop using coal altogether and 40 percent of the industrial heat produced by gas would also have switched to electricity by then.

As a result, the scenario assumes electricity demand more than doubles from around 41TWh annually today to 88TWh in 2050.

"The conclusion that New Zealand should plan for material demand growth may be surprising as demand has been roughly flat for the last decade," the report says. "The major difference between the last 10 years and the next 30 years will be significantly more electrification - the shift from energy sources such as coal, gas and oil to renewable electricity."

However, with no connection to other countries' electricity grid and relatively small hydro storage lakes, New Zealand faced unique challenges in meeting periods of peak electricity demand in dry winters. This was "still the biggest challenge to solve", especially as solar energy is less available in the winter months, the report says.

"Solar, wind and hydro generation output can decline by as much as 50 percent, 20 percent and 40 percent in winter, respectively."

Electricity stored in batteries would help - and would include batteries in vehicles and in homes and buildings with solar electricity production - but would not be enough to cover prolonged periods of winter electricity shortage.

As a result of its unique circumstances, New Zealand would require a locally produced solution and "cannot wait for solutions to be developed and deployed overseas before importing them". The country "will need to be at the leading edge of energy innovation to manage seasonal and dry year peaks".

"With more and more of the national economy dependent on electricity, as opposed to a wider range of energy sources, the resilience and reliability of the electricity system becomes all the more crucial to the economy."

That made it all the more important that electricity market rules and industry regulation encouraged security of supply, new entrants and technologies, and encouraged investment "across all sectors of the industry".