18 Jul 2022

Future of New Zealand energy set to look very different

7:52 am on 18 July 2022

The country's shift to renewable energy is unlikely to see the lights go out more often.

Electricity pylon.

Photo: AFP

But the electricity sector is undergoing huge change as companies touting different technology vie for the market share that will be left once we stop burning fossil fuels.

What's happening now and what's coming

Experts want to reassure people that the phase out of coal after 2030 will not make powercuts more likely.

There are a number of different renewable energy projects coming online in the next couple of years - geothermal, wind, and some solar amounting to about 7 percent of our total energy needs.

In the medium term huge new land-based wind turbines will play a big role, as will large-scale solar installations and big offshore wind farms.

All up more than $2 billion of investments have been announced in recent years.

Long-term projects like the government's massive multi-billion dollar Lake Onlsow pumped hydro scheme - essentially a massive battery to stabilise output over dry winters - are being investigated.

Hydrogen fuel is also being explored.

Massey University emeritus energy professor Ralph Sims said renewables were now cheaper than fossil fuels, and there were plenty of options available.

"That's where the large scale solar farms can see that they maybe have got a competitive advantage now.

"That's why Mercury energy is building its large wind farm at the end of my road."

Windmills line the ridge above the Pahiatua Track

Photo: RNZ/Sally Round

Transition amid demand ramp up tricky but doable

But the transition is not going to be easy.

Renewables are less dependable - the sun may not shine, the wind may not blow.

And with large-scale battery technology still a while away, their energy is also not storable unlike fossil fuels.

Meanwhile, demand is set to double as we move to electrify the country's cars and trucks and industrial boilers to cut climate emissions.

It will be a big challenge matching constantly fluctuating demand with changing supply.

Prof Sims and others are tipping a good option for making large amounts of consistent energy is to retro-fit coal plants to burn forestry waste.

"So if you've got all these wood chips stored and ready to go, then you've got your supply.

"Bioenergy is renewable because those trees are going to get replanted, and therefore the CO2, when you burn those branches and slash and whatever, will be reabsorbed by the next crop of trees coming on."

Genesis Energy is looking to test using wood biomass instead of coal in its Huntly plant later this year.

Many sector experts told RNZ another promising and sometimes overlooked area to explore was smoothing out the peaks and troughs in consumer demand.

"When you haven't got enough generation you encourage people, factories, whatever, to turn off some electricity," Prof Sims said.

"And maybe you pay them to do that and therefore you've got lower demand."

Professor Janet Stephenson from Otago University's Centre for Sustainability said in the future thousands of people would generate more of their own power with things like solar roof panels.

They will store it in their electric vehicle's battery and feed it back into the grid if needed.

"In the past we've generally thought of electricity as being a linear model: it's coming from the generators down [the power] lines.

"In the future, it's going to be much more two-way, much more flexible ... [and] dynamic."

Energy analyst Grant Swanepoel said the sector was trying to juggle sustainability, reliability and affordability.

He wanted to see an overall strategy for the sector - something the government began this year.

"I think there are a lot of individual work streams that potentially are not being coordinated in a way to pick the best and put the money behind the best."

He said the government needed to step in and take over gas-fired power stations as a way to shore up a steady backup supply.

They will only be needed infrequently in the future making them expensive to run and unattractive to the private sector.

Swanepoel said complicating the transition to renewables in the near term was the invasion of Ukraine which has prompted a bunch of European countries to invest heavily in the technology in order to wean off Russian fossil fuels.

This was pushing up prices, and this combined with supply chain pressure could push out timeframes for projects here.

Hanging over everything is the fate of the Tiwai aluminium smelter which uses about 13 percent of all our electricity.

It was previously indicated it would shut down at the end of 2024, but the odds the contract will be rolled over has increased.

Tiwai Point

Photo: RNZ / Nate McKinnon

Calls to drop 100 percent renewables target grow

About 85 percent of electricity generated is renewable, and the government has an aspirational goal to hit 100 percent in eight years.

University of Otago energy researcher Jen Purdie said the target was expensive and an inefficient way to cut climate gases and she wanted it gone.

"The only reason to have 100 percent renewable is so that the government can go to meetings overseas and have this nice little catchphrase.

"But what we really should be looking for is maximum decarbonisation, which to me is keep 2 or 3 percent of of gas in the electricity system for at least another 10 or 15 years while we get some of these other solutions in play."

Most experts agree even without the government getting involved Aotearoa would get to at least 95 percent renewable by towards the end of the decade anyway.

Energy Minister Megan Woods said Labour promised to review the 100 percent renewable target in 2025 at the end of the first period of the government's plan to slash emissions.

This would allow a stocktake of how the goal fit with the wider plans to cut damaging gases.

Woods said the energy strategy was always planned for after the release of the government's emissions reduction plan in May.

Meanwhile there is some rare positive news about the effects of climate change.

Purdie said warmer winters to come would fill hydro lakes in the peak season - making renewables an even more attractive option.

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