The Achilles heel in electrifying the NZ economy: winter shortages
By Pattrick Smellie
May 23 (BusinessDesk) - 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 power stations using natural gas should not be closed "without
an energy storage solution" under scenarios that show the gap between supply and demand during winter 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 in 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 the country'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, becoming so reliant on electricity would also concentrate risk in the ability to meet national energy demand,
with growing electricity demand creating potentially much larger gaps than in the past during so-called 'dry winters'
when low hydro lake levels reduce hydropower production. In the past, gas and coal-fired power stations have filled in
"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 using around
one-seventh of electricity produced today, will remain operating, and 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
"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
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,
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".