"Positive Energy" Is Corporate Spin
You may have noticed the ads for the "Positive Energy" site on TV or the web. The site purports to be a balanced presentation of information about New Zealand's future energy
needs and how we might solve them. But on closer inspection, it's nothing of the sort.
The first warning that something is up is the "see-saw" metaphor used on the TV ads - that it's a matter of trading off
price and environmental impact to achieve a balance. While this is true to some extent - you can cut costs by using
"dirty" generation, and taking steps to preserve the environment will usually cost more money - it's not an absolute
relationship, and doesn't really hold in New Zealand. To see why, just look at the Ministry of Economic Development's current estimates for generation costs:
Generation optionUnit Price (c/kWh) Gas5.7 - 7.7 (+0.8 for Carbon Charge) SI Coal6.1 - 7.1 (+1.5 for Carbon Charge) Geothermal6.2 - 8.5 Wind6.2 - 8.5 Hydro7.0 - 8.5 NI Coal8.3 - 9.4 (+1.5 for Carbon Charge) LNG8.5 - 10.6 (+1.0 for Carbon Charge)
Our cheapest generation option, gas, is one of the cleanest - all we really have to worry about there is carbon dioxide.
Our most expensive, LNG, is exactly the same - it's just the same gas, burned in the same power stations, but with a
premium added for transportation costs. The filthiest, coal, is actually only marginally cheaper than the most
environmentally friendly options, wind and geothermal, and the second most expensive if sourced from the North Island.
The see-saw doesn't seem to hold on current energy prices; when the government's planned carbon charges are added in, it
looks even less useful. So why is Positive Energy using it? To define the terms of the debate, and make us think that
there is a tradeoff when there is not.
The second warning is that Positive Energy positively hates wind power, characterising it as "expensive" and "highly variable", and claiming that it does not boost security of
supply. This is more than a little misleading. As can be seen from the above, the price of wind compares favourably with
that of coal, especially when you consider carbon charges and the fact that we've only just begun to exploit the
resource (meaning that prices are going to be at the low end of the range). With regards to variability, it's true, the
wind doesn't blow all the time. However, both long- and short-term fluctuations can be forecast sufficiently far in
advance to allow other generation to be scheduled or pick up the spot load, and variability can be balanced somewhat by
spreading generation capacity across multiple sites. As for security of supply, there is a definite synergy between wind
and hydro, in that hydro lakes effectively act as a storage mechanism; when the wind is blowing, you generate less with
hydro, and leave that much more water in the lakes for a windless (or dry) day.
This is not to say that wind is the answer to our electricity problems; we're always going to need a mix of different generation types, including some
thermal generation. But it's a much more desirable component of that mix than the Positive Energy site would suggest.
But the real kicker is with their interactive "create your own solution" game. Playing around with this gives some remarkably strange results: wind is the most expensive option available,
while imported LNG seems to be priced cheaper than domestic gas, hydro, and even coal. Energy efficiency - a solution
which has the potential to substantially eliminate our demand growth for some years - doesn't really get a look in. From
tinkering, it is clear that the game is heavily tilted towards a gas/LNG solution, primarily by massively understating
the cost of LNG and overstating the cost of other options.
Why would it be stacked in this way? Well, the "Positive Energy" site was set up by Contact Energy - a generation
company with a large sunk cost in gas power plants and a significant chunk of the natural gas retail sector. Their future profitability depends on our continuing to burn
gas; if we meet our future energy needs primarily from a green mix of wind, hydro and efficiency gains, Contact's assets
will be "stranded", and they'll lose a lot of market share. Instead, they'd like to tie us into their preferred
technology, even if it means importing fuel at huge cost to meet our basic energy needs.
Unfortunately, the facts don't really support their case, and so they have to fudge a bit. Rather than being a useful
source of information for New Zealanders contemplating energy policy, Positive Energy is nothing but corporate spin.
(Contact's response is that it depends what end of the price range you use, and that the Ministry of Economic
Development has been "unduly optimistic" about renewables and "unduly pessimistic" about thermal generation. Which is
fair enough - everything is contestable - but if they want to argue that, then they should show us their figures, so we
can judge for ourselves...)
ENDS