Genesis Energy’s reliance on coal at the end of last year is again putting the debate around how New Zealand will generate energy in the future on the table.
The company reports it generated 512 gigawatt-hours of energy using coal in the December quarter – a 155% increase from the same period the previous year and the most since the June 2013 quarter.
In fact, coal was behind 32% of the energy it generated in the December quarter.
Genesis says, the “unprecedented” gas and hydro shortage at the end of last year saw it run two dual fuel Rankine units at Huntly on coal for long periods.
There was an outage at the country’s largest gas field, Pohokura, maintenance work done at the Kupe gas production station and a planned outage at a Huntly gas-fired unit.
Dry weather also saw hydro storage levels hit rock bottom; the cumulation of events forcing Genesis to import coal from Indonesia.
Households and businesses – particularly those on contracts charging wholesale electricity prices – footed some of the cost for the pressure the system was under, as prices spiked.
While hydro storage levels have picked up, prices could again shoot up as production out of Pohokura will be halted again for a total of 30 days between February and April, as the oil company OMV does a “planned campaign to re-establish the deliverability of the existing offshore wells”.
The Petroleum Exploration and Production Association of New Zealand (PEPANZ) has used news of the extent of Genesis’ reliance on coal to again make its case that the Government has done the opposite of what it should’ve, in the face of depleting gas reserves, by banning new offshore oil and gas exploration and limiting onshore exploration to Taranaki until at least 2020.
Meanwhile Greenpeace has taken the opportunity to make the case that gas isn’t a reliable source of energy, so the Government should be investing in the development of the solar energy sector.
PEPANZ CEO Cameron Madgwick says: "When the lakes are low and natural gas is unavailable, it’s coal that keeps the lights on – even though it has twice the emissions of natural gas.
"We now have around seven years of natural gas supply left and no plan on what to replace it with, other than burning more coal and importing LNG from overseas. Both of these options will mean higher prices for consumers and higher emissions.”
The Ministry of Business Innovation and Employment (MBIE) warned the Government of this when it advised it not to ban oil and gas exploration.
Greenpeace climate and energy campaigner, Amanda Larsson, on the other hand says: "Summer is exactly the time of the year we’re being flooded with clean energy from the sun.
“With proper investment in solar, we could have been protecting hundreds of thousands of people from rising energy bills, and alleviating pressure on our environment.
"We’ve met less than 4% of our solar potential here in New Zealand. It’s time to get building.”
Madgwick acknowledges solar will be an important part of the energy mix, but notes “it isn’t much help after dark and battery technology is still prohibitively expensive”.
Greenpeace’s solution is for the Government to provide homeowners with interest-free loans to install solar panels and batteries.
The Government hasn’t firmed up a plan as to exactly what will replace gas as it’s phased out of New Zealand’s energy mix.
It’s established a ‘Just Transitions Unit’ within MBIE to begin figuring out how to make the shift away from fossil fuels.
It’s also investing in projects (like work being done by a new Taranaki company, Hiringa Energy, on using hydrogen to power vehicles) through the Provincial Growth and Green Investment Fund.
Work is underway on the second phase of a review of the Crown Minerals Act, which takes a wider look at the legislation to future proof it. The first phase of the review gave effect to the exploration ban.