Make-up of NZ's future energy supply called into question as 'unprecedented' gas and hydro shortages see Genesis Energy's coal use hit a 5-year high

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”.

Wholesale electricity

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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.

Electricity prices, Retail

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We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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136 Comments

Wind is cheaper than solar at the moment. After the next economic downturn, the government should set up an SOE to build 2000 MW of wind and auction it off to various generators either here or internationally. Either that or issue directives to NZ generators to build wind. Oh, and we will have to bite the bullet and build a couple of big pumped storage.

Previous governments have done extraordinary things in the past when faced with disasters, I'm sure that even the RMA could not stand in the way.

https://www.transpower.co.nz/system-operator/security-supply/electricity...

"Demand varies from year to year, but the trend in recent years has been a decrease in electricity demand of approximately 0.2% per year, on average. If demand differs from expected, it may impact on security of supply."

So why exactly would we want to run out and spend a massive amount on increasing supply to a market that is not growing?

And pumped hydro.. No, just no.

Great strawman dude. I'm saying if you want to change the fuel type from dirt to renewables, then yes you have to go out and spend. Note that I explicitly stated this fiscal arrow should be fired right after the next downturn so people can stay employed doing these projects. Your line of argument, that "demand is flat so why bother" is exactly the one used by gentailers today to avoid construction of new large scale generation.

No one would have built NZ's electricity system if they had used your thinking.

In the past we had increasing electricity demand, so yes, we needed more generation. At the moment we don't, so no need to go build more, except to replace what is approaching end-of-life. And both wind and solar are not dispatchable, so are of very limited use. when we do need to build, we need to build dispatchable generation, and in the north island where the demand is. South island has all the electricity it needs in the form of existing hydro.

Until some useful price effective storage is available, more wind and solar have limited benefit.

Ok I concede, you are right. Building new non-dispatchable generation is not worthwhile.

Of course, the most cost effective thing would be to improve our energy efficiency. I wonder then why no one mentions this?

Because its already happening at a reasonable rate. Refer above, flat/marginally shrinking electricity demand and rapidly growing population.. So unless the data says that demand reduction is coming mostly from shrinking industrial production then its coming from increased energy efficiency.

That is a good counterargument to Lapun's post below.

Some questions I have are, is it happening at a reasonable rate? Could it happen faster?
Does it translate into less CO2 output from NZ's electricity generation?

Not at all a strawman argument.

Pumped hydro is a crappy solution for a problem that doesn't exist.
If you want a thread for why this is the case, read the comments stream here.
https://www.interest.co.nz/opinion/97543/brendon-harre-sees-future-%C2%A...

"No one would have built NZ's electricity system if they had used your thinking."
Well, naturally. Because there was no demand growth.
The someone who built the infrastructure was the Government. If you propose to do this again, which generator are you make a huge tax payer funded gift to?

We won't require pumped hydro to begin with, and we may never need it at all if wind is properly geographically diversified.

> The someone who built the infrastructure was the Government. If you propose to do this again, which generator are you make a huge tax payer funded gift to?

Government is still a majority owner of the generators, so I don't see how the new assets could be gifted.

The Government owns like just over 50% of the shares in each of the generators. Excepting Contact.

So, again. I ask. Which one is going to win the tax payer lottery?

Also, how do you 'properly geographically diversify' wind?
There are substantial sociological, topographical, geographical and meteorological constraints that would suggest that such a thing is very difficult to do.
So much so it seems like an uneducated pipe dream to me.

> So, again. I ask. Which one is going to win the tax payer lottery?

Which version of the market is going to solve the coal problem? And the govt doesn't own "like" just over 50%. It has the controlling stake.

> Also, how do you 'properly geographically diversify' wind?
There are substantial sociological, topographical, geographical and meteorological constraints that would suggest that such a thing is very difficult to do.

Instead of one big wind farm, you build more medium sized wind farms in different places around the country. It's not difficult to do the modelling, it's simply that very little research has been done on geographical diversification of wind assets to date.

"And the govt doesn't own "like" just over 50%. It has the controlling stake."

Yes it does. In each case their share holdings are ~ 51%. Which, surprise, surprise, is defined as a controlling/majority stake.

"Instead of one big wind farm, you build more medium sized wind farms in different places around the country. It's not difficult to do the modelling, it's simply that very little research has been done on geographical diversification of wind assets to date."

You are joking, right?
You seriously have to be joking.

It's no joke. Virtually no research has been done on this for NZ's geography that considers the impact it might have on power flows, storage and transmission.

Well that's an insult to Transpower and University engineering departments throughout NZ.

Jock
You are living in a fact free environment. There are tonnes of paper documents detailing power plans and the effect of various options. They might not be findable in a dumb Google search but they are out there.
Currently there are windfarms on the grid from Raglan to South Otago reporting their generation on about 5 minute intervals for all to see. It is not uncommon to see ALL of them producing little or no power. It happens throughout the year but is noticeable in winter when there is a big high over the country. Those frosty nights when we hit peak MW.
So wind and solar is useless to generate when it is most needed. Where would you site the windfarms to capture the wind that isn't there?

I only said wind is cheaper than solar at the moment. I never proposed wind to provide for base load, that's the job of geothermal and coal. I would've thought someone with your position and knowledge could at least demonstrate that understanding.

Jock - you wrote
" Instead of one big wind farm, you build more medium sized wind farms in different places around the country." The problem is still there - like I commented - Most recent was 18th Jan between 18:30 and 23:00 <10MW from 690MW installed wind. Solar doesn't generate then either.

" Virtually no research has been done on this for NZ's geography that considers the impact it might have on power flows, storage and transmission."
As nymad and I said - it has been done numerous times - right back till before the 70s.
That is why I commented that you seem oblivious to this information.
I didn't make a comment on wind vrs solar costs.
It is also obvious that you don't understand that NZ doesn't need more baseload as such. It needs dispatchable two shifting plant and liquid dominated geothermal (NZ conditions) can't do that.

What is the fascination with wind and solar when we have geothermal resources in the North Island where wanted

Dispatchable and currently generating as much as NI hydro ?

I dispute that pumped hydro was proven wrong by the comments section on the Interest.co.nz article.

I did though re-edit the article which really is a two-for-one paper-being about speculating if hydrogen vehicles have a future for the longer distance and heavier end of the transport market and whether pumped hydro would help NZ meet its climate change goals.

The re-edited article does though make a clearer argument for pumped hydro.

Brendon
The Commission looking at the options dismissed pumped storage as a footnote recording a phone conversation. It was an obvious no goer by fag packet maths.. Or do you have more expertise than all of their experts?

I cannot speak for the expertise or otherwise of the Commerce Commission but pumped hydro researchers in Australia have been awarded a leading national award.
https://arena.gov.au/blog/anu-pumped-hydro-researchers-take-out-eureka-p...

And elsewhere around the world grid scale battery innovators are close to commercialisation. I detail this in my updated article.

Agree. You did dispute it, Brendon.
I don't think you won that argument, though.

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""coal was behind 32% of the energy it generated in the December quarter"". New Zealand has the fastest rate of population growth amongst the OECD countries. Population has grown by about a third in the last 25 years. If legal immigration (it includes myself) had been at average rather than being the top OECD country then no coal would have been burnt.

Now we are committed to reducing our green house emissions - just getting back to 1990 is proving difficult.

High Immigration == High GDP && High House Prices.

That's why they do it. Labour has backtracked on their election promise to lower immigration.

Just wait until they have sold their properties. Then we will see action.

Jock is right. Build all those wind farms now. All of them. There is big capacity consented but not built. Wind is reliable year on year and the day to day variations can be coped with via use of the hydro storage.
Often of course that would mean periods where capacity is greater than demand. Doesn't matter. Any generation capacity saves use of existing hydro, which is the essential battery.

Nice in theory but wind is not reliable. There were price spikes in December because there was no wind and the full lakes didn't come to the rescue. "On Tuesday, demand peaked at about 5000MW and wind was cranking out about 300MW. On Wednesday, demand peaked at 150MW higher and there was no wind, so that’s a shortfall of 450MW that needed to be found and it came from more expensive generation sources." So with full lakes spot prices still cranked up to $1/kWh.

Why are we “phasing out gas” when we still use coal?

This is stupid. I’m all for renewables - hydro, solar, wind, geothermal, etc. but if we need something to backup those renewables or just keep the prices down through competition there is nothing wrong with a little gas.

Also why are we dependent on domestic production? The US is shipping gas around the world I believe. Why not use that if the domestic supply is unreliable?

New Zealand needs an energy plan.

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We have an energy minister that didn't even know the difference between power and energy (repeatedly demonstrating lack of basic understanding in question time), and a coalition almost entirely devoid of STEM (science technology engineering mathematics) comprehension. We are not going to see sensible or rational policy formation from them. It's all about feelings and low-information ideology.

Installing LNG importing infrastructure would cost a huge amount (>1 billion) and would be an embarrassing admission of the stupidity of the oil and gas exploration ban, so won't happen with Ardern in power.

Instead we will have a quiet increase in coal imports and consumption. Upside is that coal is cheapest form of energy. Downside is ~4x CO2 per kWh as for natural gas.

We have about 1-2% yearly population growth, and soon (if EV's take off they way they look to be) we will need to grow our grid supply by up to 20-50% for an all electric vehicles national fleet.

PV can probably do the job, wind can assist (though Nimbys make it less feasible), but we may need some interim increase in fossil fuel power to bridge the slower build-up of renewables.

Wrong. The Greens alone have more Stem comprehension than National . It just doesn't suit your point of view.

Greens are religious fanatics wedded to inflexible and provably wrong articles of faith (like anti-GM, anti-nuclear, Marxism etc.... They daily demonstrate they are not pragmatic or rational, they are rationalisers (like all religious types) who put feelings and fashions ahead of fact.

Foyle,

So the Greens are both religious fanatics and Marxists. Interesting combination.

not to mention religious rationalists.

Who is 'we' Foyle? Last time I read any of your comments you identified yourself as an England based engineer.

Why are we “phasing out gas” when we still use coal?

This is stupid. I’m all for renewables - hydro, solar, wind, geothermal, etc. but if we need something to backup those renewables or just keep the prices down through competition there is nothing wrong with a little gas.

Also why are we dependent on domestic production? The US is shipping gas around the world I believe. Why not use that if the domestic supply is unreliable?

New Zealand needs an energy plan.

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"New Zealand needs an energy plan"

Yes, we got a ban without a plan.

Ardern is just a stupid gesture politician, who is going to do a great deal of harm to NZers.

It's like having Kim Kardashian running the country.

Calm down. Government is there to govern not to pretend that doing nothing is always the right approach.

Natural gas might be the cleanest of the FF but even the oil companies weren't having much luck finding any more and were already leaving.

The exploration suspension simply tells generators to look at renewables for future generation capacity, not at more FF.

In fact, the growth in coal use since late 2018 *highlights* why FF use should be dis-incentivised as part of NZ's long term energy plan.

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You're missing the point, Larry76.

There is no long term energy plan.

Actually the Transpower report linked at the top of the Comments says there is a plan, but with partly privatised generators the government can't make them do anything without incentivising certain investment decisions.

From the article:

"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."

Like I said, there is no plan

The CoL is just hoping that something will turn up.

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"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."
The answer is to import coal from Indonesia, obviously...

Quiz Genesis on that decision not the government. I'm sure Jenny Shipley would be happy to explain why coal from Indonesian slaves is better than investing in renewables.

FYI, Jenny Shipley's no longer at Genesis, the company's now chaired by Barbara Chapman - https://www.genesisenergy.co.nz/investors/governance/board-of-directors

Indeed, but the decision to import coal was made on her watch.

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This thread will no doubt have lots of "use this energy source, no, don't do that, use this energy source....."
It gets a bit tiresome.
For me a summary is: The govt has no clues. Greenpeace has no cost effective clues. Cue: Unless we have some more competent people in charge then we are in for either even more expensive power or larger govt debt or both in future.

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So what has our august body of coalition of losers done ?

Banned new GAS EXPLORATION .( NOT COAL EXPLORATION NOTE)

When we dont have power and the economy grinds to a halt , then we will see what they do about it .

Idiots .

Boatman. Peters could have called a halt to Ardern and Wood's illogical decision to halt hydrocarbon exploration and screw Taranaki in the process but he sat back, allowed it to happen and defended his decision by a weak and unsubstantiated assertion that MBIE's $8bn consequent loss estimate 'wouldn't pass first muster'.

Someone had to eliminate the fossils Boatman. Not everyone here harkens back to the days of the Satanic Mills and industrial chimneys. Yup, too many fossils here.

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Larry76. Killing the gas industry here will increase, not decrease, emissions.

Correction: Banned offshore oil and gas exploration.
Not aware of anyone doing offshore coal exploration anywhere.. Kinda hard to drive a digger and a dump truck on the seabed.

6/10, Even for you that was a poor quality rant. Better watch out, you'll lose your title to TM2.

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Even better we are importing the coal from Indonesia to a power station that was built in a town surrounded by coal mines.From Scoop in October
"Nevertheless, it (Genesis)is rapidly drawing down its domestic coal stockpiles and has now ordered 120,000 tonnes of Indonesian coal. Four shipments are expected from early December through to mid-January"

Yeah how can it be cheaper to import coal from Indonesia than mine it down the road?

The answer I think is that a) They are happy to destroy their environment and pay low wages and b) The coal from Indonesia is very dirty apparently, so perhaps that's why the price is low, maybe no one else wants it. Apart from clean green NZ of course.

If you get the chance, the effort to visit some of these mines and extractive manufacturing plants in places like Indonesia is worth it. The conditions of some are horrifying. Woods and Ardern virtuously assert that NZ is 'showing the way' but are also well aware their actions will not only increase global emissions but also visit added misery on the poor wretches who toil in these developing world mines.

Tiwai Point. Users about 1/7 of NZ electricity and paid an estimated $48 a megawatt hour when industry paid $65. I.e it wont survive without a subsidy from the rest of us users. Pretty obvious solution here.

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Cool, now how exactly are you going to get all that electricity from the bottom of the south to the upper north island? You can use some of it to power the milk powder plants in the south island that run on coal, but thats hardly going to make a dent.

Oh, and that also means Aluminium production moves from clean "green" hydro electricity to where, and powered by what? (my guess, Australia (close to bauxite source) or somewhere like Indonesia, India etc (Mmmmm, coal powered aluminium refinery)). So less work in the lower south, less tax income for the govt, and a bunch of extra electricity we can't easily move to the north island mostly going to waste unless we spend another several billion on a second set of Cook Strait cable hardware, and serious transmission upgrades to get it there.

..heard of electrification displacing fossils? Keep up pragmatist.

Electrification of what? Be specific.

What level of environmental degradation do we allow as acceptable, in providing cheap power to Tiwai. Around 60% of the water allocated for all water take consents in NZ, is used by Manapouri. The receiver of the largest contamination of water is Doubtful Sound - the contaminant being fresh water (via Manapouri) in to a salt water, waterway. This contamination is greater than that of any freshwater waterway in the country - yet the silence on this marine environmental degradation is deafening. You won't see Greenpeace, Green Party, Fish and Game, or any environmental lobby group protesting on what this is doing to a marine environment. Jacinda Ardern and the govt indirectly applaud this destruction. Afterall, it is all about climate change now.
Prime Minister Jacinda Ardern has challenged the Tiwai Smelter to keep seeking opportunities arising from producing high-quality low-carbon product in a world that needed to transition to a low-emissions future.

From Tiwai CEO This will extend our leadership on responsible production by providing independent verification that our metal meets the highest environmental, social and governance standards...We produce aluminium with one of the lowest carbon footprints in the world.This is incredibly important to many of our manufacturing customers and helps them to meet the expectations of consumers buying products like computers, cars, food and drink.

Energy Minister Megan Woods said the smelter showed "exactly the direction the Government wants to see our economy move towards".
edit - link added https://www.stuff.co.nz/business/industries/109146959/green-credentials-...

Fresh clean water contamination! haha.

Sometimes Truth is stranger than fiction ;-) Research has shown that this population has decreased by at
least a third since 1994, with the latest estimate in 2009 at fifty two dolphins. This decline may be linked to lower calf survival in recent years. The causes behind the population decline are not well understood but may include human-related effects such as vessel activity and habitat modification. This rate of decline is not sustainable for such a small population.
https://www.doc.govt.nz/globalassets/documents/conservation/marine-and-c...

Casual Observer. DOC...... 'Runoff from heavy rainfall on the (Fiordland) mountains creates a permanent freshwater layer on the surface of the saltwater that varies in depth from 5 cm to over 10 metres'.
As someone who has dived, fished and hunted this area, I can attest to the astonishing volume of fresh water that falls naturally onto the salt water all across Fiordland, including doubtful sound, when it's raining, which is most days.

The construction of the Manapouri Hydroelectric power scheme in 1969 caused major modifications to the hydrographic environment in Doubtful Sound/Patea. This scheme involved the construction of a tailrace tunnel from Lake Manapouri to Deep Cove and resulted in more than three times more freshwater than previously coming into Doubtful/Thompson Sound. Monitoring of the area suggests that there have been some major changes in marine communities in Doubtful Sound/Patea as a result, including effects on black corals around Elizabeth Island. https://www.doc.govt.nz/globalassets/documents/conservation/marine-and-c...
The degradation effect on the Waiau River is also something that may be debated in the Environment Court under appeals to the ES Water and Land Plan. It seems the cost to Meridian will not be that great, yet they baulk at it at every turn.
214.Increasing lower Waiau minimum flows or reducing Mararoa diversions would reduce energy supply from the scheme. Increasing lower and upper Waiau minimum flows would complicate storage management and affect seasonal supply flexibility. Therefore, Meridian’s modelling considered:
increasing consented minimum flows for the lower Waiau. Because current consented flows
are low compared with natural minimum flows, an increase in such consented flows has a
relatively small percentage impact on generation.
10 per cent increase in consented flows resulted in $8.6m cost.
40 per cent increase in consented flows resulted in $36.2m cost

Wrong about protesting CO. The Save Manapouri campaign opposed this scheme. It was the first major protest of it's type in NZ.

My point was..if Tiwai is not economic when it has to pay market, let it fold and sell the power to those who can make a profit from it. That's how markets work aint it?

But wait, John Key said it would distabilise the energy market (i.e. lower prices for New Zealanders) if Tiwai Point closed down. And we couldn’t have consumers getting a break at the expensive the power oligopoly.

rastus. A problem with your suggestion is that Ardern thinks Tiwai is excellent. At the same time the gas industry was being strangled she was telling people in the Deep South how wonderful the recent pot line expansion is.

“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.” Very funny Greenpeace.

I’m surprised no one has mentioned nuclear yet. Once you put preconceived notions aside, it wipes the floor with other energy generation methods in most if not all areas.

Currently far too expensive. Might change if ways of manufacturing them in specialised factories and the moving them to suitable sites can be developed (my preference floating or submerged offshore). But that will probably take 20 years to happen so not something to pin hopes to.

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The non-dispatchables (wind and solar) are called that for a good reason: they cannot be reliably predicted, contracted for, and thus priced, for any future period. This is why dispatchables (geothermal, hydro, coal, nuclear and gas) have to be there, spinning and ready to take up the slack, at any given moment. Of course, some non-dispatchables Can be predicted, but only negatively, never positively: no solar at midnight......

Take a peek at Transpower's real-time generation to see just which source is contributing what.

Solar plus battery can load-shift considerably, but (as in my own case, with a 4.8kW generation capacity and a 9.8kWh battery) is double the cost of a pure PV rig. This neatly powers the household right through until the wee small hours in high summer, but it's a different story on socked-in days or mid-winter. So the dispatchables are called on when El Sol fails to supply my demands, modest as they are. And they better be there.....

There is little to zero real engineering sense in the political world. But as they simply reflect the general population in this respect, the pollies can get away with technically impossible statements (like 100% renewables - equivalent to the eternal salespersons' assertion that 'Yeah it'll Do that...') without demur. As the dreadful example of SA shows, letting pollies effectively design entire grid delivery systems via granting or withholding funding or subsidy for certain types of generation, is not a spectacular success.

Be careful wotcha Wish for.....

waymad. 'So the dispatchables are called on when El Sol fails to supply my demands, modest as they are. And they better be there..'
So as an off grid generator/very low user you are sweet with paying an annual minimum line charge to have supply available, so the rest of us don't subsidise the cost of your delivery infrastructure?

Not everyone pays line charges. Nth Is based family member with a holiday house at the beach pays no line charges, as they have their permanent home power account with the same electricity supplier. Said family also has a PV solar system which, annually on average, sends more power to the grid than they use. When we had a holiday home we had the same deal - no line charges. So all those home owners with no holiday homes are subsidising those with holiday homes anyway.
We generate almost half our annual 16,000kwh electricity requirements from solar with battery with surplus going to grid. More than happy to pay annual line charges for those times in winter when solar doesn't supply requirements.

You think the lines company isn't getting paid? They may not be paying directly or having them itemised, but somewhere in the powerbill those line charges are hidden, probably by way of a much higher per unit charge.

Casual Observer: Interesting about the zero line charges. I live in two houses. Dunedin and Central Otago. Pay line charges on both, and annoyingly pay big line charges on a bore pump, which is an essential device but uses very little actual energy.
Which company charges only one line charge. ?????

KH We were with Energy on line. Family is with Contact - I think most of the big companies do that deal - if one is a holiday house. Since moving to CO I find water pump lines charges hugely excessive compared to what we paid in the nth island, and there is no way to get round them short of using solar but if that is efficient or not in an existing set up may be debatable. Our commercial orchard pump/irrigation is run on a generator - heaps cheaper than having electricity.
There is a power cut here at present but the solar is keeping the house running - just no power to stove or induction cooktop. But that's what we have a bbq for ;-)

Thanks CO. I will follow that up. About to spend some capital and link the bore pump to the house, so no bore line charge. And by winter will have 6.5 solar. I was not going to do battery but waymad's comments are causing me a rethink. (Pearson Road, Gorge end)

pv battery systems are still crazily expensive. EG last time I looked Tesla powerwall 2 was about USD$600/kWh, when we know that Tesla car batteries modules are getting close to USD$100/kWh. That can only be down to a lack of production capacity and competition keeping prices high, so have to expect it to drop to a small multiple of car prices, and perhaps even <$100/kWh in next 5 years. As such it is my take that you will get hammered as an early adopter and are better to wait a couple of years to do pv+battery (and hopefully off grid to avoid high connection fees). Don't pay $10k now for what is likely to cost $2k in 5 years.

Foyle, economically, you are perfectly right. But when one factors in the sitting-duck that is a Kiwisaver/Bank deposit in an OBR event, versus a 25+ year panel life (LG say 86% production in year 25) and a 10-15 year battery life - neither of which can be repo'ed by the Gubmint, then it makes comfortable survival sense go with PV+Battery.

I have Greek Cypriot relatives who recall the OBR event there: every bank deposit skimmed down to €100K overnight, so that has doubtless informed my world-view.

We have a LG battery with 9.8kwh storage. 24 panels. SolaX. For us the battery is worth the $ spent. The installer didn't push a battery - in fact he said they were expensive and would likely get cheaper, but we have a payback time of less than 10years. Yes, they may come cheaper in time but given the amount of power we use - over 16000kwh/yr - and the high cost of power in Central Otago (compared to what we paid in the north island) we have no regrets. Also we are home during the day so have adjusted our power usage to take advantage of the solar generation.
We have friends who are off grid in a large home, (but not a passive home), who find in winter they need to use a generator due to the number of days the solar doesn't generate any/very little power. They are partway up the eastern side of Pisa.
Happy to talk to you off site if you ask David C for my email address.

I'm neither of an 'off grid generator/very low user'. The system is grid-tied, but has an overriding setting of 'maximise self-consumption' so will use battery to supply demand in preference to grid. This effectively time-shifts residual demand to night-rate time, or reduces grid supply to the extent that PV or battery or both are available.

This is specifically designed to avoid the 'duck-curve' which pure PV (no battery) causes: as El Sol sets, PV stops and grid generation faces exacerbated ramp rates in order to meet demand. Adding the battery allows the rig to

..."flatten" the duck, shrinking its belly by shifting supply and demand so solar can meet parts of the load that wouldn’t normally be provided in the middle of the day.

Edit: Oh, and I pay daily line charges (Genesis) so that the grid will indeed Be There....

Wind power is Fugly and low yield. Just consent a new dam somewhere.

The Gas industries own organisation doesn't seem to worried.
http://www.gasnz.org.nz/nz-gas-industry/natural-gas-industry/gas-fields-...
They have oalready found enough potential gas fields to last us for the forseeable future. They haven't been developed , because it is not economic to do so .
Why keep exploring for gas when its not economic to produce it anyway ? The reality was , there was no serious exploration going on anyway .
.

I'm going to throw this one in here: Hydro useage is too conservative. Why not just run hydro harder? As in drain the lakes further. That would use less coal.

Wow... just wow.

I don't mean run it down to zero. Just run it less conservatively than we do now.

I agree with prag.
Wow. Just wow.

Exactly how are we running it 'conservatively' now?

Water has a cost, you know. Hence why we don't just 'run it harder'.

> Water has a cost, you know. Hence why we don't just 'run it harder'.

I could've sworn it was free in this country.

> Exactly how are we running it 'conservatively' now?

Most years we don't run out, therefore we must be running it conservatively. Sometimes we even spill to get rid of excess.

Now you tell me why the system is run as conservatively as it is.

"I could've sworn it was free in this country."

It is. Just not when you put it in a dam.
It has a marginal water value - essentially an opportunity cost of spilling.

"Most years we don't run out."

Yes. Purely because we allocate an opportunity cost to 'running it hard'.

This is real armchair engineer sort of stuff you are putting out there, JS.
From now on if you think of something really obvious as a solution, just ignore it because there is a very good reason as to why it is not the current case.

> opportunity cost

That opportunity cost is determined by a human, and its setting may not be optimal for reducing CO2 emissions. The reason it is way is because hydro inflows are not known for the coming year. Therefore it gets run conservatively. I contend that hydro can be run less conservatively, without reaching minimum storage levels.

*facepalm

The opportunity cost is determined by the market.

And yes, water levels can be forecasted with relatively high accuracy.

You have it exactly back to front. Inflows, which cannot be accurately forecasted, ulitmately determine the opportunity cost.

Oh. So not only is there a effective cost for water, it's also not a human that determines the opportunity cost, anymore.

Reading back through your comments is hilarious.
A perfect example of guess work pretending to be expertise.

nymad - it is not armchair engineering. It is uniformed guesswork. JS's comments show he just doesn't know what he is talking about - going for soundbites that look good, at least in his mind.

Yet again Jock you demonstrate you don't know what you are talking about. What happens when the lakes run dry, which they have done before and will again?

Or 'value'.

Take Waikato River . Water is getting sucked out for irrigation. MRP has to maintain minimum flow. MRP can't produce as much power as they might, as the irrigators are grabbing it. This hits the bottom line of MRP and thus the public's power bill.

This is why water needs to be costed.

A very good point.

Farmers benefit from an artificially low cost of water that has to be shared with generators in some areas.

But farmers and communities along the rivers are the ones who wear the costs of water degradation due to excessively lenient minimum flows in some cases. The Waiau river in Southland being a case in point. When limit setting comes in, the businesses in that catchment will be hit hard because the low minimum flow Meridian is allowed to get by with isn't enough to contribute to the river being in a healthy state.
http://www.southlandexpress.co.nz/our-community/river-eco-queried/
https://www.stuff.co.nz/national/109538527/meridian-energy-blamed-for-so...

Waiau river is a totally different situation to the Waikato. Waikato hydro power scheme doesn't divert water away from the Waikato river, and has very limited storage, its mostly run of river hydro, so what goes in one end comes out the other end (if the farmers don't nab it.). And since its going the same way, you may as well run it through the turbines to make electricity.

My comment was more generally that some power stations do have an environmental cost more than others and NZers need to consider ALL contributing factors to water quality when determining limits etc. I should have qualified that. I grew up not far from the Waikato River. Family up there now say that Lake Karapiro is a shadow of the waterway that it once was. They prefer to go the extra kms to the Hora Hora area for their water playtime.

To those of you in the electricity industry - is it true that a dam has a life span of around 90years? If so, Karapiro would have around 20years left?

There is a need to provide for more storage in the North Island . That doesn't necessarily mean pumped. It could be extending storage in the metre or 2 of usable variation . Wetlands would be ideal for this. More storage above Lake Taupo would be good too , as land is alot less valuable round the desert road etc.

Really Solar - you only went to maths and science classes to eat you lunch, didn't you. DO THE MATHS. If you don't know how, don't make stupid comments.

Chris Morris. Abuse does not help. Just saying.

Says interest's resident poppy cutter.

Only been designing hydro systems for 20 years. Lets hear your reasons for your comments.

Lake Taupo with a 300m head through all the dams has about 400GWh storage for 1.4m working range. NZ uses 100-120GWh a day. Even using a lake like Rotoaira and increasing its working range to say 10m will make very little difference to NI Storage. So a few ponds on the Desert Road is trivial

I'm not thinking about a few ponds. Lake taupo is 620 square k.m times your 1.4 metre range. I would think in m3 equivalent of that , eventually, in conjunction with wind and other generation. It would be for short term smoothing , rather than interseasonal storage.

A few meters of fall doesn't work for hydro (as you probably know), bigger falls are necessary.

Central plateau is very hilly which makes it a poor place for a storage lake - you need both fall and area, and building on top of a supervolcano that erupts every few 1000 years isn't ideal either. But biggest issue is that politics of power production and infrastructure development are now set by the Green Bananas (Build Absolutely Nothing Anywhere Near Anything). Their Luddism/Change nothing conservatism would see you shut-down as soon as the word 'wetland' left your mouth.

Let Tiiwhai Point go .

Its cost us taxpayers a fortune to subsidize , it uses way too much power , and the 900 workers will find something else to do , they are mostly skilled workers who will be absorbed into the economy elsewhere

Currently working on coal in Brayton Cycle, which when combined with a secondary Ranking Cycle would increase the efficiency of Huntly Coal by more than 50%. I learnt that Genesis, and other generation companies, have no capability for building new infrustructure.

Really? That's very cool/interesting. How do you deal with the fly ash in high pressurise combustion air eroding the turbine blades? And what about the generally large proportion of sulphur impurities in coal with their typically devastatingly corrosive effects on turbines etc? I knew that coal dust had been demonstrated as a fuel in some gas turbines many decades back, but didn't know it had gotten to the point of being an economic option.

Use wood, it doesn't have those same problems. However my combustion system (patented) is comparable to IGCC and produces a naturally clean gas without the energy consuming and expensive to engineer intermediary step. So clean that a US Laboratory has measure zero carbon monoxide on a scale of parts per million. This is the worlds first ever perfect combustionc the proviso is that parts per billion may reveal some.

Achieving complete combustion of the Carbon isn't the primary problem. As I remember it the big issue was the inevitable presence of alkali salts combining with vaporised silicaceous oxy-hydrides at high temperature to condense out as corrosive glasses in turbine components. These will be present in both wood combustion products and coal as well unless you have means to clean the combustion products. Google the damage that is done to Rankine cycle superheaters by this stuff.

Coal dust and wood gases have been applied far more successfully as fuels in large internal combustion engines - with higher efficiencies possible than in Rankine cycles. I've even seen car diesel engines run on coal powder by an Australian startup. Abrasive fly ash is a managable problem in a large IC engine like a ship engine that already has to deal with the high sulphur and ash in the low quality tar-like bunker fuel they use.

A possible CSIRO link here - DICE. I do like these sorts of threads - insights into the tricksy techy stuff that underpins our current state of living....done by Real Engineers.

We can see how brave the government's decision is May/June this year. The Transpower outages will really test the system. If one of the CCGTs go down, the lights will go out.

I cannot speak for the expertise or otherwise of the Commission but pumped hydro researchers in Australia have been awarded a leading national award.
https://arena.gov.au/blog/anu-pumped-hydro-researchers-take-out-eureka-p...

And elsewhere around the world grid scale battery innovators are close to commercialisation. I detail this in my updated article.

You simply can't comprehend the difference between Australia where they have 8% hydro generation and keep the coal burners going flat out and use the off peak power to pump water up a hill for later, and NZ where we have >50% hydro generation and simply throttle back the storage hydro to keep water behind the dam can you?

Google 'NZ hydro dry year' and then try to explain how simply throttling back on hydro to store more water behind the dams can work.

https://www.nzcpr.com/the-future-of-electricity-supplies-in-new-zealand/
This seems to be relevant... as an example...

"It would be possible to mitigate the risk by keeping the storage lakes brim full from January to May in all years with normal rainfall. The disadvantage is that this would result in a massive increase in spill in normal and wet years and would require additional generating capacity in the rest of the system to make up the loss from spilling.

Another option is to build a large pumped storage scheme. A site has been identified in the South Island that could store sufficient energy to get us through a dry year. But it would be expensive and it would take at least 10 years to build. RMA consents alone would probably take five years because they are likely to be opposed by environmentalists"

No, you explain where you are getting the extra generation to pump water up a hill. Are you burning coal to pump water up a hill into an expensive hydrodam for 1 in 20 year contingency use?

I think in his other article he advocated the use of other zero marginal cost producers such as wind and geothermal.

Given that there's not much geo in the south Island and wind is, well, wind, though..
We'll be keeping the GTs in the North Island burning to send power to Benmore to fill pumped hydro dams.
The other alternative is that we spill hydro to fill pumped hydro.

All this so we can have a huge unproductive asset sitting there to supposedly ensure security of supply.

Yes. The solution to the problem really is this crazy.

In other words Brendon, you have no ability to actually understand what was written by the Commission so you introduce a few irrelevant squirrels to sound knowledgeable.
You don't understand generation, you don't understand grids and you don't understand power engineering. That is the level of your contributions.

That's attacking the man not the argument isn't it?

Your argument is stupid because you do not understand what you are talking about, as you continue to demonstrate. You can call it what you like but that is not ad hom..

You introduced the straw man argument that the Productivity Commission are the arbitrary experts on the viability or not of pumped hydro. I said I had no idea why they had not commented on the issue but I gave overseas examples of pumped hydro and grid scale battery experts and for that you call me stupid. Well Chris Morris that is an Ad hominem attack.

The few metres is the variation in the level of the storage lake. Same as lake Taupo, and all waikato dams.You would have more fall for your turbine. Hill country is idea for building dams,2 sides already provided.

You do have no understanding.
Raising the operating level of the Waikato lakes means the power station upstream generates less. The volcanic plateau is unconsolidated ash, pumice and rubble so there is no bottom to your beloved potential lake.

Just be thankful we don't have any nuclear. We are blessed with more wind and sunshine than we can handle, and ample supplies of coal and gas in the meantime. I am amazed that offshore wind with super high towers has been a success in the North Sea, it has been so long coming. We have just the sort of problems you want to have, lots of choices and time to try things out.

Personally, I think coal is ok, apart from the particulate pollution, but gas is way better, and sunshine and wind would be better still. The hydro system is an enormous battery we already have in place. Nuclear is a disaster unless you need the plutonium. North Sea gas transformed Britain, every house got central heating over a thirty year period, which was an enormous improvement. Millions of houses went from being cold and damp to being warm and dry throughout the whole house. Far better than any other system I've met.

"Between 2009 and 2017, the price of solar panels per watt declined by 75 percent while the price of wind turbines per watt declined by 50 percent.
And yet — during the same period — the price of electricity in places that deployed significant quantities of renewables increased dramatically.

Electricity prices increased by:

51 percent in Germany during its expansion of solar and wind energy from 2006 to 2016;
24 percent in California during its solar energy build-out from 2011 to 2017;
over 100 percent in Denmark since 1995 when it began deploying renewables (mostly wind) in earnest.

The price of natural gas declined by 72 percent in the U.S. between 2009 and 2016 due to the fracking revolution. In Europe, natural gas prices dropped by a little less than half over the same period."
https://www.forbes.com/sites/michaelshellenberger/2018/04/23/if-solar-an...

Early adopters always get financially punished. PV and wind are cheap enough now - if you have enough other easily scheduled generation to use when the sun doesn't shine and the wind doesn't blow, and batteries are almost cheap enough to deal with day/night cycles (adds $0.05-0.2 per kWh to pv electricity price)

"Building the level of renewable generation and storage necessary to reach the state’s [California] goals would drive up costs exponentially, from $49 per megawatt-hour of generation at 50 percent to $1,612 at 100 percent.
And that's assuming lithium-ion batteries will cost roughly a third what they do now."
https://www.technologyreview.com/s/611683/the-25-trillion-reason-we-cant...

And your point is what? That building new energy infrastructure costs money that generators re-coup through price hikes?

Industrial rates per kWh in NZ doubled between 1995 and 2017 as well but we've deployed bugger-all renewables since 1995 other than some small wind farms.

Wind and solar are very expensive once you add in the idle standby power generation. Do we really want to go down the path of Denmark which have doubled its electricity cost even with the luxury of imported French nuclear when the wind doesn't blow? We have no such luxury.

Since 95, they have built about 800MW geothermal and the windfarms, plus uprated most of the hydros and built the second Manapouri tailrace - that is bugger-all ? - Another who doesn't know what they are talking about

Thanks to all for the informative debate. Informative contrast between the engineers of big power and the likes of those using systems at home. I am guessing that in their fields everybody is right.
I am wondering what will happen when we all drive around on electric about a decade from now. Statements which say it's uneconomic to generate the energy that off the shed roof may well be correct. But also correct is the joy of going out the gate taking energy generated from the property.
I see the interesting debate over the next few years will be about 'big power' centralised systems, versus the rise of distributed generation (eg my roof and the neighbours) How will we deal with changing the market structure and Transpower physically to make that work to the benefit of us all. Politics at it's essential purpose.

There is no one solution, and no one source that won't be required in one way or another.( except maybe coal as a fuel).The are plus's and minus's to each generation and storage method.
There isn't much information or cooperation available at the consumer level. Most grid connect PV systems simply pump most of their input back into the grid (at 7 cents per KWH), because the owners are not home or not using much power during the day. Battery storage is an expensive solution , far cheaper are controllers to use the power for hot water , freezers etc as a form of storage.

Southern Australia right now is a very good example of what happens when you don't have reliable dispatchable generation. The 1600MW that Hazelwood used to produce is being sorely missed, especially as it was shut down by State government decree, like the big plant in South Australia.
It is no good blaming the coal plants breaking down causing the cuts, like the Greens have tried to do. Old baseload generation was forced to two shift which always causes issues. The electricity companies also wouldn't put the mtce money in, as the state governments were making very loud noises about shutting them down as well. At last year's Generation conference, the likelihood of blackouts on hot days was openly talked about.
The governments have reaped what they sowed. The wind didn't blow and suburbs get switched off. Solar won't save you as it has got no frequency to match. If lines are dead so is your solar and battery system unless it is built with stand alone option, and that is dodgy for many appliances. SA is supposed to have about 150MW of diesel engines running - and there isn't much fuel in the country.
Just like Tasmania a few years back can tell you all about the risks of not having a conservative water management policy. The generated flat out to sell to the mainland, then the DC failed. They had massive power cuts and had to import engines, as well as recommission thermal units they shut down to show how green they were. Unfortunately, it proved they had the wrong definition of Green.

From Ambrose Evans Pritchard at Davos.

“I don't think a lot of policy makers have an understanding of how herculean the task is," said John Hess. He invoked the fifteen Princeton Wedges, the combination of measures that would broadly be needed to cut emissions to zero while meeting the surging energy needs of China, India, and the developing economies.

The world would have to do the following: triple nuclear power to 1200 gigawatts; increase wind power tenfold to two million turbines; increase solar panels 100-fold to 40,000 square kilometers.

Replace 1,400 coal plants with gas, and fit 800 remaining plants with CCS; double vehicle efficiency from 30 to 60 mpg, and cut mileage driven by half; raise bio-mass ethanol from one sixth of the world's cropland."

And so on. It's also becoming apparent now that livestock farming is in the firing line as a major contributor to emissions. Some hard decisions looming for NZ. And in hindsight, the oil and gas ban seems daft if it's going to lead to more coal,being burnt.