By Alan Brent & Gregory Guyot*
Greater electrification of the economy is an essential part of Aotearoa New Zealand’s climate policy, as set out in the emissions reduction plan.
But the national electricity system depends heavily on the fluctuating storage capacity of hydropower lakes, which makes the country prone to energy shortages during dry years.
The NZ Battery Project aims to address this. One of the options being investigated is the Onslow pumped storage hydropower (PSH) scheme.
A feasibility study is due to be completed and cabinet is expected to decide early in the new year whether to continue to the next phase of establishing a detailed business case.
Pumped storage hydropower is an established technology. It accounts for more than 94% of the globally installed energy storage capacity.
Worldwide, pumped storage hydropower has been ramping up. In 2021, 4.7GW capacity was added, up from 1.5GW in 2020. If it continues, the Onlow project will be one of the largest PSH schemes in the world, adding up to 1.5GW of generation capacity.
The proposed scale of the Onslow project requires a considerable investment – at least $4 billion. To justify this, we argue the scheme should be seen as a public-good and multi-purpose asset. It would not only support electricity generation but also address water and other sustainability priorities in the face of climate change.
Making the investment worthwhile
Pumped storage hydropower is well known to be a cost-competitive option for energy storage. While the capital expenditure is high, the cost of the energy is one of the lowest, at 20-40 cents per kWh. Return on investment in pumped storage hydropower is considerably better than for conventional batteries.
The Onslow project is also likely to qualify for a climate bond because its carbon emissions may reasonably be under the limit of 50gCO₂/kWh. To achieve this, it must use renewable energy resources for the pumping and its construction footprint has to be reduced.
Other environmental and social impacts (and opportunities) also need to be addressed. This includes the planting of an indigenous forest around the reservoir to prevent sediment erosion.
A multi-purpose asset
The Onslow infrastructure provides a way of managing dry years by storing water during rainy periods.
It can also participate as a conventional electricity generator. This will have implications for the wholesale electricity market because variability (from renewable generators) is currently mitigated by existing hydropower and fossil-fuel generation.
From a technical perspective, the challenge for Transpower is to maintain a consistent frequency and voltage in the power network. The Onslow infrastructure will assist with frequency regulation for the entire electricity network.
It offers a fast-acting and large-scale dynamic load, as is the case for other pumped storage hydropower projects such as the UK’s Coire Glas project or France’s Grand Maison. Both are also located remotely in the network similar to Onslow.
Globally, PSH schemes are viewed as multi-purpose assets. The Wivenhoe Dam (in Queensland, Australia) is a lower reservoir for a pumped storage hydropower scheme and provides drinking water and flood mitigation for Brisbane.
Another example is the hydropower infrastructure of the Durance Valley in France. It was designed, built and regulated to guarantee the operator provides drinkable water (740 million cubic metres per year) for 5 million inhabitants. It also supplies water to more than 170,000 hectares of cultivated lands (1.5 billion cubic metres per year in a dry season), generates reliable low-carbon electricity (for over 2 million people per year) and protects the valley from extreme flooding – and it’s become a visitor attraction, drawing 2.5 million tourists annually.
Onslow would offer similar water-management services. It could be delivering fresh water to Dunedin and other towns in the area, potentially free water to surrounding farmers and flood protection for towns along the Clutha River.
Another benefit is the regeneration of the Waiau and Waitaki rivers by freeing capacity (and water) from the Manapouri hydro system and the lakes at Tekapo and Pukaki.
Hydropower schemes are also viewed as territorial objects or public management tools. The schemes in the Drac Valley in the French Alps are a good example. While some of the agricultural land in the alpine valley was lost, the real estate values have increased substantially. Recreational activities now provide the main income for the area, estimated at €3 million (NZ$5 million) over five years.
The schemes have an enormous impact on local economies. The operators pay local taxes and provide employment, including local subcontracts, worth an estimated NZ$88 million.
The Onslow project would obviously bring employment opportunities (more than 1,000 direct and more indirect) during the construction and throughout its operation. But it could also provide financial benefits to the local community in the form of a local tax paid by the operator to maintain roads and infrastructure networks (telecom, water, energy) as well as other public services.
To ensure Onslow manifests as a sustainable, public-good asset requires careful upfront co-ordination to avoid complications. If the project goes ahead and is managed well, Onslow may become a long-lasting asset that offers the opportunity to diversify a low-carbon, self-resilient economy in Aotearoa New Zealand.
*Alan Brent, Professor and Chair in Sustainable Energy Systems, Te Herenga Waka — Victoria University of Wellington and Gregory Guyot, Associate researcher in Fluid Mechanics Energetics Process and Civil Engineering (PhD-Ing), Université Grenoble Alpes (UGA) This article is republished from The Conversation under a Creative Commons license. Read the original article.
**Listen to Earl Bardsley, who first proposed the Lake Onslow pumped hydro scheme, in an episode of Interest.co.nz's Of Interest podcast here.
89 Comments
Onslow may or may not do all of those things. But the article would have done better if it had included alternatives, of which there are many.
Distributed generation is one. That avoids the drain on the national system, and in particular drain on our existing storage. In my case it's a rare week that my solar brings in more units than it sends out. This is a quality house, but not extremely eco, and with minimal battery.
Our demand on the grid varies over days and hours, not 'dry years’. Further we are net contributors not net users. So this house is part of a solution to dry years.
As for cheaper, be sceptical. I heard Minister Wood talk of cheaper electricity but she was saying cheaper for the industry, consumers were not mentioned by her.
My father built dams on the Waikato. Efficently built and long paid for. So you might think cost to consumers now would be minimal. However the accounting principle values them hugely, a big return is required for that, and it costs consumers big. Go figure.
100% - decentralization is a path we need to go down using our current energy surplus before we are forced that way (enter PDK).
I think a baseload (such as Onslow) for civil & basic purposes is good, but if you want the big TV, AC, EV, PC's and Hi-fi etc then source the extra juice yourself.
Also (as you say) NZ cannot design or implement large civil based projects without exporting at least 50%+ of the monetary benefit to foreign shareholders. The best use of everyone's energy is to legislate to make user pays easier & cheaper IMO.
"Our demand on the grid varies over days and hours, not 'dry years’. Further we are net contributors not net users. So this house is part of a solution to dry years."
So what should we do with all that excess energy during the day, when solar is cranking?
Maybe some kind of pumped hydro scheme?
What's the storage capacity of the current dams? The proposed scheme is absolutely gargantuan in terms of quantity of power that can be parked up the hill, and actually stands a chance of filling in the 'missing power' gap when we have a dry year and the hydro plants run slower. This happened a year or two ago and we burned a whole heap of coal to fill the gap - remember the Government being blamed for that?
I suspect so too. Onslow would go alongside further investment in renewables so that we have a decent surplus to pump up hill in the good times. More generation is needed anyway, something like Onslow means that we can go even further with the renewables and still have a chance of balancing our intermittent generators.
My scheme would add storage at various stages of the pump up and at the top . Its just a case of thinking smaller , and utilising the geography to make minimal impact. In some cases , national parks or other areas aof natural beauty are involved so impact needs to be minimal .
Our current lakes have quite limited storage capacity compared to the proposed Onslow scheme. We could increase the range, at the expense of having a dustbowl several hundred metres wide between, say, Tekapo township and the lake front whenever the storage is running low. The current range is set by aesthetic and environmental considerations.
Distributed generation decreases risks from generation loss,reduces transmission and distribution loss (around 4500 gwh now) and increases the opportunity for smart grids.Such as the use of EV battery storage back into the grid for peak load ( smart grid metering will operate similar to ripple control ) This is around 250 mw of capacity already (although may increase surge pricing on uber)
Distributed generation is not cost efficient compared to centralised generation.
The installation cost is very significant when installing solar on your own roof. There are no economies of scale. Plus your generation and consumption timing do not match if you are typical.
Install solar on the roofs of industry. This is a business opportunity.
Install solar beside and on Lake Onslow. This is a no brainer but noone has thought of it.
The generic cases:
Install on or beside places where consumption occurs at the same time as production
Install on or beside storage.
Install where economies of scale can be applied.
new geothermal would still be a better and cheaper option
As would gas fired turbines to be fired up in a real emergency
There are also distribution risks adding to south Island based generation when usage growth is in Auckland region
so yes article ignores options/alternatives, downplays risk, overstates benefits and looks like a justification for a decision already made
It's not always an either-or. We're already building more geothermal generation and it's a fantastic baseline generator, but it doesn't do the same storage/buffering intermittent generation job that Onslow would.
Gas generation would make sense in preference to coal as a backup/peak generator but I am not sure we have sufficient storage for gas to cover the dry year problem, and we have no real capability to import gas as our own resources dwindle. This would require significant investment. Others may know more about the current situation in terms of production and storage capacity. Coal is a lot easier to import and store in large quantities.
AR, are you talking about nationalising the companies already majority owned and controlled by government who not so long ago deliberately spilled water to increase the spot price of electricity?
Government ownership simply means government can place more value on the revenue received rather than the interests of the consumer. Let's not be niaive.
It's "pidgin". Can't you get the name correct?! :)
Meridian was found to have 'contributed to an UTS by deliberately spilling to push spot prices up, costing consumers an estimated $80M', by the Electricity Authority in 2020, by spilling unnecessarily in December 2019.
I couldn't find a more recent update, sorry, so I don't know if Meridian's push-back was upheld. But such stories don't feed well into consumer sentiment re:overcharging power companies.
Meridian is also the company that pushed power prices up 4c/kwh on a 2c lines charge increase, then reduced by only 2c when that same lines charge was reduced by 2c. The letter to their customers attributed the power increase wholly to the lines company, despite half the increase being Meridian's own.
Contact Energy and Meridian Energy have been accused of extracting more than $60 million from consumers by over-charging for their electricity while spilling water from their South Island dams.
https://ecotricity.co.nz/meridian-contact-60m-ripoff
Also on spilling due to too much water:
Generators Meridian Energy and Contact Energy began spilling water to cope with the inflows but electricity prices on the spot market remained higher than might be expected, averaging around 15¢ a kilowatt hour (kWh, or “unit”). For about 10 years until 2018, the average spot price was around 7.5¢.
So if spot prices can stay high when there’s so much water, is the market broken?
https://www.consumer.org.nz/articles/spilling-water-is-our-electricity-…
Chaos and Nzdan
It would have helped if you had done a lot more research before commenting.
At the time of the spilling, there was massive flooding in the SI, the hydro inflows to the lakes were massive and the generators were trying to lower lake levels to give them headroom for more rain.
Flooding updates: Rangitata River and Waitaki catchment area | Environment Canterbury (ecan.govt.nz)
The DC was running about 800MW north, constrained by lack of NI Reserves. The spill in question on the Waitaki scheme was supposed to have been 55MW worth. At times, the Meridien plants on the river were generating over 1200MW. At the time Manapouri was doing 750MW baseload, and they had to back off Clutha because of line constraints getting power north of there.
After some investigation the EA decided Contact wasn't spilling to manipulate the market.
Meridian spilled water to hike electricity prices - Authority ruling | RNZ News
However, they reversed their preliminary ruling a month later.
Meridian and Contact cleared of alleged trading breach | BusinessDesk
Theory is use of excess power to pump, problem I understand is NZ generation capacity is at 92/98% utilisation. Pumped storage in UK at Trawsfynnd is driven by Nuclear power from Wylfa which runs at 100% 24/7 so most nights there is ample excess power. The answer for NZ is increased generation - and it won't happen until power cuts make enough NZers so angry that politicians override obstructionists.
For Clarity from above:
Octopus pay 17c for power that goes out. And various rates high/medium/night for power we bring in the gate. No line charges in our situation. (of course there are line charges but they recover those within their charge for power units.
Perhaps we are unusual, but we send a lot of electricity out and very little comes in. Our four months with commencing with them have monthly power bills each month where they owe us $60 -$70 - $80 per month. So four months they owe me $277 to be exact.
As above the trick is they will not pay you out in cash. But for most people it's like money in the bank because they will turn on heaters in the winter so the credit will be used up. For us, we shall see.
Anyway without solar our power bills were about $200 per month. With solar and using Genesis that went down to $50 -$70. Now with Octopus it's credit so far about $70.
Chasing a good rate for your generation pays.
But I don't want to focus on that. My point in my first post was that we are a great contributor to the electricity system, and promoting more of this would make Onslow redundant.
Reading Octopus' NZ web site was like taking a breath of fresh air. I hope it continues but the cynic in me says it won't, so take advantage while you can! Sadly Octopus is not operating in this area, but if/when they do we'll be "in".
We have been off-grid solar powered since 2016, but retained the old grid connection as 'back up' (happy to pay approx $20/mo rather than buy/install/maintain/run a diesel generator for back up). A grid-tied solar system was out of the question at the time due feed-in rates of less than 5c/unit, so many "hoops to jump through" to install grid-tied, and some technical reasons unique to here.
With this government now phasing out the "low user" lines charge of 30c/day, our electricity bill will go from about $20/mo to about $80/mo with all of the increase being the new $1.80/day (+GST?) lines charge. Looking forward to Octopus' "low user" price plan option with no daily charge.
Yet another article written by academics who have no understanding of how electrical generation actually works, nor any idea of the costs of expanding and operating an electrical grid. And no experience working for System Operations. PhDs have no more insight into the industry than the average plant operator.
If people want to use current examples, how is Snowy 2 getting on?. Why did Clough go bust?
Yep as an ex Transpower wholesale market employee I think the same.
Megan Woods has been shown to to totally out of her depth as well. The electricity industry is so complicated nobody has a good overall understanding of all the important details.
One tiny example: a generator constrained on to provide voltage support. What is voltage support? Why would provision for this ever be needed?
After comments made by the writers about how pumped storage like Wivenhoe would support the grid for security and frequency control, I looked up the actual data of what happened in Queensland when Callide fell off last year. What little wind there was actually generating fell off with the fequency drop. Most of the grid solar was taken off. As they switched off suburbs, almost all of the behind the meter solar went off. Hydro didn't come in till 90 minutes later. If that is dynamic support, I would hate to see what static did.
Guess what. Most of the coal that hadn't tripped from the incident just chugged on, and the standby GTs were starting to generate 5 minutes after the trip. That is reality. It is also why I rubbish stuff written by academics as the should have known about this. It and the repercussions were all over the industry
Got it. I then assume that when you say the behind the grid solar went "off", that it was "off" to generating to the grid. But still generating for the house.
Well hopefully, because that's the only reason I have a battery, so the house runs when the street supply goes off.
The report doesn't go into that level of detail but from what is reported, it was off for two reasons. One was the local distribution system was off and those houses didn't have batteries. The other was the voltage fluctuations from the disturbance tripped the inverters. For the latter cases, houses as far away as South Australia were affected.
Strange, I thought they were feeling the effects of having their fuel supply for so called reliables cut off...
And its amusing calling renewables unreliable when https://www.abc.net.au/news/2022-11-04/callide-power-station-offline-eq…
That's fantastic. Imagine if they could couple that with an Onslow-scale scheme that would allow them to overbuild solar and store the excess for the night. Once your solar generation can provide 100% of your needs at peak, you need storage if you want to build any more.
For us, wind is our cheapest current method and Onslow would allow us to 'overbuild' our wind generation while maintaining a reliable grid.
Cheapest compared to what? Intermittent wind and solar and require an expensive Onslow backup/Indonesian coal. Once storage cost is taken in to account solar and wind a are very expensive. Just look at the snowbound, windless UK today - "Vitol is being paid £6,000 a megawatt-hour to generate in the UK’s balancing market".
"Levelized Full System Costs of Electricity
...Analyzing different sources of generation sources shows that the LFSCOE are much higher for wind and solar than for conventional and dispatchable fuels, which stems from the large requirement for storage to overcome wind and solar’s intermittency. However, even if these storage costs drop by 90%, renewables are still not competitive on an LFSCOE basis.
https://www.bloomberg.com/news/articles/2022-12-12/energy-latest-uk-rea…
Gentailers love unreliables! It is classic Baptist - Bootleggers - "Vitol is being paid £6,000 a megawatt-hour to generate in the UK’s balancing market". What is cheapest for the consumer - perhaps have look in the LFSCOE linked paper? Also, are gentailers permitted to build all base load options or just the virtue signal flavour of the day?
'We're all in trouble' | Wind turbine makers selling at a loss and in a 'self-destructive loop', bosses admit
...Currently, some 85% of the industry’s components are, however, coming from China, he said.
“The energy independence is supported by a supply-chain dependency policy. This a huge risk.”
Blanco was not only referring to rare earths, but said “normal things” such as metallic shafts in turbines, 95% of which are sourced in China."
https://www.rechargenews.com/wind/were-all-in-trouble-wind-turbine-make…
Contact are investing in geothermal base load, no-one is considering thermal because the economics don't stack up - in fact the gentailers have been decommissioning thermal plants and any still left holding them are trying to convince the Government to form a 'ThermalCo' to take them off their hands. As noted below, carbon credits make coal generation non-viable at a price consumers are willing to pay and this is likely to get worse as credit prices increase.
You're probably right that nuclear base load is essentially off the table due to current Government policy, but that would be a tricky fit for us anyway. Perhaps its day will come soon.
That'll be predominantly because of the ETS and possibly gas supply for a gas turbine generators
Texas has or is going to introduce legislation that any new wind farms have to provide an alternate source should they stop generating under certain circumstances. There are tax benefits or some form of subsidy, federal i think, for wind farms to be constructed. Without these very unlikley any wind would be installed in Texas. Just waiting for rolling blackouts to occur in Californication because of their energy policies. Close down nuclear and fossil fuel plants. Thev've also "exported" a large portion of their energy supply.
What incentives to the generators have to overbuild regardless of the mode of generation?
(edit) Another question, whilst Onslow is being considered, how would this influence the investment risk for any of the generators to build more generation if they thought Onslow could become a reality and create a lid on prices?
Solardb
You are another one who needs to tell the whole story. I gather you are talking about 16th October. That day, they had to keep the GTs running at about 100MW to provide grid inertia. Most of the wind was dispatched off and a surplus 300MW was exported. You also failed to mention that at 6:30 that morning, the gas turbines and engines were generating 700MW and at 6:30 that night 800MW, plus importing lots of coal power from Victoria. Their beloved batteries show as a just a tiny sliver on the Gen Mix graph. Looking at 12 months data for south Australia, the grid solar was 7% of the generation and gas 35%.
You also didn't mention that when most of SA was islanded last month, they couldn't get domestic solar off the grid to stabilise it. They let the domestic voltage rise to 253V to trip those inverters off. Pity if it fried your household appliances’ electronics
And for the privilege of that virtue signalling, they have the most expensive power in Oz, about 36c a unit.
The full picture puts quite a different complexion on your puff piece comments, don’t you think?
I fail to see your point regarding the name of an African country that I am sure the people who inhabit it have named themselves. My objection is to all the woke folk who seem to be obsessed with changing the name of our country without putting it to a vote. I'm sure if the proposed name has any merit a majority of us will adopt it as our new name.
Dammed by faint praise. "Return on investment in pumped storage hydropower is considerably better than for conventional batteries."
That time A$2 billion pumped hydro became A$10 billion.
https://www.smh.com.au/national/five-years-on-snowy-2-0-emerges-as-a-10…
This is only viable with a small, modern reactor which is not really proven tech yet (although I understand it's close). A traditional nuclear plant would be so large we would be unable to provide backup for it without, say, building a couple of gas plants next door to turn on whenever there is a fault in the nuclear plant or its connection to the grid, or for maintenance. Otherwise every little fault at that plant means blackouts.
"TVA’s whole nuclear fleet of seven reactors, with a total daily capacity of about 8.3 GW of power, has generated more over that period than the approximately 34.2 GW of intermittent power that California’s great wind and solar industry has brought to market, and with only a minuscule fraction of the land (and rooftop) footprint. Moreover, unlike much of New England and California’s green energy installations, all that TVA nuclear power is publicly-owned, producing energy at cost, not for profit—and not for Wall Street, whom federal tax credits for “green energy” were set up to enrich."
https://thebreakthrough.org/journal/no-18-fall-2022/we-need-a-nuclear-n…
It is a nice idea. But surely to proceed we need some very detailed
Planing and modeling of what our future power generation and demand will be with firm commitments of where we will be going.
Modeling of how the generation and distribution system presently operates, how it can be managed optimally, with and without pumped storage. Incorporating variation of weather patterns. Other options that need to be considered and possibly implemented are load management, other storage options (Lake Hawea/Wanaka pumped storage is very easily implemented at far lower cost), Transfer of surplus water from the West coast to the SI storage lakes, etc etc
Investigating and numerically model what options that we have to smooth the matching of demand and supply optimally
Where would this sit in our privately owned power and marketing power market?
Inside a firm future energy plan decide if and when it is economically justified to implement this or any storage proposal
This is not some arm chair nice idea past time and needs detailed competent planning and analysis. Sadly it is a long time since we have seen any of this in NZ.
When the authors write "we argue the scheme should be seen as a public-good and multi-purpose asset" there is an implication that they are making an original contribution about a new way to view pumped storage at Lake Onslow. However, as the authors are clearly aware, the multi-purpose value of the scheme dates from publication in 2019 of the University of Waikato PhD thesis by M. Majeed "Evaluating the potential for a multi-use seasonal pumped storage scheme in New Zealand’s South Island". The only original contribution by the authors would appear to be the suggestion of planting forests around the lake shoreline to supposedly reduce erosion. However, it is not clear what the origin of the erosion might be. It would seem that the authors have never visited Lake Onslow.
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