Accelerate the World's Transition to Sustainable Energy - to fight Anthropogenic Climate Change, page-37595

*** Bryan Leyland MSc, DistFEngNZ, FIMechE, FIEE(rtd), is a power systems engineer with 60 years experience in all aspects of power generation and supply all over the world

New Zealand has serious problems with its power supply. There are three underlying reasons: the weather, a flawed electricity market and adrive for ‘net zero’.

Sixty-five per cent of New Zealand’s electricity is provided by hydropower, and the remainder by geothermal, gas, coal, wind and some solar. Though hydropower is often seen as the one form of renewable energy which is not plagued by intermittency of supply, it sadly isn’t true. In a dry year, hydro’s ability to deliver falls away, and we lose about 10 per cent of our generation. In the past, we always tried to have the hydro reservoirs and coal stockpile full by the end of summer to guard against this possibility. When we switched to an electricity market, this was forgotten.

This year, we failed to refill the reservoirs, and levels are now unusually low. We are muddling along for the moment, but this is a difficult position from which to recover and there are likely to be blackouts at some point in the future.

The ability of our fossil fuel power stations to step into the gap has been severely restricted. We used to get 20 per cent of our electricity from gas-fired power stations, but six years ago, as part of theirdecarbonisation policy, the previous governmentbanned further gas exploration, and we are now desperately short of gas. The new government is encouraging new exploration but we won’t see the results for several years.

We also have a single coal fired station with insufficient coal in its stockpile because our electricity market does not pay for the cost of maintaining an adequate stockpile.

The situation has been made worse by poor market design. New Zealand was one of the pioneers of electricity markets, and chose a risky model which has proved to be seriously flawed.

As a result, the problems this year have led to wholesale market prices rising to ridiculous levels of as much as £1/kWh. This has already caused some factories to shut down; others are under threat. The politicians are beginning to realise that the energy crisis could have serious effects on consumers, and there is speculation that they will be forced to intervene. This could mean instructing our gas and coal-fired power stations to run flat out day and night – which won’t make much difference because of the lack of fuel. Failing this, the only solution in the short term is rolling blackouts. and a public conservation campaign.

How did we get to this situation?

Firstly, the electricity market is simply not fit for purpose. The underlying propositions are that ‘electricity is a commodity like any other’ and that ‘when the price goes up, the demand goes down’. But electricity is not a commodity like any other, because it does not have an alternative or significant price elasticity. It isn’t a market that Adam Smith would recognise. As two departing CEOs said, the way to make money is to keep the system on the edge of a shortage. Which means that disaster is inevitable if a dry year occurs. And that is exactly what has happened.

Theblind pursuit of ‘Net Zero’, has driven the closing down of gas exploration and the desire to shut down our coal fired station, even though it is doing a vital job in keeping the lights on.

The long-term problem

There has now been some rain on the hydro lakes and we are temporarily out of danger – assisted by the fact that the power companies have paid a stiff price to a major industrial gas user to shut down so that they can have its supplies.

But the long-term problem is still there: empty storage lakes that need to be refilled, not a lot of snow pack to melt in the springtime, declining supplies of gas, and the need to import 30 shiploads of coal and truck it to the power station. None can be achieved in the time available. The imminent shutdown of a 380 MW combined cycle power station, because it cannot find a secure gas supply for the next 20 years or so, adds to the problem.

Instead we are placing our faith in more wind and solar power. The price will skyrocket when it is in short supply, but that will not help the wind and solar farms’ accounts as that is when they have very little to sell. When wind and sun are abundant, prices will crash. This means that the wind and solar farms under construction and planned will not make enough money to pay for their construction and operation. New Zealand does not directly subsidise wind and solar power so we can’t even be sure that the generators will continue building them.

To be economic, wind and solar must be supported by low-cost long-term storage for days, weeks and months. There is no technology that can deliver this right now. New Zealand’s hydro reservoirs have huge capacity – approaching 10 per cent of a year’s electricity supply – but this storage capacity is already fully required to deal with the annual variations in hydro output. It cannot be used to back up solar and wind. Batteries simply can’t be used at national grid scales: they are too expensive by a factor of 50 or so.

Worse still the expectation is that electricity demand is going to increase rapidly, driven by domestic and industrial heat and road transport being electrified (although the extent to which this will actually happen in the face of rising power prices is debatable). Whether electric heating and transport arrive or not, we are already getting more and more data centres, which are a 24-hour per day load and need a reliable supply.

So the load will go up but we will be less able to keep the lights on when wind and solar are not delivering. Australia is 2000 km away, so there is no chance of importing from there, even if they did have power to spare, which they don’t.

We could build more geothermal stations, but that takes time, especially as the oil rigs they need to drill production wells have all departed overseas. There is probably 1000 MW so of identified geothermal potential, and there is the possibility that more could be found with exploration. But this is not a quick solution.

The only quick solution is to buy gas turbines and run them on diesel: not a nice prospect.

In the long-term we could consider more hydro generation, but that is blocked by many environmentalists, even though there is probably 2000 MW of potential left in the South Island. For those who do not believe in dangerous carbon-driven climate change – or who consider that atmospheric carbon levels will rise beyond desirable levels anyway due to China and India and that it is therefore pointless forWestern nations to spend huge sums reducing their emissions– more coal and gas generation are an obvious solution but they are not quick.

For those who believe that man-made global warming is real and dangerous, and that it is worthwhile for the Western nations to cut emissions alone, we could be urgently considering nuclear power. This is the only practical and economic way of having reliable electric power with low carbon emissions. I suspect that in spite of a long-held opposition to nuclear armed and propelled ships, the New Zealand public are more sympathetic to nuclear power than they are believed to be.

Whatever happens, New Zealand faces a very uncertain situation in the next few years with an increasing risk of major shortages and a major increase in domestic electricity prices.

The implications for other countries

I suspect that this is the writing on the wall for all countries that have pursued net zero and ignored the importance of keeping the lights on at a reasonable price. The UK is already relying on interconnectors for about 10 per cent of its electricity and would be in serious trouble if Europe was unable to provide backup power when UK wind and solar are not delivering.

For as long as Europe and other countries have net zero as a prime objective, electricity blackouts and high prices are inevitable. As we are planning to make our entire society electrically powered, this is a bleak prospect.

Bryan Leyland MSc, DistFEngNZ, FIMechE, FIEE(rtd), is a power systems engineer with 60 years experience in all aspects of power generation and supply all over the world