Renewable Energy

Working Towards 100%

In the summer of 1982 while on holiday, my family took a detour to Cromwell so we could visit the valley that would be flooded by the hydroelectric dam on the Clyde river. I remember being confounded by the idea. The road I was standing on would be intentionally flooded. I was visiting a landscape that would disappear. People had sacrificed their homes so electricity could be generated for the rest of the country. I didn’t think it was good or bad. I just thought it was strange. I couldn’t quite wrap my head around it.

In the early 1980s New Zealand produced 90% of its electricity from renewable sources. Today we produce 80% from renewables and our national target is to achieve only 90% renewable electricity by 2025.

Meanwhile residential electricity prices – in 2015 dollars – have almost doubled since 1980. Some commentators boast that New Zealand, like Norway, has one of the highest percentages of renewable electricity in the world. Yet, on a purchasing power parity basis, New Zealand’s residential customers pay almost twice what Norway residential customers pay. Furthermore, residential prices in New Zealand remain high despite falling retail demand.

Real and Nominal Residential Electricity Prices for March Years 1974 - 2015 Energy in New Zealand 2015, Ministry of Business, Innovation and Employment

Real and Nominal Residential Electricity Prices for March Years 1974 – 2015 Energy in New Zealand 2015, Ministry of Business, Innovation and Employment

New Zealand consumes almost 40,000 gigawatts of electricity each year. A gigawatt is 1,000 megawatts, or 1,000,000 kilowatts. Approximately one quarter of New Zealand’s electricity is consumed by residential customers. The remainder of our electricity is consumed by the primary (agriculture, forestry and fisheries), industrial, and commercial sectors.

Over the past decade New Zealand’s energy intensity – the amount of electricity used to produce each dollar of GDP – has consistently fallen. While energy efficiency has contributed to this fall, the greatest influence on energy intensity has been the rapid growth of the commercial sector (low energy intensity) relative to the industrial sector (high energy intensity). For example, the aluminum smelter at Tiwai Point uses 12.3% of New Zealand’s electricity but now contributes less than 0.25% of the country’s GDP. By comparison, Progressive Enterprises which owns 171 Countdown supermarkets uses only 0.8% of New Zealand’s electricity but generates 2.4% of New Zealand’s GDP.

Renewable energy’s share of electricity generation fell during the 1980s and 1990s as new fossil fuel generation was built to match our country’s GDP growth.   Consequently, each year our existing hydro dams contributed a smaller and smaller proportion of our total electricity needs.

Hydro definitely has its disadvantages. Hydro dams disrupt local wildlife, cause erosion, and are vulnerable to earthquakes. However, thirty years ago hydro power was the most economic grid scale source of renewable energy. By comparison, solar generation cost US$30 per kilowatt hour in 1980. Today solar photovoltaic generation is one hundred times cheaper. Modern photovoltaic generation now costs only US$0.30 per kilowatt hour.

Instead we built fossil fuel plants. As a kid when my family drove south from Auckland, passing through “Collision Crossroads”, and over the last ridge at the top of the Bombay Hills, the descent into the Waikato presented a bucolic landscape marred by dark smog lingering over the Meremere coal power station. Again I felt ambiguous. The smog was ugly but each year the power station strung up lights that said “Meremere Christmas”. That always made me smile.

Later when the Meremere plant closed, that last Bombay ridge showcased clear skies above the Waikato. Only in recent years have I recognised that pollution still sits above the valley. This time it’s coming from the Huntly power station but because it’s CO2, it’s invisible.

Last week Genesis Energy announced that they would be closing Huntly’s remaining two Rankine coal powered plants in 2018. Genesis did not however demonstrate a commitment to accelerate the replacement of fossil fuels with renewable energy. Even after 2018, Huntly will continue to generate 450 megawatts from natural gas. With an average CO2 intensity of 450 kilograms per megawatt, after Huntly’s coal units are closed, the gas-fired power plant will emit over 200 tonnes of CO2 every hour it operates.

At the United Nations Rio Conference in 1992 New Zealand acknowledged our role in mitigating climate change. In May 1994 the Electricity Corporation of New Zealand sought consent for a new 400 megawatt gas-fired power station at Stratford. This single power station was projected to increase New Zealand’s total CO2 emissions by 5%. Following a Ministerial Board of Inquiry, Stratford Power Limited was required under the Resource Management Act to plant 4,000 hectares of forest per year for the life of the plant to sequester the carbon dioxide emitted by the new plant. This requirement was never enforced. In June 2003 the Taranaki Regional Council deleted the requirement. By 2010 another 200 megawatts capacity had been added to the site.

Transport and Energy Minister Simon Bridges says “New Zealand’s abundant energy resources give us a renewable energy advantage that we need to make to the most of”. The government has described its goal for New Zealand to reach 90% renewable by 2025 as “ambitious”. Given that this would only return us to the level of renewable electricity we enjoyed in the early 1980s, this goal seems uninspiring and timid.

Percentage of New Zealand Electricity Generation from Renewable Sources*  Energy in New Zealand 2015, Ministry of Business, Innovation and Employment

Percentage of New Zealand Electricity Generation from Renewable Sources* Energy in New Zealand 2015, Ministry of Business, Innovation and Employment

Over the next few weeks we will demonstrate how New Zealand could achieve 100% renewable electricity by 2025.

About the author

Belinda Storey

Belinda Storey

The Founder of Nouveau Eco, Belinda has 20 years experience advising multinationals in New Zealand, Australia and the United States. Her work has been covered by Radio New Zealand, the New Zealand Herald and Harvard Business Review. Belinda is Chief Consultant Rural Climate Impacts for Aotearoa and is a Board Member of ShelterBox New Zealand. She is a Member of the Institute of Directors.

1 Comment

  • You’ve set the scene really well Belinda and I’m looking forward to the next instalment! I think laying out the journey since the 1980’s gives context for what the current plan is, something the government needs to be measured against going forwards.

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