National has committed to halt investigating hydro dry year buffering schemes in its first 100 days, but is it wise to terminate feasibility studies before their outcomes are known?
Comment: Dry years hurt us. It’s not so much the risk of the lights going out as the impact of high electricity prices from burning coal and gas to make up the hydro-generation shortfall. The dry first part of 2021 saw industry closures, and some gas supply had to be diverted to power generation.
Genesis might have run out of coal if the rains didn’t start in May. Then the lights would really have gone out.
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* Epitaph for Onslow
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Unfortunately, a myth has become established that all we need for dry years is more renewable generation.
This arises from confusing power with energy.
Power is a flow of energy. What is needed for dry times is increased energy storage that can be converted to a particular energy flow (electricity) when needed. Just having more renewable power generation will not work by itself.
Given the seriousness of the dry year risk, the National Party policy in its Electrify NZ document is little short of astonishing. Apparently, it knows of an unknown expert who told the Electricity Authority that having more renewable generation would suffice.
The National Party has thus swept the dry year problem under the carpet. It feels that all that is required is an easing of the consenting process for renewable power developments. Then the free market will look after everything. However, there is a problem with this philosophy. A dry year solution requires new energy storage and there is no money to be made from energy storage.
And that’s National’s dry year policy in as many words. They might as well have said they knew of an unknown somebody who has discovered cold fusion.
The power/energy confusion for dry years can be illustrated with two examples that come up frequently in public discussions: large-scale rooftop solar and more hydro dams.
Solar panels don’t store energy and can’t provide the months of continuous 1000MW power output to get us through a dry time. More than a trillion dollars would be needed to pay for batteries to provide the 5TWh of energy storage needed for a dry year.
For new large hydro dams, we ignore for the moment that flooding significant river valleys for power generation will never again be acceptable in New Zealand.
New dams would still be a very bad idea for dry years.
Suppose, for example, that new dams are added to the Clutha River and the Clutha generating capacity is doubled.
That will have the effect of increasing energy storage capacity (in Lake Hawea) by just 0.35TWh, far short of the 5TWh we need.
Even worse, a dry year in the Clutha will now have greater impact because there is more decline of power output when going from a normal year to a dry year. With the Clutha River flowing low, multiple dams producing not much power is little improvement over the existing two dams producing not much power.
This is similar to National’s policy of “doubling renewable power”. Twice as many wind farms all generating no power in an anticyclone will not be helpful.
The key point to be made from all this is that solving the dry year problem without increasing emissions requires creating a large amount of new energy storage capacity.
Numerous energy storage options were evaluated and eliminated by the NZ Battery team at MBIE.
Just three possibilities survived to go forward for detailed business case analysis: gravitational potential energy (water stored in Lake Onslow), chemical energy (a pile of wood pellets at Huntly), and heat energy (geothermal wells held in reserve).
The wood pellets and geothermal options were categorised together into a single “portfolio” option that would be based in the North Island.
Lake Tekapo was not selected as an alternative to Lake Onslow. Presumably this was because adding 5TWh would flood Lake Tekapo township and the lake would become a dustbowl at maximum dry year drawdown.
The Onslow construction cost is estimated at $16 billion. The portfolio option is less expensive at $13b. However, it would have a much higher running cost and involves riskier technology.
Both alternatives are massively expensive. However, the missing part of the equation is reliable quantification of the long-term dollar value of both options as national infrastructure.
The Onslow scheme would have a long construction time but would produce cheaper power. Most of its operation time would be spent generating income by smoothing the intermittency of wind and solar power, independently of dry years.
This was to be the next task of the NZ Battery team, with reporting back due in mid-2024.
Then came the change of government with the election and the present National Party policy is to terminate further investigation of both options, not just Onslow.
The National Party has thus swept the dry year problem under the carpet. It feels that all that is required is an easing of the consenting process for renewable power developments. Then the free market will look after everything.
However, there is a problem with this philosophy. A dry year solution requires new energy storage and there is no money to be made from energy storage.
The New Zealand electricity market has not delivered significant energy storage in the past, nor will it do so in the future.
National’s abdication of its responsibilities in the energy scene is inexplicable. Even ACT recognises the dry year risk to the extent that it favours the portfolio option progressing to full business case evaluation.
However, both the Lake Onslow and portfolio alternatives are complex and contain different risks. It would be unwise to define a single winner at this early stage.
In fact, it could happen that further evaluation of both alternatives may lead to elements of both proceeding to full development.
This is because the two options are complementary rather than competing.
Unlike Onslow, the portfolio scheme could be constructed relatively quickly and with minimal environmental impact.
However, it is likely to produce more expensive electricity and would not have fast-start peaking ability that could be used outside of dry years.
The Onslow scheme would have a long construction time but would produce cheaper power. Most of its operation time would be spent generating income by smoothing the intermittency of wind and solar power, independently of dry years.
Having the ability to either pump or generate means that the Onslow scheme’s 1000MW installed capacity could buffer 2000MW of new wind power.
In addition, Onslow would encourage new wind farm development because it would set an electricity floor price. In this way, new wind farms will have a shorter time to recover establishment costs.
Onslow development would have an environmental impact through wetlands lost. It is a subjective call whether this is compensated by reduced emissions and a return to higher summer flows in the lower Waitaki River.
The Onslow scheme does not require alternating wetter and drier years. However, it does have a drawback because its finite storage capacity makes it vulnerable to a rare sequence of consecutive dry years.
All this raises the possibility of an interesting combination: a dual scheme comprising a reduced 3TWh Onslow scheme, coupled with a reduced version of the portfolio scheme. The 3TWh Onslow alternative would be less expensive because a smaller dam is involved and less land is flooded.
The dual scheme would also have the advantage of sharing power security over both the North and South Islands.
The portfolio component in the dual scheme would be important for dealing with dry years during the long period of Onslow scheme construction. Once Onslow is operational, it would be given preference for generating because its power would be cheaper.
The portfolio component would then be used just as Onslow backup for rare but still serious instances of sequences of multiple dry years.
Energy storage variations such as the dual scheme may or may not prove viable. However, we will never know unless both the Lake Onslow and portfolio options are permitted to carry on to completion of full business case evaluations in 2024.
The ball is now in National’s court. Will it consider shifting its policy to allow the possibility of alternative energy storage? Or will the do-nothing mindset prevail and our dry year energy storage defaults permanently to a pile of expensive Indonesian coal at Huntly?
