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Commentary: New Zealand is this close to a 100% renewable electricity grid

August 6, 2020

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DUNEDIN, New Zealand: A proposed multibillion-dollar project to build a pumped hydro storage plant could make New Zealands electricity grid 100 per cent renewable, but expensive new infrastructure may not be the best way to achieve this.

New Zealands electricity generation is already around 80 per cent renewable, with just over half of that provided by hydro power.

The government is now putting NZ$30 million (US$20 million) towards investigating pumped hydro storage, which uses cheap electricity to pump river or lake water into an artificial reservoir so that it can be released to generate electricity when needed, especially during dry years when hydro lakes are low.

The response to the announcement was mostly enthusiastic – not least because of the potential for local jobs. But whether it is the best solution needs careful evaluation.

There are many realisable changes to electricity demand, and New Zealand should consider other potentially cheaper options that deliver more efficient use of electricity.

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PROMISE OF A PURELY RENEWABLE GRID

Electricity is mooted to play a major role in achieving New Zealands target of net zero carbon emissions by 2050. To support the governments plan to accelerate the electrification of the transport and industrial heating sectors, generation will need to grow by around 70 per cent by 2050, all from renewable sources.

Worldwide, pumped hydro energy storage is seen as a promising option to support cheap and secure 100 per cent renewable electricity grids.

New Zealands analysis will mainly focus on one particular lake, Lake Onslow. If it stacks up, it would be the biggest infrastructure project since the “think big” era of the 1980s.

But at an estimated NZ$4 billion, the cost would also be massive and the project would likely face opposition on ecological grounds.

File photo of Lake Wakatipu, New Zealand. (Photo: AFP)

Such a scheme would be a step towards the governments target of 100 per cent renewable electricity generation by 2035 and fit with the overall goal of New Zealand achieving net zero carbon emissions by 2050.

It would also solve the problem conventional hydropower plants face during dry years, when water storage runs low and fossil-fuelled power stations have to kick in to fill the gap.

But the possible closure of the Tiwai Point aluminium smelter would free up around 13 per cent of renewable electricity supply for flexible use. This alone raises the question whether a pumped storage development on this scale is necessary.

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CHANGING SUPPLY AND DEMAND

Getting to 100 per cent renewables and achieving a 70 per cent increase in supply in the next 30 years will mainly come from new wind and solar generation (both now the cheapest options for electricity generation) as well as some new geothermal.

Major new hydro dams are unlikely because of their significant environmental impacts.

As a result, electricity supplies will become increasingly variable, dependent on the vagaries of sun, wind and river flows. This creates a growing challenge for matching supply with demand, especially if hydro lakes are low.

Last year, the Interim Climate Change Commission concluded New Zealand could get to 93 per cent renewable generation by 2035 under current market conditions. But it warned the final few per cent would require significant overbuilding of renewable generation that would rarely be used.

It suggested the most cost-effective solution would be to retain some fossil-fuelled generation as a backup for the few occasions when demand overshoots supply. It also recommended a detailed investigation into pumped storage as a potential solution for dry years.

A cattle farm is seen in Fernside outside Christchurch, New Zealand March 29, 2019. REUTERS/Jorge Silva

Electricity demand – the collective consumption of all businesses, organisations and households – is also changing.

Households and businesses are switching to electric vehicles. Farm irrigation is becoming widespread and creates new demand peaks in rural areas. Heat pumps are increasingly used for both heating and cooling.

These all create new patterns of demand. And households arent just consuming power.

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More and more people are installing solar generation and feeding surplus back into the grid or storage batteries. Local community energy initiatives are starting to emerge.

New markets are developing where businesses can be paid to temporarily reduce their demand at times when supply is not keeping up. It is only a matter of time before such demand response mechanisms become commonplace for households, too.

In the near future, housing collectives could become virtual power plants, and electric vehicles could feed into the grid when supply is stressed.