Part 4, New Zealand and Renewable Energy

Chris Morris is a semi-retired power station engineer in New Zealand who has commented here on No Minister occasionally and on other NZ blogs. In mid 2023 he emailed me about a series of four articles he had written for the blog of Judith Curry in Australia.

I published a summary of the key points of his first article here, Australia’s Transition to Renewable Energy, Part 1, and Part 2, which looked specifically at South Australia(SA). Part 3 deals with the impact of renewable electricity on the grid and follows on from the point made in part 2 that replacing fossil fuel generators with renewables is easier than building a grid to cope with them and that both have to be done concurrently.

Part 4 is all about New Zealand, since we’re an example of the sort of thing other nations are striving to achieve, as the following graphs from Transpower’s website showed for November 19 at 4pm:

That dial is hardly ever below 80% but of course that’s thanks to our old hydro-electricity system, plus the newer geothermal plants. As you can see, wind and solar barely count with 8.62% of the total. Wind was pushing out 388MW from a plate capacity of 1259MW, a 30% efficiency, which is typical of wind and solar at 41MW from a plate capacity of 47MW, although evening was approaching of course.

Chris’s original article was written with Judith Curry’s Australian audience in mind but given how little is understood about the NZ system by Kiwis themselves, it’s just as effective for us.

Key points:

• The NZ grid runs on a market model but it’s a lot simpler than the Aussie one:
  • The grid is owned by Transpower, which is 100% owned by the State because it’s a natural monopoly (nobody is going to build competing power lines).
  • Transpower is also the system operator, who has to maintain a second-by-second balance between supply and demand and operates legally as an independent entity that’s basically a subsidiary (for all the players in the market it has to be seen as independent and impartial).
  • There’s a market regulator called the Electrcity Authority.
    
• The market model is something called a “merit-order stack” of bids to supply power for 1/2 an hour, starting at the bottom with “must-run” bids put in at $0.01/MWh. Prices are shown in fourteen regions and increase as you move north.
  
• The market is only for “residuals” – about 10% of total generation – to cover the changing daily and hourly supply and demand gap. The rest is locked up in long-term pricing contracts or hedges to cover customer power needs.
  • Bids prices increase as you go up the stack. The generators bids have to cover their fixed and operating costs at a minimum of course.
  • The bids are accepted, with units “switched on” to dispatch power, from the bottom of the stack (the cheapest) up to the point where demand is met.
  • If there’s too much power, such that $0.01/MWh is not cheap enough to make it worthwhile to produce, power plants are told by the Transpower grid operator to stop or reduce output.
    ** unlike Australia where they use “negative pricing” – charging generators if they supply power – to push them off the grid when supply exceeds demand.
    
• Physically the grid is a spine running the length of the two main islands, with a DC (Direct Current) link between them. Two thirds of power consumption is in the North Island and 2/3 of that in the upper half.
  
• Total generation is about 44TWh per year (Aussie is over 270), a small grid:
  • About 60% of the generation is hydro-electric and most units are small compared to overseas (most in the 30-50MW range, some above 110MW). The hydro is based on chains of stations on three main rivers (two in the South Island, one in the North), plus the Lake Manapouri underground station in the South Island taking water from the lake to the sea and dedicated mainly to the Bluff Smelter.
  • The river-based system means artificial lakes with the tailrace of one station starting at the head of the next. As a result there’s only about six weeks of supply and staging the flows is as much a balancing act as that of the power grid. If low demand means the stations have to be dispatched off the system then they have to spill the water downstream instead. The level of the lakes is actually monitored by major consumers.
  • Geothermal 20% (and typically at a very high load factor >90%), wind less than 10% of generation.
  • Gas-fired stations provide 2/3s of the gap between renewables generation and load, coal 1/3 (almost all at the large Huntly power station).

Aside from the massive renewables load courtesy of hydro and geothermal, there are some other unique aspects to NZ’s power grid:

• The load is globally unique in being highest in winter not summer. Most other nations heat with gas/oil and cool with electrical AC, whereas our summers are mild enough that we don’t need AC and we heat with electricity.
• The daily load curve is also unique with a double peak (morning and early evening)
• Both are because the only big industrial load is the 500MW smelter in the bottom of the South Island, which actually stablises the grid, although there are pulp and paper factories that add up to 200MW and run steadily.
• Because generator units are so small, matching supply and demand is usually done by simply switching them on and off rather than tuned up or down.
• There’s also some control over domestic usage vis ripple control, to switch off water and space heaters that run on seperate meters,
• Because of the hydro and geothermal constantly running inertia is not a problem in the system.
• Because the grid is small, swings in the power frequency are frequent and significant (a 1Hz swing isn’t uncommon while AUS rarely goes worse than 0.2Hz). This requires a lot of management and control. (Chris has two charts showing the impact of a Rugby World Cup match at 5am. 😅😅😅😅)

It’s actually quite a beautiful little system – especially from a renewable POV – but it’s hitting its limits. As I pointed out in NZ Power Blows, we’ve managed to plateau demand for two decades now via more efficient devices like LED’s, but we’re at the end of that now, yet we don’t have enough baseload generation (meaning always on) coming on-stream:

• More dams are politically unacceptable and there are few big sites left anyway.
• Geothermal has been great but there aren’t many more sites for that either.
• Big thermal plants, like the Huntly coal-fired station, are the ones we’re supposed to shut down because of CO2 emissions, yet they’re the ones filling the renewable-load gap right now, up to 150MW at times.
• Even before being shut down they become more uneconomic as they are used less – while also being vital backup. Australia got a taste of this in 2022 when the government practically begged operators to fire up their coal plants 100% – and then berated them for breakdowns because they’d cut down on repair and maintenance, expecting the plants to close. This is also exploded power prices.
  
• There are many plans to build more wind and grid solar farms, but few consents applied for and even less construction starting: “A long list of 147 solar, wind and geothermal projects have been announced by companies eager to find investment for a renewables boom….but less than a fifth of that was fully committed or close to committed before the end of next year.“
• Backups like batteries are too expensive at grid scale – the ones being built at Huntly by Genesis and in Onehunga by Contact are for grid stability purposes (ignore the MSM line about how it can “provide enough electricity to meet peak winter demand for 44,000 homes for more than two hours”).
• The pumped storage Onslow project was scrapped by the National government as its costs exploded.
• There is no overall coordination of power station development, with each of the four big power companies, two smaller ones and some overseas developers and community groups, figuring it out for themselves.
• The margin for balancing between renewables is now almost gone.

As an example of where we could end up with the closure of Huntly and other thermal plants, Chris has recently updated his series on Australia’s efforts to go 100% renewable, noting that the closure of Liddell, a 2000MW coal fired power station in New South Wales, plus two others being out of action, plus the increase in unreliable wind and solar, had resulted in ever more difficult management of the grid (“unstable grid voltages” among other things) and continuing power price rises even beyond those seen in his Part 1, 2 & 3 series – plus increasing risk of outages.

New Zealand Greens bitching about Onslow being scrapped should look at the equivalent Aussie scheme, Snowy2 ,a pumped-storage expansion of hydropower in the Snowy mountains: it’s cost has risen from $2 billion to $12 billion, it’s years behind schedule – all this for a one-day backup!

That link about the closed Liddell plant points out that an even bigger coal unit in NSW (Eraring at 2.5GW steady output) that was supposed to be shut down in late 2025 is now being kept open, such are the worries about the unreliables being added to the grid, and it compares the station to a proposed $20billion unit of 14 gigawatts of wind and grid-battery storage:

One single coal power station occupying 0.6 square miles (total project area 3.6 square miles) bests 10,000 megawatts of wind and 4,000 megawatts of storage. That’s two thousand wind turbines, assuming each has capacity of, say, 5 megawatts (well above average), occupying in the order of 1,000 square miles plus batteries of over thirteen times the size of Australia’s biggest battery, the 300 megawatt battery in Victoria. And all costing, so they optimistically say, $20 billion to build. Including high-voltage transmission infrastructure to carry electricity from far-flung wind farms? Hardly. That’s the taxpayers’ job.

In practice, several such wind-battery stations like that proposed, would be needed to replace Eraring, and even if they’re spread out there are windless periods across wide parts of Australia: another myth, that the wind is always blowing somewhere.

Is it any wonder that former Cambridge Professor of Technology (PhD in Engineering) Mike Kelly’s recent Net Zero for New Zealand report concluded that:

The cost to 2050 will comfortably exceed $550 billion, a workforce comparable in size to the health sector will be required for 30 years, including a doubling of the present number of electrical engineers, and it will need about 10% of the global annual production of lithium, cobalt, neodymium and other materials. On the manpower front, New Zealand will have to rely on the domestic workforce, as I assume that every other country in the world is working towards the same target. If they were not all so working elsewhere, the value of the New Zealand specific target is moot.

At a recent company meeting I attended the Chairman of the Board bluntly said that the country is in an energy emergency situation and that National Energy Minister Simeon Brown knows this.

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See also:
Lessons for National from the Australian Power Crisis
NZ Power Blows
Where does our energy come from? (NZ)
42 Inconvenient Truths on the “New Energy Economy”
Net Zero for New Zealand

This PDF, How The NZ Grid Works,

How the grid works 07Download