Electricity demand set to double in climate change fight, posing pressure on grid

Tuesday, 22 May 2018

As we rely more on electricity, as opposed to other energy sources like coal and oil, the resilience of the electricity system becomes more critical, Transpower says.

A vast electrification of factories and vehicles is expected to see demand for electricity double over the next 30 years, posing significant risks to New Zealand's energy system.

On Wednesday Transpower, the state-owned enterprise which owns and operates the national electricity transmission grid, releases a white paper, Te Mauri Hiko, outlining both the opportunities posed by stripping carbon from New Zealand's energy system.

The system predicts that looming changes in technology and pressure to strip carbon from the economy presented both the greatest economic opportunity New Zealand but also a major source of risk to security of supply.

'As the New Zealand economy electrifies in pursuit of the most cost-efficient and sustainable energy sources, electricity demand is likely to more than double from [about] 40 terawatt hours (TWh) per annum today to [about] 90 TWh by 2050,' the report said.

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'With more and more of the national economy dependent on electricity, as opposed to a wider range of energy sources (coal, gas, oil), the resilience and reliability of the electricity system becomes all the more critical to the country.'

The report marks a major change in outlook from a previous Transpower report published in 2016, which predicted that while there would be a slight uptick in demand in the period until 2030, electricity demand between 2030 and 2050 would fall.

Transpower said its 2016 report was written prior to the signing of the Paris Agreement, which set binding targets for carbon reduction, 'so the future it forecast was one without a coordinated approach to climate change'.

'This report now views electrification of transport and industrial heat processes as the most likely way for New Zealand to meet its Paris Agreement commitments - the conversion of a large part of private and transport fleets, as well as some industrial heat processes, is likely to see a doubling of demand for electricity, when projected population and [economic] growth are also taken into account.'

As well as thermal electricity sources being replaced by renewable forms, Transpower adds to new sources of demand, with electric vehicles forming 40 per cent of the vehicle fleet by 2030 and 85 per cent by 2050.

The report marks a major change in outlook from a previous Transpower report published in 2016.

Meanwhile the cost of carbon will see many industrial plants which require heat change from thermal to electricity.

'Electricity demand as a percentage of total delivered energy demand is estimated to increase from 25 per cent in 2016 to 61 per cent by 2050.

'Climate change has become a central issue for governments globally, technology continues to advance rapidly, and electricity is increasingly positioned as an energy source for whole economies, rather than just homes and some business processes.'

Transpower said New Zealand's ability to generate electricity from weather was both an advantage and a disadvantage.

'New Zealand is unique in the world in that it relies on weather-dependent renewables and has limited energy storage options.

'Assuming a phase-out of thermal generation, more and more electricity generation will be intermittent, posing increasing security of supply challenges, particularly during dry years and winter demand peaks,' Transpower chief executive Alison said.