Labour's 2030 '100 per cent renewables' goal is realistic if Lake Onslow scheme stacks up

Friday, 11 September 2020

Genesis Energy’s Huntly power station would need to close by 2030 to meet Labour’s target.

OPINION: A day after Labour announced a timid tax policy, the party came out with a bolder policy to make sure all electricity generated in New Zealand was renewable by 2030.

Renewable generation has drifted sideways under the current government.

The proportion of electricity generated by renewables was 82 per cent in 2017, according to the Ministry of Business, Innovation and Employment.

That increased to 84 per cent in 2018, and the latest figure from MBIE was that it had dropped back down to 82 per cent in the first three months of this year.

**READ MORE:

Prime Minister Jacinda Ardern has made a bolder promise on the campaign trail, in regards to Labour’s renewable energy generation goal.

* Election 2020: Labour pledges 100 per cent renewable power by 2030

* Big jump in coal-fired electricity in 2019

* Genesis boss adds to Meridian's woes voicing 'disappointment' over hydro spills

The NZ Battery Project, which may see a huge pumped hydro facility built at Lake Onslow in Otago (above), could tip the electricity market on its head, but independent retailers warn competition may not be able to wait that long.

* $4 billion Lake Onslow pumped hydro scheme could 'tip electricity market on head'**

The challenge in getting to 100 per cent renewables is that gas power plants in particular – while expense to run when they are needed – are cheap to build and have on hand.

It is the exact opposite for hydro plants, wind farms and geothermal plants, which are expensive to build and then cheap to run.

Overall, over their lifetime, renewable generation may be the cheaper option, but only so long as plants are run to somewhere close to their full capacity.

The New Zealand Initiative (NZI) is one of the organisations arguing that Labour’s 100 per cent renewables goal would be likely to be counterproductive.

Any environmental gains from displacing the last bit of gas generation needed to meet demand with rarely-used renewable plants would significantly push up the price of electricity, it argues.

That “overbuild” of renewables could dissuade Fonterra and others from replacing their factory coal boilers with electric ones, meaning more emissions, the theory goes.

Genesis Energy chief executive Marc England harbours the same concern.

“Genesis believes the primary focus should be on reducing emissions from the 30-40 per cent of New Zealand’s emissions associated with transport and process heat by utilising the highly renewable electricity system we already have,” he says.

“Care needs to be taken to ensure a focus on the 4 per cent of emissions associated with non-renewable electricity isn’t at the detriment of larger and more immediate de-carbonisation opportunities.”

But Labour now has a plan to deal with those objections.

That is its proposed multi-billion dollar Lake Onslow hydro scheme in the South Island, which would store water pumped uphill from the Clutha River.

The artificial lake would act as a giant battery that could store enough power (5000 gigawatt-hours) to meet to the entire country’s average electricity demand for five weeks.

Even though its pumps could sometimes be powered by hydro generated using water that would otherwise be spilt and wasted from existing dams, the scheme might consume power overall.

But it would mean that generators could massively increase their investment in wind and other renewable generation – knowing that power could be stored in the lake when it wasn’t immediately needed and used instead of gas and coal to power the country when hydro levels were low and the wind wasn’t blowing.

Labour has now begun preparing for a scenario in which the $30m business case it ordered just last month for the Lake Onslow scheme does give it the thumbs up.

Its election policy promises to earmark an additional $70m for “engineering design and preliminary field work” to understand any environmental, geotechnical and seismic issues.

That funding is so the project could move ahead quickly “if the business case proves it is feasible”, a Labour spokesman says.

NZI consultant Matt Burgess has stated that the Government is “ignoring its own experts” in committing to a 2030 target of 100 per cent renewables.

“What makes the 100 per cent renewables policy so counterproductive is that higher electricity prices will prevent far greater emissions reductions via electrification.”

He went on to say that the Government’s Interim Climate Change Committee (ICCC) had reported “you can have 100 per cent renewables, or electrification, but not both”.

But that is not the full picture.

The ICCC report that NZI quoted from made it clear those comments assumed that 100 per cent renewable generation would be achieved by “overbuilding renewable generation and increasing the use of demand response and short-term batteries” to manage supply and demand.

As such, it explicitly did not factor-in the construction of a scheme like Lake Onslow.

The ICCC noted that it had identified a number of technologies to achieve 100 per cent renewable electricity by 2035.

“All are technically feasible, although most currently appear very expensive.

“Pumped hydro storage shows the most promise and the committee has recommended that this be further investigated,” it said.

Could New Zealand get to 100 per cent renewable generation by 2030?

Of course, if that’s what we wanted.

Would it make economic and environmental sense?

If the business case for Lake Onslow stacks up, quite possibly.

If not, the answer might still be ‘yes’, but it would be a somewhat tougher puzzle.

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