Colossal wind turbines with 110 metre long blades planned Taranaki coast

Thursday, 31 August 2023

Colossal is the only way to describe the 100-plus wind turbines that could be dotting New Zealand’s coastal waters in the next decade or two.

Giacomo Caleffi is spearheading a joint venture between green energy investor Copenhagen Infrastructure Partners and the NZ Superannuation Fund to build a $5 billion wind farm about 23 kilometres out to sea in the South Taranaki Bight.

“We are working on the assumption we would use 15 megawatt turbines which are being built and tested right now,” he says.

The power-rating means that when running at maximum output each could power more than 6000 large oil column heaters running at full bore, or 2.5 million typical led downlights.

“They would be 260 metres tall from the water level to the tip of the blade, and we are talking now about 110-metre long blades,” Caleffi says.

That means they would stand taller than the top observation deck on Auckland’s Sky Tower and their individual blades would be longer than a rugby pitch, from goal line to goal line.

Even larger turbines with 123m-long blades are already in service in China.

In Sweden an application had been made for a wind farm that would have 30-megawatt turbines that stood 370m – taller than the Eiffel Tower – with blades that would sweep an area of more 90,000m², equivalent to about 10 rugby pitches.

One of the main reasons that it can make sense to build wind farms out to sea is simply that it is possible to build wind turbines of that size there by dropping the parts directly off a ship, Caleffi says.

Transporting a wind turbine blade that was more than 100m long by road to any hillside site in New Zealand would be a logistical nightmare, even if it was possible to get resource consent.

“They would not be able to go on any significant journey on land,” Caleffi says.

Another consideration is that, out to sea, the wind tends to be a bit stronger and also more consistent.

The Taranaki Offshore Partnership (Top) joint venture is keeping the early readings from a million-dollar-plus measuring device that it has anchored in the South Taranaki Bight close to its chest.

But Caleffi is confident from earlier work that the “world class” wind resource there averages more than 10m per second.

It may seem obvious that wind speeds are important when planning a wind farm, but perhaps not obvious just how important.

The power that can be generated from the wind is a function of the cube of the wind speed, which means a wind of 10 metres per second will generate about three times the electricity of one blowing at seven metres per second – which would be considered an excellent resource inland in Europe.

The greater consistency of offshore wind also means it would be “easier”, though still far from simple, to integrate it into the broader generation system.

There are still times when an offshore wind farm won’t generate much electricity, but compared to a wind farm on land, fewer of them.

Caleffi says that, in Australia, Copenhagen Infrastructure Partners has observed that offshore wind farms would have the bonus of often being to generate “when onshore wind isn't”, because the unequal heating rates of Australia’s land mass and the water in the seagenerates its own sea breeze.

Unfortunately, that is not the case in “long skinny” New Zealand, where the wind on land and at sea is whatever is happens to be incoming from the weather systems, he says.

Caleffi estimates the overall size of the wind resource in the relatively shallow waters 23km offshore from Taranaki, where turbines could be constructed on single piles drilled about 20 to 30 metres into the seabed, at about 2 gigawatts.

But he believes government officials are keen to divide the zone between at least two operators.

A consortium between local and overseas investors BlueFloat Energy and Elemental Group is the other joint venture that is looking at essentially the same opportunity.

Does it stack up commercially?

Contact Energy chief executive Mike Fuge voiced his doubts on a conference call to analysts last month, saying offshore wind farms had only been built overseas when they had the benefit of government support.

“We have a tremendous development pipeline of highly competitive low-cost renewable energy options on shore, whether it's geothermal, wind or solar,” he said.

“One day, when we've exhausted the current development pipeline, it might indeed come off. But unless there is a dramatic government intervention then I can't see it getting away in the next five to 10 years.”

Energy Minister Megan Woods was more upbeat when she hosted a reception for the Top joint venture at Bellamys restaurant Parliament on Tuesday.

Two years’ ago there would have been little appetite for such an event, but the “excitement and buzz” had grown in that time, she said.

“Offshore renewable energy will play an important part in the transition to a more productive, sustainable and inclusive economy,” she said, though without detailing what assumptions gave her that confidence.

NZ Super chief executive Matt Whineray suggests that it may just be too early to tell if offshore wind will stack up, given the variety of moving pieces involved.

So far Top has spent “millions of dollars” on preparatory work, including on measuring the wind resource at the proposed site.

But Whineray makes clear it is taking a methodical, step-by-step approach to sizing up the opportunity, which at some point will require a decision on whether to fund some of the more expensive environmental studies that would need to precede any more major investment.

The South Taranaki Bight is after all home to the critically endangered Māui dolphin as well as a migratory corridor for several species of whales.

Crunch the numbers and it’s plain to see why NZ Super is keeping its head firmly screwed on.

Top estimates that its proposed gigawatt wind farm would produce about 5 terawatt-hours of electricity a year, which is equivalent to about 12% of the country’s total annual electricity usage.

As an aside, that also implies that its turbines would typically be generating electricity at a little over 50% of their maximum theoretical capacity which would be a very good “load factor” even for offshore wind.

Caleffi notes that if Top could sell its electricity for about 10 cents a kilowatt-hour, that would mean its wind farm would bring in about $500m a year.

Given the estimated $5b upfront construction cost, additional ongoing operating costs, and the likely 30 to 35 year life of the turbines, the economics of the venture at that price would appear to lie somewhere in the tricky space between off-putting and compelling.

The 10 cent question

Is obtaining 10 cents a kilowatt-hour for offshore wind power realistic?

Given the relative consistency of offshore wind, it should sit somewhere between more variable onshore wind energy and baseload geothermal generation in the value chain.

Prices will have changed since 2019 when the Ministry of Business, Innovation and Employment last estimated the cost of producing power through different forms of generation.

But, back then, it estimated the long-run cost of producing power from onshore wind at about 6c/kWh, solar at about 7c/kWh, with baseload geothermal power in the same ballpark.

There are, however, only limited cheaper sources of geothermal power.

Generators are paying far higher prices for fossil-fuelled power generation, but that has a very different value proposition to wind or solar, given it can be used to plug shortages in renewable generation and to meet the peaks in electricity demand.

The bottom line is that Caleffi and Whineray appear genuinely uncertain whether Top would need some form of government subsidy for its proposed wind farm to proceed.

“Not necessarily,” Caleffi says.

“We understand that type of support has not been provided to energy projects recently in New Zealand.”

But, at the same time, he appears hopeful for some support, perhaps in the form of a guarantee that Top would be paid a minimum price for the power it produced.

“That’s what has enabled offshore wind in many other countries,” is how he puts it.

Top argues so-called “Contracts for Difference” that provide such guarantees are “very different from a traditional subsidy”, in that payments from the Government when electricity market prices are low would “mostly be compensated by payments” at times of high prices.

But to the extent those payments didn’t in fact balance out, a subsidy is what they would be.

Whineray also says it is not “axiomatic” that government support would be required, and that the joint venture has “just got to work through things and think about where the variables are”.

The case for a subsidy

Caleffi says one reason the Government might want to assist is that the Cook Strait HVDC power cables that usually carry power from the South Island to the North Island could be taken out for at least a month the next time the Alpine Fault ruptures.

Having a large wind farm offshore from the North Island could increase resilience, he says.

Against that, is the argument that developing a one or two gigawatt generating resource offshore from Taranaki might in itself be putting a lot of eggs in one basket.

Another case for intervention is the concern that other investments in renewables are simply not coming on stream fast enough to match an expected increase in demand from the electrification of transport and industry, and that some larger-scale leap forward may be needed, Caleffi suggests.

“We suspect that just playing on market rules, as it's been so far, will not deliver all those onshore wind projects that you need to satisfy the electrification demand,” he says.

CORRECTION: Energy Estate left the consortium between local and overseas investors in January. (Amended: 8.54am, September 5, 2023)