New Zealand has set a target under the Paris Agreement to reduce its greenhouse gas emissions by 30% below 2005 levels by 2030, and to adopt increasingly more ambitious targets in the future.
Per capita, New Zealand’s emissions are one of the highest in the world with an output of <1% of the total world’s emissions.
Business New Zealand recently released a report which concluded that “opportunities to improve our performance in productivity and renewable penetration lie in every part of the energy supply chain. While productivity and renewables are not necessarily mutually exclusive, we need to consider the best policy balance. Our country is richly endowed with resources so should our focus be primarily on economic growth with a reliance on carbon prices to guide renewable penetration, or do we need stronger policy support for low-carbon economic output? With an economy heavily driven by trade, the cost of our choices has direct consequences for our international competitiveness. And, since our future is uncertain, how do we remain responsive and resilient to changes in the world around us?”
There is no doubt that the current Government’s policy strategy is being geared to meet the targets under the Paris Climate Accord.
The Insights Behind Sustainable Business Growth
Centrica recently published the following survey of businesses in 10 countries (UK, Ireland, Germany, Italy, France, Hungary, Belgium, Netherlands, USA and Mexico) and across 7 verticals (manufacturing, retail/ wholesale trade, healthcare/ medical, education/schools/universities, construction/ trades/ property development, travel/tourism/hospitality and property/real estate).
The survey identified some interesting trends:
Customers are driving change
Perceived risks are growing
Energy is an increasingly vital part of an overall business strategy
Yet only 1 in 8 businesses are doing it successfully
They concluded that in today’s fast-changing world, businesses need to find an innovative way to balance their financial performance and environmental policies using the following key focus areas.
What does this mean for your business?
Becoming a supportable business isn’t something that can be achieved overnight, and the journey can be challenging. Many successful businesses are complementing their internal expertise by engaging a third party, like Total Utilities, to help them understand the energy market and associated technologies, build business cases and engage stakeholders.
I lit my first fire at home for the year on the unusual date of May 31, just one day before the official beginning of winter.
I live in the sunny north side of Auckland, but I would have expected to see my dog sleeping in front of the fire by around late April.
There are some of us who believe that to the detriment of future generations the planet is suffering from global warming and others who feel that the scientific consensus is still a long way from being agreed. Either way, I do believe there is a general accord that we can’t keep consuming the planet’s resources at the rate we are, without very dire consequences.
Whether it is to save the planet or to drive efficiency, businesses are now using technology to reduce their carbon footprint. Some of these are unexciting and some are just plain cool. Either way, I describe below a few to pay attention to.
Tech to reduce the footprint
Methane co-generation
Very few people realize that Auckland’s largest landfill is also an energy park. The rubbish that goes into Waste Management’s Redvale Landfill captures more than 95 percent of the methane gas that is generated from the waste, which is then used to generate up to 14MW of electricity. Last year this meant it generated enough electricity to power 12,000 homes, making it the largest producer of renewable electricity in the Auckland region.
Heat recovery
Energy-intensive businesses, supported in some cases by subsidies from the Energy Efficiency and Conservation Authority (EECA), are now placing increased emphasis on the reuse and reinjection of heated water and steam in their industrial processes. We at Total Utilities have, as a result, seen excellent improvements in energy efficiency at factories and larger campuses.
Heat recovery is also used for go-generation where energy is converted to electricity and put back on the national grid.
Sensors, monitoring and the Internet of Things (IOT)
There is a difference between managing and monitoring business activities. A simple analogy is parents in the park: one couple hovers over their beloved children, constantly checking and rechecking their safety while exhausting everyone in the process; meanwhile, over at the park bench, another couple enjoys the sun, chats and drinks coffee while watching their young ones interact safely with the world and only interfering when they observe a real problem.
In the past, businesses used product-specific sensors to monitor equipment and processes. These sensors tended to be expensive, proprietary and clunky in their outputs (think: complex graphs on green screens).
Today an edgy new cousin has turned up, reducing the cost of monitoring, and providing rich insights via web-based applications that run on almost every device. This is called the Internet of Things (IOT). These simple, useful sensors provide streams of meaningful data about electricity consumption, temperature, process efficiency, humidity and more.
Artificial intelligence
While the Internet of Things sounds a bit like Nirvana, it does have one significant flaw: complexity. In theory, we could provide an IoT connector to every grain of sand on Earth without consuming all the available capacity.
Making sense of all the data it reports is the big problem. This is where Artificial Intelligence (AI) comes in. Capable of analyzing billions of bits of data from multiple data sources, AI is being used by many businesses to sift huge data pools and deliver the insights and activities that deliver competitive advantage and reduce wastage.
In the electrical industry, Power Factor is widely known as a bit of a dark art. Over the last few years, advances in technology have brought new types of correction systems to the market along with a range of off the shelf cheap products that can be ordered online and promise the world but deliver little.
The below paper was written by Allan Ramson (NZCE, BEng, MBT), General Manager of kVArCorrect Ltd and provides an insight into the pros an cons of active versus passive power factor correction for different applications. For a full copy of this paper please click here.
History of Static VAr Generators (SVG) Technology in New Zealand
Metalect Industries combined with the Engineering School at Canterbury University to fund and direct research into Active Systems for 3 phase applications in 1996-1998. This culminated in publication of a PhD thesis by Edward Arnold Memelink in 1999. From there, single phase prototypes were built and tested. Metalect Industries and a technical team from Canterbury then extended the design to 3 phase, obtained government research grants, and units were built and site tested, notably on the Queenstown Gondolas. Whilst successful in electrical terms, the systems could not be economically manufactured due to component limitations of the time and by 2006, the projects were abandoned. Several related products were spun off as ongoing products for Metalect Industries and several of the ZVX units (Zero Crossing By-Pass units) have been installed in many sites around New Zealand.
Conventional Capacitor Based Power Factor Systems
Benefits
Proven technology when correctly designed
Larger switchboard builders and specialist companies know what they are doing
Utilises available switchgear
Contactors, MCB’s, fuses
Simple to maintain
Ensure air flow as designed, capacitor current within specifications, temperature within specification
Simple to repair
Replace contactors, capacitors, MCB’s, fuses, etc. All done by any Electrician without system shutdown (if designed correctly)
Low cost test equipment
Current meter, temperature measurement. Capacitance meter not required (if the current is correct, so is the capacitance)
Easily expanded
Add more capacitance in very small lumps as site grows
Reliable
Capacitor failure does not take whole system offline. Saves customer money in penalties by continuing to partially operate
Deficits
Cannot control leading power factor
There are very few sites where this is required.
Can be slow to react (but not always)
Often not required. However, there are capacitor-based systems that are specifically designed to response sub-second
Old capacitors may be prone to leaking
Modern capacitors are optionally fire-retardant resin filled.
Generate significant heat
True, but active systems generate even more. If the available cooling cannot handle a capacitor system, it absolutely cannot cool an active system
Can produce system resonance issues
This is so rare; we have only ever documented one case in NZ (but can be easily fixed)
Considered to be Old Fashioned
A matter of image only
Risk of fire in the event of capacitor failure
Modern capacitors, combined with correct design, completely mitigate this.
Active Power Factor Systems (SVGs)
Benefits
Fast and accurate correction of power factor (leading or lagging)
When working as designed, there is no doubt that the power factor correction delivered is excellent
Often physically smaller than capacitor systems
Wall mount options are lower cost than the rack mounted large SVGs
More reliable than poorly designed conventional systems
Certainly not true for properly designed capacitor-based systems
Deficits
Higher cost of installation than conventional capacitor-based systems
Made up of unit purchase price plus 3 x CT’s (and may require air conditioning.) Even without air conditioning in the switch room, the cost of SVGs is higher
Expensive to expand because the units come in big lumps. EG: if the system is 5kVAr short of achieving target, minimum step is 30kVAr at >$5-7k installed
Contrast a capacitor-based system where an extra 5kVAr may be a few hundred dollars only
All the eggs are in one basket, causing potential large penalty tariffs to the user
If the unit has a fault and goes ‘off- line’ all power factor correction is unavailable. If a capacitor fails in a conventional system, then the rest can continue
Generates almost twice the heat as a capacitor-based system and is specified for lower ambient temperatures to start with.
Capacitor based systems have a higher ambient temperature specification. This is critical in non-air conditioned rooms over summer months
Usually very high MTTR (mean time to repair) times – recommend 100% complete spare system backup to avoid 0% power factor control to the site (maximum exposure to penalties)
When the whole system is offline, the full penalty tariffs will be incurred by the end user. One way around this is to use multiple 30kVAr units rather than a single larger unit, although this is a huge cost disadvantage
Units have more capacitance internally than conventional systems. Worse, these capacitors are electrolytic type with corrosive acids inside
True, and the lifetime of electrolytics is known to be significantly less than high quality MPP caps as used in capacitive type power factor systems. See kVArCorrect’s papers on Design Problems in Power Electronics
More susceptible to dusty and humid environment compared to capacitor-based systems
Modern capacitor-based systems can fail too, but the MTTR is significantly lower and can be fixed by local electricians without ‘return to base’ or very specific skill sets
A Combination of the two Technologies – THE HYBRID SYSTEM
Potentially, a Hybrid system that combines the two technologies can mitigate the cons of both technologies whilst accentuating the pros. The scenario would be, for a 100kVAr requirement, to provide 70kVAr of capacitor based modules with a 30kVAr SVG. In every case where the author has investigated the case for control of leading power factor, it has been found that the amount of leading kVAr required is less than 30% of the total requirement. For example, we’ve documented sites with 20-50kVAr leading at certain times and 200-300kVAr lagging at other times. This Hybrid system is undoubtedly more cost effective than a full 300kVAr of SVG, in addition to not having all of the negative points shown in the tables above. The system will produce far less heat and will not be completely off-line due to an SVG electronic malfunction, as there would be significant capacity in the capacitor based section of the system to avoid the bulk of penalties.
Summary
The comparative pros and cons of the three technologies are summarised in the following table – the third column relates to kVArCorrect’s Hybrid system, which was developed specifically to overcome the limitations of both capacitor-based systems and active systems. It uses a traditional capacitor-based approach for bulk power factor correction, with a smaller active system to handle high speed as well as leading power factor requirements. The Hybrid system is designed to have the best of both technologies whilst offering superior reliability.
While fully active systems can provide exact kVAr requirements for both leading and lagging power factor in near- to real time, they can be extremely expensive, and are normally return-to-base in the event of electronics failure. Clients are often shocked to discover the cost of expanding a fully active system could be as high as the original installation.
Hybrid systems only rely on the active electronics for less than 25% of the overall available corrective kVAr’s, meaning 75% or more of the power factor correction is still available to mitigate the potential penalties, should the electronics require repair or servicing. Hybrid systems combine the speed and control benefits of a fully active system, with the maintainability and reliability of a capacitor-based system.
About the author
Allan Ramson is the owner of kVArCorrect Limited and has worked extensively in the Australasian Power Factor market for over ten years. Allan and other engineers at kVArCorrect are ex-employees of Ampcontrol and Metalect Industries in Rotorua, and have been involved with Active System technology in New Zealand for many years.
Also having been closely associated with few hundreds of power factor correction systems installed, it is with significant experience in the market that this document has been written. kVArCorrect designs and manufactures capacitor based power factor systems, Hybrid Capacitor/SVG systems, a range of power quality controllers, and SVG add-ons. Additionally, kVArCorrect sells SVG systems in 30kVAr, 50kVAr, 100kVAr and above sizes.
The Government has set a target for New Zealand’s economy to be net-zero emissions by 2050. Does our current approach stack up?
Methanex – adding 15% to national electricity demand?
In a recent submission to the Ministry of Business, Innovation and Employment (MBIE), Methanex, New Zealand’s largest single gas user suggested that should the company transition from gas-based manufacturing of methanol to electricity, this would increase New Zealand’s national electricity demand by around 15% (5,800 gigawatt-hours). In other words, there would be a Rio Tinto Aluminum Smelter-sized electricity user in Taranaki.
Methanex currently consumes around 88 petajoules of gas and 84 gigawatt-hours of electricity and produces about 2.4 million tonnes of methanol per year.
Located away from New Zealand’s main generation sources, this would place increasing pressure on the North Island generation mix. With only limited new baseload generation planned for the North Island, electrification of methanol production would require more coal and or gas being used by thermal generators.
Methanex says that should conditions become nonviable to remain in New Zealand, they would relocate to China. Because of China’s current generation mix and energy sources, this could increase global emissions by four to six million tonnes of carbon dioxide a year.
The hydrogen solution
Last year the New Zealand Government signed a memorandum of understanding with Japan to develop hydrogen production in the Taranaki region with the view to pave the way for a transition away from Natural Gas and LPG.
However electronic hydrogen production will further strain the New Zealand energy system as 41.4 kWh of electricity is required to produce 1 kg of hydrogen from water.
In a recent article, Centrica (owner of British Gas) warned a move to make the gas grid run on hydrogen is “unlikely to be practical”.
Centrica chief executive Iain Conn said natural gas would be “crucial” in the transition to reducing carbon emissions, and that Britain and other countries would need to start using more of it before it could wean off the fossil fuel.
“It is quite clear that we cannot get from A to B without using more natural gas,” he said at a speech at the Aurora Spring Forum in Oxford.
“I don’t believe in the mass use of pure hydrogen, I think it highly unlikely to be practical,”
Iain Conn
Conn said, but said he was open to injecting around nine per cent hydrogen into the grid.
“We have done a lot of decarbonising power generation, but heating and cooling will be key,” he added.
Heating and Cooling in Britain
The remarks come just a week after chancellor Philip Hammond announced a plan to ban fossil fuel boilers from new homes built after 2025.
“We will introduce a future homes’ standard mandating the end of fossil fuel heating systems in all new houses from 2025, delivering lower carbon and lower fuel bills too,” Hammond told parliament during last week’s Spring Statement.
Conn said that heat pumps would eventually start taking British homes off the gas grid. He also said the world would be able to add around one gigawatt of renewable power capacity each day for the next 30 years.
Heating and cooling in New Zealand
Heat pumps in New Zealand have only added to electricity demand in recent years as more are installed and being used for cooling in Summer as well as heating in Winter. While more efficient than electric fan heaters, gas heaters and oil column heaters, the added cooling load has counteracted the savings in many cases as large numbers of New Zealand homes are moved away from wood burners.
These concerns were echoed in New Zealand by Paul Goodeve, First Gas Chief Executive, saying that, “A key element is affordability. We need to find affordable ways to meet winter electricity peak demand and maintain the competitiveness of large industries that use gas for production. Would New Zealanders find it palatable to pay substantially more for their electricity to upgrade infrastructure which will be underutilised to cover large energy use sectors and peak winter use? These are considerations we believe policymakers need to take carefully into account when making decisions.”
When we look at New Zealand electricity prices, it is important to consider lines companies in the equation.
The lines company or electricity distribution business (EDB) operates and maintains the transformers, power poles and copper wires that keep our local electricity networks running and delivering reliable electricity to the door. Examples in the EMA membership region are Northpower, Vector, Counties Power, WEL Networks and Powerco.
Lines companies in your power bill
Take my last home bill. The energy component, which is the part provided by my retailer, was $184.76. This part is subject to market competition and as a privileged, old white guy with a good credit history I can move freely between retailers chasing the best price. I can also take advantage of a prompt payment discount of $56.65 – nearly 30 per cent of the entire cost of the energy I purchased that month.
In the detail of my bill, however, is another bit called the “Daily Line Charge” of $52.85, being 33 days at $1.60 per day charged by my local lines company.
Electricity Monopolies and Regulations
Unlike retailers, lines companies are monopolies, not subject to competition and they supply an essential service. As a result, they are highly regulated by the Electricity Authority and the Commerce Commission.
This regulation occurs in three ways:
• Limits to the percentage return on the assets deployed, • Legal requirements for the quality and price of service, and Company ownership structures.
There are 27 electricity distribution businesses in New Zealand. Some are privately owned such as the North Island giant, Powerco, which is owned by overseas investors and supplying electricity and gas to about 440,000 homes in the North Island.
There are public/private ownership companies such as Auckland’s Vector (supplying 331,000 households) which is 70 per cent owned by a consumer-owned trust and 30 per cent by shareholders on the stock exchange.
There are also 100 per cent consumer-owned trusts such as Counties Power and there are companies owned wholly or in part by local Councils, eg, Aurora, which is owned by Dunedin City Council.
Owners and investments
Ownership is critical when we look at pricing and quality of service and the impact of rules, regulations and the inconsistent behaviour of the regulators.
Privately-owned Powerco, for example, after years of underinvestment in lines infrastructure, last year went to the regulator asking for dispensation to increase its charges to consumers so it could remediate its increasingly dilapidated and unreliable infrastructure. Incredibly, the regulator agreed to this request without a whimper!
Meanwhile, further south, the Commerce Commission is indicating it will levy fines on council-owned Aurora for quality failures on its network. These failures have been attributed to Dunedin City Council’s active decision to use Aurora’s profits to help fund a new sports stadium and other civic works, while neglecting maintenance and renewal of its electricity infrastructure.
Back up north, after a one-in-100-year storm blew out the lights in Auckland last year, Vector was fined nearly $3.6 million by the Commerce Commission for failure to meet its reliability targets for the second year in a row. This, despite massive investment on Vector’s part in technology and improved services aimed specifically at improving quality.
Areas of economic growth such as Auckland, the Bay of Plenty and Franklin are faced with big increases in investment to meet demand, while many EDBs in the regions face regulatory demands for increased investment in infrastructure despite their consumer bases shrinking.
Ownership has a direct relationship to New Zealand’s electricity prices. Whether growing or shrinking, the reality is that EDBs are in a bind, because investment in maintaining and growing reliable infrastructure means price increases are a fact of life for the consumer.
In the meantime, the Electricity Authority’s price review seems to be wilfully ignoring the market-distorting behaviours being exhibited by the elephants in the room: the government-controlled generators/retailers (gentailers). We’ll take a look at them in an upcoming article…
