Here’s to Kiwi Ingenuity

Posted 13 June 2016 by Dr Paul Bannister

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The following is a guest post written by Dr Paul Bannister from Energy Action regarding the recent Energy Management Association of New Zealand conference that he recently attended along with Total Utilities.

I spent most of last week in NZ attending the Energy Management Association of New Zealand conference, and was once more reminded of how well the Kiwis do some things.

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For starters, there was the conference itself. Two days of excellent speakers – enough to keep my attention for probably 75% of the time, which is well above average for a conference. Over 100 in attendance including practitioners, clients, suppliers, etc. Easily a match for many of its peers in Australia, in my humble opinion.

Then there was the EECA Awards night. This is energy-efficiency-in-New-Zealand’s “night of nights”, with 11 industry sponsored awards covering all aspects of energy efficiency, showcasing many excellent projects. As an event, this is way beyond anything we have in Oz, with a comedic MC (and indeed a fairly comedic Chairman of the Energy Efficiency and Conservation Authority), big production values, etc etc. Minor grumbles about food aside (they starved us until 8:30pm and then served us canapes…), it was an excellent evening and an insight into many project types you don’t see in Australia, particularly in the industrial and institutional sectors. Most obviously, the Kiwis are well ahead of us when it comes to biofuels, prompted particularly by the lack of reticulated gas in the South Island. In general I’m of the opinion that NZ has a greater focus on industrial energy efficiency than I’ve seen in Australia; while their commercial sector work has some catching up to do.

Of course there is also a paradigm difference in NZ: their electricity is already mainly hydro so they have the march on Australia in terms of greenhouse intensity, even allowing for the sheep. So whereas we seem to think of gas as being clean, for them it’s actually more emissions intensive than electricity.

And then there was the forceful reminders of how much smarter their electricity market seems to be than ours. Before I rant on, just consider this: the purpose of a market is to enable buyers and sellers to meet and determine a natural price. So if you have too much generation relative to demand, electricity is cheap, while if there’s too much demand and not enough generation electricity becomes expensive. The ultimate reflection of this dynamic is the spot market, which is the price that electricity sells at on a 15 minute basis. Of course, normally we don’t see this because electricity retailers on-sell electricity to us at essentially fixed prices; if the spot market goes crazy, they take the hit on our behalf. But that makes no sense because as users of electricity we can respond to a spot price signal, so we need to have the ability to access that signal. In NZ, it is normal practice for large energy users to have some direct spot market exposure and indeed it is possible to buy electricity at a spot market linked price at a residential level. This sort of transparency is missing in Australia, and indeed we are a long way off from getting near to it. But in a generation market with increasing exposure to the variability of renewable generation, it’s increasingly important that we catch up with the Kiwis and join the 21st century.

Overall, I’m inclined to make an observation: Kiwi ingenuity has been driven by the necessities of working in a country with a hydro-dependent electricity system that goes into crisis around once a decade; that doesn’t have the population or gas reserves to support gas infrastructure across the South Island; and that has comparatively limited coal reserves. Economically, when the world catches the sniffles, NZ tends to catch double pneumonia because it the economy lacks the inertia provided by a large mining sector. Necessity is the mother invention and the Kiwis have responded by being smart and adaptable.

It’s hard not to contrast this to the situation in Australia where we have rich fossil fuel reserves, an electricity network that is stable to the point of stagnation and of course a mining industry that has been propping up our lifestyle for a half a century. So whereas the Kiwis have had to be nimble, it’s hard not to look at Australia and think we are just a little too secure and comfortable for our own good. Now I’m not knocking that security but at times I think we need to ask ourselves whether we have become complacent. Australia has many great minds, many great innovators and many great opportunities but a bit of a track record of forcing them overseas because the local policy and economic environment isn’t as supportive as that of our trading partners. We need to learn from the Kiwis and embrace a little bit of the frisson of excitement that change and instability can give so that we can be leaders of positive change rather than the ballast of resistance and intransigence.

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