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.”
During the recent two-day EMANZ Conference that I attended in Auckland with our Energy Manager, Tânia Coelho, I was struck by the surge of genuine enthusiasm for and commitment to renewable energy from the diverse group of Energy Managers and others who attended.
In this regard, our country is in the fortunate position that 85% of our electricity supply already comes from renewable energy, mainly hydro-electricity, geothermal and wind-generation based.
Successive National and Labour Coalition Governments have made a strong and binding commitment to New Zealand meeting its global carbon emission reduction obligations.
To achieve these commitments in practice, New Zealand will need a sustained and integrated programme, to utilise rapidly evolving technology in this area.
The following guest post by James Flexman, Wholesale Markets Manager, Mercury highlights some of the excellent work in the inter-related areas of solar power and battery storage, that their company is championing.
Innovative Battery Technology Has Potential to Disrupt Fundamental Aspect of Electricity Market
The crazy thing about the electricity market, the thing that sets it apart from almost all other markets, is its immediacy. Electrons are the ultimate NOW product. They’re right here, right now, turn on the switch, see the light.
New Zealand’s sophisticated spot market and all its intricacies have been developed to work with electricity’s time-bound quirk of physics and deliver reliable, affordable and mostly renewable electricity to Kiwi homes and businesses.
But now this non-negotiable is being challenged. There’s a ‘disruptive technology’ on the scene that, like a kind of Timelord, has the potential to substantially diminish the impact of time and timing on the generation, dispatch and ultimate use of electricity. We’re talking about the exciting new opportunity created by super-batteries that can charge up with electricity from the grid and store it, before being re-dispatched into the electricity market.
Grid-Connected Battery Research & Development
Last week Mercury launched its own 1MW/2MWh battery storage facility at our R&D centre in South Auckland. For context 2MWh of electricity could power 400 homes for a winter evening peak for 2 hours. On its own, it’s not going to change the world and it’s also definitely not for the short-term gain. The rate of return based on trading 2MWh of electricity in and out of the national grid means it would take many years to break even on the $3 million investment.
Being directly connected to the grid, and able to send energy into the market like a little 1MW power station makes this battery a Kiwi first. And there’s potential for much more.
So what are we expecting in the medium to long-term from this pilot?
The clue is in where the battery has been installed – in Mercury’s R&D Centre in South Auckland. For us, it’s all about the ‘R’ part of ‘R&D centre’: Research. And at a time when the Government is calling for greater investment in R&D in this country, I’d like to do a quick shout-out celebrating the constant ongoing investment in R&D undertaken by Kiwi businesses every day of the week.
The battery is a pilot, a toe in the water, part of the New Zealand electricity market’s ongoing exploration of battery storage as the technology evolves, to work out what part batteries will play in the energy generation eco-system of this country. We believe there’s potential here. Reflecting on the first generation in New Zealand (for power, not gold processing) at Reefton, it was a 20kW generator – and look what hydro generation has grown to and its role in our economy now.
Battery Pilot a Milestone for Innovation
And it’s a true innovation. Mercury is the first company in New Zealand to install a battery system that is directly connected to Transpower’s high voltage national grid and to use the battery to participate in both the energy and reserves markets. Others have explored other ways that battery storage could interact with our current energy landscape – Counties Power together with Genesis, Vector and Alpine Energy have all commissioned batteries that can participate in the energy market, but these are also used to manage local networks better.
Being directly connected to the grid, and able to send energy into the market like a little 1MW power station makes this battery a Kiwi first. And there’s potential for much more. The storage facility is on the site of Mercury’s mothballed thermal power station next door to Transpower’s Southdown switchyard which is capable of moving over 100MW in and out of the grid.
However, despite the facility being able to accommodate battery storage of this size (similar to the much publicised South Australian battery project that Tesla committed to (and did) build within 100 days), trading at this scale will only start once the R (Research) has turned to D (Development). But once this happens, (when battery technologies develop further and costs of large-scale batteries drop), the lessons we have learnt from our investment in 2018 will give us a fast start to capitalise on this exciting opportunity.
Grid-Connected Battery Research May Lead to Paradigm Shift
There is also some other work that Mercury has been doing that will benefit us as well as all future battery traders. This work (which also involves Transpower and the Electricity Authority) is addressing current regulations that need to be adjusted to accommodate the participation of battery stored electricity in all aspects of the NZ reserves market.
The use of large-scale batteries to store energy from times of lower usage and make it available when it’s most needed could make a real difference to the way power is supplied to homes and businesses over the coming decades, particularly as populations grow. At scale, the lowest parts of the demand curve will be raised as electricity will be generated and stored in batteries and the highest peaks of demand will be offset by electricity being re-dispatched from the batteries back into the market.
In a future world, when the investment that companies like Mercury are making in R&D has led to large-scale battery storage in New Zealand, this flattening of the supply-demand curve should lead to more efficient use of current generation capacity.
We see all these future developments as great reasons for our research investment now. And we’re proud to be pioneers in this field that has so much potential to change the New Zealand energy market to everyone’s benefit.
See how the direct grid-connected battery will work in New Zealand’s energy eco-system
This excellent article in Energy News says it all for me. A reality check which deserves to be published in the mass media!
Unlike New Zealand politicians who are only interested in scientific research that validates their particular view of the world, this acclaimed Cambridge University academic knows what he is talking about and has no ideological axe to grind on Climate Change.
– Richard Gardiner, Managing Director, Total Utilities.
The following article was originally written by Gavin Evans and published on Energy News
Michael Kelly has nothing against walkways and cycle paths. Public transport also has a lot of benefits, but none are great options for New Zealand to be looking at as emission reduction measures, the UK-based technologist says.
There may be a lot of arguments for building a rail line from central Auckland to the city’s airport but it won’t do anything material for emissions, he told regulators and industry executives in Wellington last week.
New Plymouth-born Kelly, Emeritus Prince Philip Professor of Technology at the University of Cambridge, is frustrated by the absence of intellectual rigour in the responses being proposed to climate change.
The world does not have unlimited resources to throw at the problem and — as an engineer — he wants to see initiatives and options developed that deliver the biggest “bang for the buck.”
What he sees instead – here and overseas – are wish lists.
“There is so much of what I regard as a lack of engineering integrity in the debate, which really actually makes me angry and sad.”
Real action on climate change
Kelly wants to see action taken against climate change – but he believes the cost, the time-scales involved, and the uncertainty of some of the science – favours more of a focus on adaptation than mitigation.
For New Zealand the Productivity Commission’s focus on afforestation of marginal farm land is compelling and should be the main focus of further studies, he says.
The next priorities should be on research and development to reduce methane emissions from stock, and ways to increase exports of processed wood, thus extending the duration of emissions captured in timber.
But many of the other recommendations of the commission, and most of those of the Royal Society of New Zealand in 2016, are “futile gestures” he says. They are either too costly, unworkable, or – in the case of increasing renewables in power generation or reducing domestic coal use – already happening without much intervention.
Promoting walking, cycling and use of public transport are all positive for other reasons, but the emission reductions are small and only make sense in very dense cities. Kelly estimates the cost of the carbon saved here from such measures at more than $500 a tonne.
Auckland – Photo by Bernard Spragg
Kelly notes that in densely packed Tokyo, 90 per cent of all journeys are by public transport. In New York that figure is down to 55 per cent; in Los Angeles – 10 per cent.
“Which of those is Auckland most close to?”
Urban sprawl similarly reduces the convenience of walking and cycling for much of the community.
“As soon as you have a very large city, walking and cycling becomes a minority interest,” he told the seminar hosted by Spindletop Law in Wellington.
“I don’t mind putting cycleways and anything in for other reasons – but if you say you are doing it to reduce carbon emissions then you are just burning money.”
Social change
Kelly’s fourth recommendation for New Zealand – surprisingly – is a “serious national programme” to change community attitudes to profligate consumption.
Climate change, he says, is being driven by massive population growth and urbanisation in developing countries.
Anything New Zealand does is almost irrelevant at a global scale. He likens it to digging a hole with a spade and having people with wheelbarrows fill it in behind you.
But Kelly says individual choices do matter and social mores can be changed at relatively little cost.
He cites the change in attitudes to drink-driving, smoking in public spaces and unprotected sex since he left these shores for the UK in 1971.
“What we have got to do is get the idea that profligate use of resources is deeply anti-social.”
He’s not talking about banning cars, although greater aerodynamic design would greatly improve their efficiency.
But what if community attitudes changed so that people jeered at Lamborghinis and their owners instead of leering at them?
“We wouldn’t, as we do in Cambridge now for six weeks every winter, have this huge ice rink with huge pumps, making sure the ice stays frozen so we can go skating in Cambridge over Christmas.
“We wouldn’t do that sort of thing if we had an attitude that using energy for profligate use was anti-social. That is probably the biggest single thing we could do.”
People central to climate change
And at its root, the climate change problem is people – the growing world population and what it takes to lift those in developing countries out of poverty. Trying to do that without increasing emissions brings you head to head with the declining energy return that investment in renewables delivers – relative to energy-dense options like hydrocarbons and nuclear.
The day after Kelly’s presentation, the International Energy Agency reported on progress on the UN’s Sustainable Development Goal 7 – universal access to reliable, affordable, sustainable, modern energy by 2030.
While electrification rates in Africa – where 600 million live without power – overtook population growth for the first time last year, progress on all four of the UN’s targets are lagging.
At current rates, 8 per cent of the world’s population still won’t have power in 2030 – an improvement from 13 per cent in 2016. Lack of access to power, LPG and natural gas means that in 2030, 27 per cent of the world’s population still won’t have access to clean cooking – compared with 41 per cent in 2016.
And renewables – including ‘traditional’ use of biomass – will only account for about 21 per cent of final energy consumption in 2030, up from 17.5 per cent in 2015. Less than 10 per cent of demand that year was met by ‘modern’ renewables.
“Progress has been challenging, particularly in developing countries where energy consumption continues to grow rapidly, and modernising economies substitute fossil fuels for traditional uses of biomass,” the IEA said.
“Despite major investment, it has been hard for renewable energy expansion to keep pace with growth in energy demand.”
It’s a conundrum and at a scale few recognise, Kelly says.
China, where 600 million people have gained power or shifted to towns and cities in the past 15 years, already accounts for a quarter of the world’s emissions.
The belt and road project – a highway and high-speed rail link to be built between Beijing and Vienna during the next 20 years – will lift about two billion people along its route out of poverty, Kelly says.
The project, also involving development of 700 coal-fired power stations, will treble China’s emissions by 2050. By that stage emissions from China and its broader interests will be 500-times New Zealand’s current emissions.
Kelly struggles with what he calls New Zealand’s “gung-ho” determination to take local action on climate change when “it isn’t going to make a blind bit of difference.”
If “precious New Zealand dollars” are to be spent, they would be more effective funding a programme to get people in China to raise their central heating thermostats by 2 degrees during summer.
“What you would save there would dwarf anything that you do here.”
China may be leading the world’s investment in wind and solar, but its use of coal will fall only slightly during coming decades.
And that just reflects the scale of energy demand growth and the relatively low energy return from some renewables.
Global energy demand increased by about 40 per cent during the past 20 years and could increase by the same percentage in the next two decades, Kelly says, citing BP projections. And while renewables and gas are expected to show the greatest growth, by 2035 coal would still be the world’s third-largest source of energy after oil and gas.
Kelly says New Zealand – and Norway – are rare in that they each have low density populations and a lot of hydro – a renewable that delivers a relatively high energy return on the cost required. New Zealand also has geothermal.
Most countries don’t have those options. And the wind and solar that is being developed around the world has a far lower energy return on the energy used to build them – compared with more energy dense hydrocarbon options, nuclear or large-scale hydro.
It’s an issue recognised by others. Last month, HSBC specifically included coal-fired generation development in Bangladesh, Vietnam and Indonesia among its permitted coal-related investments. To do otherwise would be to ignore the real energy needs of those communities, it said.
Archival photo of Meremere coal-fired power station, New Zealand – Photo by W. Cleal
Kelly says people tend to look at the scale of China’s investment in renewables as some sort of “beacon of hope” without also recognising its on-going investment in coal, gas and nuclear.
“So this idea that somehow around the corner we are going to be having a new age of renewable energy is just simply nonsense.”
“Renewables do not come close to constituting a solution to the climate change problem for an industrialised world.”
Kelly observes that about 40 per cent of the world’s emissions still come from the smoke stacks of coal-fired power generation. Currently that CO2 can be extracted at a cost of about USD $60 a tonne to USD $90 a tonne. By 2025 those figures could be down to USD $25 to USD $40.
Promoting other options costing five to 10-times those figures is simply “burning money,” he says.
But all these initiatives also come at a cost to energy productivity and Kelly is concerned people haven’t thought about the long-term consequences of that.
Energy determines quality of life and intervention should only be pursued in the clearest of cases, he says.
And the energy system accounts for about 9 per cent of the global economy.
CO2 extraction reduces the efficiency of coal-fired plants by almost a fifth – taking their performance back to 1960 levels.
But the impact of lower-returning renewables could be more stark.
Productivity decline?
Kelly cites studies of Spain’s investment programme in solar in the 2009-2012. Even assuming free panels, the projects over their lifetime will deliver only five-times the energy that was used to build and operate them.
That’s in contrast to the 10-times return from a coal-fired plant, or 15-times for a gas-fired plant in the UK.
Kelly says there is an established correlation between a community’s energy productivity and the health, education and cultural benefits it can provide.
“The world is running on 11-1. We don’t notice this at the moment, but once solar energy becomes a large fraction of the total energy mix this is going to show up as a lack of productivity and nobody seems to discuss that.”
Another factor that may temper the take-up of renewables is the expectation that more than half the world’s population could be living in dense megacities by 2050.
In those communities, rooftop solar can’t deliver enough energy for all those dwelling in high-rises. Land surrounding cities like Beijing, Hong Kong, Singapore, Moscow, Rio de Janiero, London and Calcutta may also be too valuable for agriculture to give it up for solar arrays and wind turbines.
Kelly is optimistic new food technologies – like aeroponics – will ensure that the world’s megacities are self-sufficient for at least basic food stuffs.
They are also where the world should put its focus for emissions reduction, but he’s not sure renewables can play a big part in that.
He believes nuclear energy and fossil fuels will remain the mainstay for them. Carbon capture and storage may be an option, but it does reduce generation efficiency, its development is slow and it remains unproven at scale.
Given the impacts of climate change have not been as severe as some predictions during the past 20 years, Kelly says his “greatest hope” for the megacities, and the globe generally, lies in a demographic change underway for the past 40 years.
Everywhere where there is universal primary education and more people live in towns and cities the local population is in decline – where the average number of children per family falls below 2.1.
Kelly notes that in Italy the rate is down to 1.2 and in Germany 1.4. In Botswana and southern India the rates are nearing 2.2.
The UN is picking the world population to reach nine billion by 2050. But the rate of growth is slowing and in some models the range of potential outcomes includes a decline soon after.
“The chance is that in 2150 the population will be seven billion and going down – that is the answer.
“The change in the world demographic now is going in our favour,” Kelly says. “It’s a matter of getting through the next 30, 40, 50 or 60 years.”
It is well known that in New Zealand, energy generation is largely renewable. Around 65% of generation is hydro-based mainly in the South Island and around 15% is geothermal based through the central to the eastern side of the North Island. In the following series of articles, we will look at the pros and cons of commercial solar installations in the New Zealand market.
During the last National-led Government, there was little emphasis placed on increasing the uptake of large-scale Solar (with the current Labour-led Government this may change) as it was seen merely as converting from one form of mostly renewable generation to another with little overall benefit to New Zealand’s energy generation emissions. This is because the vast bulk of our thermal based load is only utilised during times of long-term dry weather (mostly during Winter periods) or intermittently when other generators are out for short-term planned or unplanned maintenance.
While Solar energy generation has been around for well over 30 years, it has only recently that economies of scale in efficiency and cost have meant that generating energy for photovoltaic panels is a realistic option for some businesses to reduce their reliance on the main transmission and local distribution grids.
A recent study published by Statistics NZ and the Ministry for the Environment concluded that sunshine hours are increasing in most areas across the country. However, there are areas throughout the country that have a more natural fit for installing Solar due to a combination of sunshine hours and the costs of energy and transmission and distribution energy pricing.
The recently announced ban on offshore oil drilling and gas exploration will have a major impact on the energy requirements of the country. From the generation perspective, Genesis’ Huntly power station will be most affected. While the original Rankine units are expected to be operated through to around December 2022, the newer 400MW combined cycle generator may have an uncertain future. From an end user perspective, food manufacturing will be most greatly impacted by a lack of gas supply or higher costs due to imports which is most likely lead to manufacturing moving offshore or higher prices for consumers. However, I digress, although the above will most likely have a positive impact on the feasibility of distributed generation.
Regulatory change and reform have always had a large impact on New Zealand’s primary sectors, and since deregulation of the energy system in 1999, successive governments have used the market for political capital by consistently tinkering and influencing the market. With the upcoming wide-ranging government inquiry into power pricing in New Zealand, the newly created Climate Change Commission and the Transmission Pricing Methodology Proposal one thing is for certain is the constant potential for change.
The following was published in the NZ Herald 25th of November 2017 and includes energy tips from Total Utilities’ own Pushkar Kulkarni who reveals how leaking air wastes money.
Four energy experts offer top tips to save money
Running an air-conditioning unit at full tilt to cool down one part of a building, while a boiler blazes away to heat another part of that same building, sounds like madness – but it’s surprisingly common in New Zealand’s commercial buildings.
It’s just one of the ways businesses are squandering energy, and therefore money, in the course of their day-to-day operations.
The Energy Efficiency and Conservation Authority (EECA) say many businesses could shave up to 20 per cent off energy costs – with the potential energy efficiency savings adding up to $900 million a year across all New Zealand businesses by 2030, if all economic options are adopted.
The good news is many of the fixes are inexpensive, immediately effective and boast short timeframes for return on investment. Some even cost nothing. According to some of the market’s energy efficiency experts, here are some of the most common ways businesses are wasting energy.
Poor energy monitoring
Simon Ross, mechanical engineer, Beca: “People leave their buildings running when there’s no one in them. The warm-up cycles also often start way too early in the mornings – and no one is even aware of it.”
Ross says monitoring energy use identifies where it is being wasted and quickly clarifies a plan of attack. It’s a classic case of not being able to manage what hasn’t been measured.
“Once you’ve measured it, it then makes sense to compare your energy usage to others in your industry – to benchmark it.”
Ross points to Beca’s benchmarking of electricity use of Christchurch schools: “When a school can see where it sits relative to another school then they can see the value in reducing their energy usage. Until you give them data to show where they sit, they’re basically only able to compare with how they’ve performed historically – which might be good, or terrible.”
EECA Business has its Energy Management Journey tool set up for precisely this purpose. It’s a free online tool where users input energy usage data, then find out how they’re doing compared to similar businesses. Find out more at https://www.eecabusiness.govt.nz/tools/energy-management-journey
Leaking Air
Pushkar Kulkarni, business manager sustainability solutions, Total Utilities:
“Many companies invest in a new air compressor but may not make an effort to find the leaks in the system first. If all of those leaks are found and fixed, they may conclude there is no need to invest in a new compressor.”
Kulkarni sees this scenario on a regular basis. He estimates eight out of every 10 systems could be leaking air.
“These systems are very common in New Zealand – particularly in the industries of production, packaging, food processing, waste, yarn and pharmaceutical production. Over time they may deteriorate or be modified and start leaking air. They can be expensive to run, so the savings from identifying and fixing leaks can be considerable. It’s usually a fairly inexpensive fix with a fast return on investment.”
Uninsulated pipes
Glenn Johnston, Smart Power: “If it’s an exposed pipe in a warm boiler room it’s not as bad but, if that pipe runs outside or through the roof space where it’s a lot colder, the heat loss can be substantial.”
Johnston is used to seeing money go down the drain in the form of energy escaping from uninsulated pipes, used for both heating and cooling.
“Industries where it’s important to insulate pipes include the likes of food processors, hospitals, freezing works, packaging plants – anywhere they have refrigeration or hot water needs.”
Often these pipes are easier to get to than in commercial buildings, making repairs easier and cheaper. Johnston cites the example of a plant his company worked on. The company beefed up insulation of steam and hot water equipment. A $20,000 investment turned into an annual saving of some 250,000kWh, or $11,000, giving a payback period of just 1.9 years.
“When you insulate pipes properly you get an immediate impact,” says Johnston.
Heating and cooling systems fighting each other
Alastair Hines, divisional manager, Enercon: “Heating and cooling systems are often working at the same time. Nobody worries about it too much, because it’s the norm.”
Hines points to one business which Enercon found many of the heating, ventilation and air-conditioning (HVAC) and lighting systems were operating 24 hours a day, seven days a week, even when not required. The HVAC systems also did not have an air temperature dead-band to prevent frequent switching from heating to cooling and vice versa.
That resulted in increased demands on the system and adjacent zones simultaneously heating and cooling.
Hines says this happens in many commercial buildings, typically because the building is poorly controlled. He estimates 10-20 per cent of the energy used for heating and cooling in a building is wasted.
“When you consider heating and cooling account for up to 50 per cent of the total cost of running it, that 10-20 per cent can be a big saving. Adding sub-meters, sensors, and re-programming the building management system all make a big difference.”
A treasure trove of information about how businesses can save energy is available on www.eecabusiness.govt.nz, or find an energy management expert in the Programme Partner directory.
