Gentailers ‘fighting’ a plan for cheap, clean energy
A giant energy-storing lake in Central Otago could provide reliable, cheap, green power, according to environment watchdog Simon Upton.
Yet the Parliamentary Commissioner is concerned the electricity industry is unfairly casting doubt on the project, perhaps because its profits could take a hit.
Upton warned that energy companies might rush to break ground on projects like a large hydrogen factory, shaping the future of the grid in ways that may not benefit the country.
In a letter to Energy Minister Megan Woods, sent in December but published Tuesday, Upton repeated the benefits of a giant pumped-hydro dam at Lake Onslow. Woods introduced and regularly champions the project.
The dam would release water and generate power when prices spiked, keeping a lid on wholesale rates – and bringing down average electricity costs for customers.
Upton advised Woods to speed up work on a national energy strategy, warning that private companies could commit to rival projects to Onslow before the strategy was in place.
Critics of Lake Onslow are ‘‘expend[ing] rather a lot of energy trying to cast doubt on its worth’’, Upton said.
Claims – for example, that the proposal is stifling investment in new wind and solar farms – are often unfounded, Upton said. The evidence ‘‘suggests otherwise’’, he added, noting there are enough clean energy proposals to achieve 98% renewable generation by 2030.
In fact, Upton thought the project would likely encourage wind and solar. Lake Onslow would buy electricity when it’s cheap – so new farms could count on earning a minimum price even during lowdemand periods.
Meridian Energy is considering the construction of the world’s largest green hydrogen plant in Southland. (Originally, Contact Energy was also involved, but the company said it stepped away last year).
The facility would use electricity to split water into hydrogen and oxygen. The former would be exported overseas as a source of green energy.
To ensure the hydrogen was zero-carbon, the plant would need to use large amounts of renewable electricity. Hydrogen production is fairly inefficient, so could require lots of additional wind turbines to power it, Upton noted.
A Southland plant would also be positioned to take over the Tiwai aluminium smelter’s power consumption, if the facility closes.
In theory, the facility would shut down when national power prices spiked, freeing up extra energy for the grid. But the shutdown point would depend on international hydrogen prices. There’s a risk, Upton warned: If hydrogen prices were high, New Zealand may have to resort to burning fossil fuels for power instead – putting our climate goals at risk.
It’s not just generators suggesting alternatives. Natural gas pipeline owner Firstgas proposed using electricity to create hydrogen, storing the gas in old wells until hydro lake levels fall, and then transforming it back into electricity.
Firstgas commissioned a report, which concluded hydrogen storage could be cost competitive – though warned it was not known if hydrogen could actually be stored in old gas wells.
Upton criticised the concept’s inefficiency, because an estimated 70% of the original electricity consumed would go to waste.
Energy companies – ‘‘despite what some say publicly’’ – put profits and their shareholders’ interests above the greater public good, Upton said in the letter.
Gentailers want to keep competition low and power prices high, he added. ‘‘This comes at the expense of securing the least costly transition to a de-fossilised economy.’’
Upton stressed the Onslow dam project still needed to be put through its paces, to ensure it could be built and assess how much it would cost.
James Irvine, the future fuels general manager for Firstgas, supported the development of an energy strategy.
‘‘Energy sector projects – whether public sector or private sector – benefit from having clear direction, policy support and stability, given the long-lived infrastructure involved,’’ he said.
‘‘However, any plan will inevitably also have to evolve over time.’’