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Woods defends 100% renewable power target

Friday 21st June 2019

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The government is defending its 100 percent renewable electricity target against criticism that it risks distracting efforts from cheaper and larger emission reduction efforts elsewhere.

Energy and Resources Minister Megan Woods says the government’s 2035 electricity goal is “ambitious” but necessary if the country is to meet its net-zero carbon target by 2050.

The government is looking at other sectors for emissions reduction, including industrial process heat which accounts for 27 percent of all energy-related emissions, she said.

“Reducing emissions from the process heat sector depends on a secure, affordable and low-emission electricity system,” she told Parliament’s economic development, science and innovation select committee yesterday.

“Some of the most important innovation work we have to do is in market innovation in order to make this work – hydrogen will be really important.”

New Zealand’s electricity system is already more than 80 percent renewable. The Interim Climate Change Committee, which delivered its assessment of the 100 percent target to the government on April 30, noted in February that the electricity sector appeared on track to be 93 percent renewable by 2035.

The committee said then that were “much more significant” emission-savings available in other sectors than pursuing the remaining 7 percent. While new storage technologies were developing, it said that trying to cover dry-years without using gas or coal-fired back-up generation would be prohibitively expensive.

Woods made no reference to the committee’s report – originally planned for publication in April – except to say it was being held back for release with the government’s response.

“It’s not far off. It’s certainly something that I would expect in the coming weeks and months,” she told MPs.

Power prices surged late last year when unplanned maintenance work at the Pohokura gas field, the country’s largest, coincided with planned work at the Kupe gas field and declining South Island hydro storage.

Emissions also soared as Genesis Energy was forced to import coal to keep the lights on, and coal-fired generation in the March quarter was the highest in almost six years, according to government data.

Committee chair Jonathan Young, also National’s energy spokesperson, challenged Woods on both the capital cost of expanding the country’s renewable fleet to cover winter power demand without gas-fired supplies and the inherent intermittency of wind generation.

Wind generation the day before, one of the coldest this year, had fallen to just 4 percent of capacity, he noted.

Woods countered that there are plenty of days which are windy and sunny. The falling cost of battery storage and hydrogen production will enable the country to take advantage of those resources, but the country may also need to shift the use of its hydro assets into more of a storage role, she said. Geothermal is also an important and growing base-load power source.

“Nobody is thinking about moving to a renewable future that doesn’t have storage absolutely at its heart,” she said.

The government is funding a range of hydrogen trials and is planning to release a discussion paper “very shortly” outlining its potential challenges and opportunities, she said.

Hydrogen – usually made from natural gas - is benefiting from huge international investment to see if its manufacture from water and electricity can be made cost-competitive.

But it is also difficult and costly to store and move. In February, Concept Consulting said it may not be a viable fuel for back-up power generation unless carbon costs reached $300 a tonne.

Woods told the committee that technology is evolving rapidly and 2035 is “16 years in the future.”

Norway’s Nel, which makes large-scale electrolysers for making hydrogen, had indicated its technology could be competitive with conventional processes within a year, she said, and Concept’s costings would already be out of date.

Last year, national grid operator Transpower modelled the power needed to achieve the government’s 2050 target through wide-scale electrification of transport and industry.

It said that would require construction of about 2-terawatt-hours of generation capacity – equivalent to about four wind farms - annually. And while batteries would likely cope with daily swings in wind and solar generation, the state-owned company said no plans should be made to shut the country’s fleet of gas-fired peaking plants until other long-scale storage options were in place.

Woods said the country does need secure power supplies but she said gas was not the “panacea” it was often held up to be.

Over-building renewables to replace fossil-fuelled plant in order to meet “the last 1 or 2 percent” of the renewable target is expensive, but only if that capacity can’t be monetised, she said.

“Hydrogen produced from an oversupply of wind and solar could potentially become a very lucrative export.”


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