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Greater role for gas in electrification of transport, industry

Wednesday 17th July 2019

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Accelerating the take-up of electricity for transport and industry will require more gas-fired generation to be kept in the system for longer, projections by the Interim Climate Change Committee show.

Electrifying half the light transport fleet, switching about a third of the coal and gas used in low- and mid-temperature food processing to power and replacing coal and gas-fired space heating of schools, hospitals and businesses would boost electricity demand to about 57,270 gigawatt-hours in 2035.

That is 29 percent more than now and about 8,000 GWh more load than either a business-as-usual scenario would deliver by that date, or under a scenario where generation becomes 100 percent renewable over the same period, the committee’s modelling shows.

To meet that extra demand, while also keeping power affordable and covering the greater intermittency of wind and solar supplies, gas-fired generation by 2035 would be about 43 percent higher than under a business-as-usual scenario.

Gas’s share of total generation would fall to less than 7 percent, from more than 12 percent now, but would be up from about 5 percent in 2035 if the use of renewables increases in line with current trends.

"No single solution stands out as a clear candidate to replace the relatively low-cost, flexible and low-emissions service that natural gas can provide," the committee says in its 120-page report.

“Having both 100 percent renewable electricity by overbuilding and accelerated electrification in the period to 2035 is not possible. The high prices under the 100 percent renewable electricity future would act as a disincentive to fuel switching - and therefore emissions savings - that underpins the accelerated electrification future.” 

The committee, early in its work, signalled that the government’s 2035 100 percent renewable generation target would be prohibitively costly and less effective in reducing emissions than other options. It has instead called for the government to restrict new coal-fired industrial heat capacity and set a target to reduce transport emissions in 2035 by 6 million tonnes of CO2, relative to today’s levels.

Even with the greater use of gas – and a 29 percent increase in emissions from power generation – “accelerated electrification of transport and process heat results in more than triple the emissions reductions compared to pursuing 100 percent renewable electricity.”

Energy and Resources Minister Megan Woods tried to put a brave face on the report for the government, which last year also banned new offshore exploration and has not committed to offer onshore exploration permits in Taranaki beyond 2020.

Woods said the government is keeping the 100 percent renewable generation target, which had always included a caveat that that was achievable in a year of normal rainfall.

“It’s entirely consistent with what’s in the report, because what we are also doing at the same time is prioritising that work around industrial process heat and transport emissions,” she told journalists yesterday.

Paul Goodeve, chief executive of gas pipeline operator First Gas, said the ICCC’s work showed that any electricity-based energy future for New Zealand requires a gas network.

A mix of renewables and gas is needed as covering seasonal and incidental shortfalls in supply with renewables would be prohibitively expensive, he said. Some firms must use gas rather than electricity, and the availability of gas will also help keep downward pressure on power prices.

“The final electricity/gas mix does not need to be decided for some time and shouldn’t be,” Goodeve said in a statement. “There’s technology in development, like hydrogen and gas blends. We must keep our options open for whatever alternatives turn out best for purpose while reducing emissions.”

The ICCC’s modelling assumed that rooftop solar would generate 1.2 terawatt-hours of electricity by 2035, from 0.2 TWh in 2018. Large-scale solar costs would fall to $81 a megawatt-hour, from $121/MWh, wind would cost $66/MWh, from $70/MWh, gas would cost $9.50 a gigajoule, from $6.40/GJ, and carbon would cost $50 a tonne, from $24.

Generation in 2035 would be 93 percent renewable, from about 82 percent now, or 92 percent renewable under the accelerated electrification scenario.

The committee found that falling technology costs meant power prices would only be marginally higher, even with 99 percent renewable generation. But at 100 percent renewables, power costs jumped to $113/MWh from $89/MWh at 99 percent and $84/MWh now.

The modelling also showed there were many more periods in the 100 percent renewable scenario when generation couldn’t meet all demand. Deploying additional wind and battery capacity to bring the need for demand response in line with the committee’s other scenarios would push the cost to more than $125/MWh.

The report noted that, even in the 99 percent renewable scenario, gas peaking was required at some time in all of the 87 years of hydrological data available. While more gas was used in the driest, stillest years, some gas was still needed even in the wettest, windiest years to supply periods of “particularly high daily demand.”

The government hasn’t been able to define a year of average hydrology for its target. Hydrology can vary widely from island to island and the country can experience periods of drought and flooding within the same year. Gas- and coal-fired plants also provide important back-up for planned and unplanned generator and transmission outages.

The committee noted that defining dry or calm periods, and restricting gas-fired generation to only those times, would be “extremely challenging – and potentially operationally infeasible.”

(BusinessDesk)

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