Analysis: The Climate Change Commission wants to see close to a 50 percent increase in renewable electricity generation by 2035, but how close are we to achieving that? Marc Daalder reports
These days, everything is going electric. From cars to stoves to dairy processing plants, converting fossil fuel-powered equipment to clean, green electric infrastructure is crucial to decarbonising New Zealand and combating climate change.
However, in addition to the complications around electrifying existing infrastructure, the transition poses a second major problem: Where will all the electricity come from to power these new cars, stoves and industrial plants?
Last year, national electric grid operator Transpower estimated that demand for electricity will grow two-thirds by 2050. Most of this is a result of the electrification of transport, while decarbonising process heat and projected population growth make up the remainder.
In order to meet that rising demand, Transpower found we will need to build more new generation capacity by 2035 than we have since 1980.
Commission calls for renewables
In its recently-released draft advice to the Government on decarbonising New Zealand, the Climate Change Commission goes even further in calling for green electricity production. In just the next 15 years, the Commission wrote, renewable electricity generation will need to increase by 47 percent.
Read more: Key takeaways from the Climate Change Commission's advice
Read more: Newsroom's in-depth analysis of the Commission's report
That's partially a reflection of accelerated electrification of fossil fuel-emitting activities called for by the Commission's report - and partially a result of a quicker timeline for the phase-out of fossil fuel electricity generation. Coal use for electricity, the Commission says, should be gone by 2024. Under current policies, the Commission's analysis found, coal use would only fully vanish by 2031.
Similarly, the Commission wants natural gas use for electricity generation to be a third lower by 2035 than it otherwise would be.
In the short-term, the Commission hopes to see a ramp up in the construction of new, renewable generation capacity. That rolling infrastructure programme would then pause for a few years in the mid-to-late 2020s, in response to the Tiwai Point aluminium smelter closing down. That event, which is not a guarantee but which nonetheless underpins the Commission's analysis, would free up 572 MW of electricity from the Manapouri hydro station and defer the need for new generation for a couple of years.
After that excess generation is soaked up by new demand in the latter half of the decade, new generation truly kicks into gear, jumping more than a quarter between 2027 and 2035.
Over the course of the coming 15 years, the majority of the new generation will come in the form of wind energy. The Commission wants to see annual wind generation increase sixfold from just two terawatt hours today to more than 13 terawatt hours by 2035. New electricity from geothermal plants would increase by a third, to 10.2 TWh, while solar electricity would skyrocket to 18 times its current (nearly negligible) levels, producing 2.19 TWh a year by the middle of the next decade.
Hydroelectric generation would remain flat while fossil fuel generation would fall from producing about 17 percent of electricity today to just 2 percent in 2035.
The Commission's advice, released on January 31, sparked a wave of new announcements of investment in renewable generation. Several projects which had been put on hold due to uncertainty around Tiwai Point are now scheduled to begin construction, including Contact Energy's massive Tauhara geothermal plant and Meridian's Harapaki wind farm.
New generation on the way
But will this new generation be enough to meet the Commission's recommended build-out of green electricity options?
Newsroom sought data from the five major electricity generators about projects that they expected to come online in the coming decade and the expected annual generation of each new build.
Contact's Tauhara scheme is expected to come online in the middle of 2023 and will generate 1.3 TWh a year. A spokesperson told Newsroom this is the company's only confirmed project at this stage.
Meridian's Harapaki farm will be up and running by 2025 and produce 542 GWh a year. Other wind farm sites are under investigation but none have reached the consenting stage, a spokesperson said.
The general manager for Mercury Energy's portfolio, Phil Gibson, told Newsroom the company had just completed upgrades to its Whakamaru Power Station, increasing capacity to 124 MW from 100 MW, and was working on two wind farms. The first of the farms, the Turitea scheme in the Tararua Ranges, will be New Zealand's largest wind farm. The first 33 turbines are expected to be operational this year and will produce 470 GWh annually. The second 27 turbines will generate 370 GWh on average from mid-2023.
A second nearby wind farm, at Puketoi east of Pahiatua, has been consented for 53 turbines. However, a Mercury spokeperson was unable to provide an estimated completion date or annual generation, as the project is still in its nascent stages. Between the two farms, Mercury expects to spend $1 billion, Gibson said.
Lastly, a spokesperson for Genesis Energy highlighted the company's Future-gen programme, which seeks to see 2.65 TWh of generation online by 2031. The first of its Future-gen projects, the 455 GWh Waipipi wind farm, will be fully operational by the end of the year. Genesis is currently reviewing 6 TWh worth of proposals with an eye towards having 1.35 TWh of generation running by 2025, on top of Waipipi.
A spokesperson for TrustPower said the company had no confirmed new renewable projects at this stage.
"Trustpower is committed to increased effort and investment into new renewable generation options. We are exploring a number of opportunities and will provide more information when we are able," CEO David Prentice told Newsroom.
Renewables gap
Even when all of the confirmed projects from the four generators are summed up, expected renewable generation lags behind the Climate Commission's recommended figures, Newsroom's analysis shows.
In particular, more investment is needed in the tail end of the decade, when the renewable gap - the gulf between the Commission's recommended generation and what companies have committed to produce - widens to more than 4 TWh.
For context, that's enough to power about a third of New Zealand's houses or nearly 1.8 million electric vehicles for a full year.
Of course, more projects for the coming years could still be announced and Newsroom's analysis doesn't take into account the impact of Mercury's potential Puketoi wind farm.
Part of the hesitancy is also likely due to ongoing uncertainty around Tiwai Point. A clearer plan for whether the smelter will stay (in which case even more generation than what the Commission called for will be needed) or go (in which case a pause in new building seems prudent) could allow generators to be more confident in new investment.
"In the short-term, electricity generation companies may not commit to this expansion in capacity while there is uncertainty around the future of the New Zealand Aluminium Smelter at Tiwai Point," the Commission acknowledged.
It's also worth noting that none of the confirmed projects involve solar electricity - although Genesis' Future-gen scheme could in the future. The Commission expects solar generation to really kick off in the 2030s, nearly tripling between 2031 and 2035. Tweaking market settings to allow for a distributed solar grid could go some way towards enabling that expansion.
"Our path requires rapid expansion of renewable wind and solar generation in the 2030s and beyond to meet increased electricity demand as electric vehicles are widely adopted," the Commission wrote in its draft advice.
"The challenge is delivering a timely, reliable and affordable build out of the electricity system, while managing the opposing risks of under or over-investing in the system. Continuing to build new electricity generation and transmission infrastructure throughout the 2020s would avoid construction bottlenecks and potential delays to wider decarbonisation in the 2030s."
