Comment: The jump in oil prices this year with the latest conflict in the Persian Gulf was a reminder of how essential energy is to our society, and how dependent we are on foreign sources that we have no control over. The energy shock led to a burst of demand for electric vehicles. But getting off our addiction to oil is going to require more than just EVs and renewables. We need to store energy – lots of it.
Why we need energy storage
In our industrialised energy system, fossil fuels act as a store of energy for us to draw upon whenever we want. Living organisms and geological processes already did the job of storing that energy for us by converting sunlight into coal, oil and gas over millions of years.
Many renewable sources, on the other hand, are transient energy flows. Solar and wind energy, for example, have ramped up rapidly in many countries due to their low cost and low emissions. But as countries use more of these renewable resources, they will have to capture and store that energy to provide a buffer for periods of low sunlight or wind.
In most countries this means storing a few hours’ or days’ worth of energy consumption. New Zealand, however, is heavily reliant on hydropower and is vulnerable to winters with low rainfall, the so-called ‘dry year’ problem. Our lakes can only store about one month’s worth of winter power demand, so during dry winters we call upon stored energy for weeks or even months.
So far this has largely been provided by coal and gas, but with domestic supplies severely depleted, we need a sound alternative.
What’s more, our demand for electricity will only increase as we use more of it in electric vehicles or electric heating for homes and businesses. In the future we will need even more stored energy than we do now.
So what’s the plan?
Recognising this, the previous Labour-led government launched the New Zealand Battery Project in 2020 to examine the options. Before long, that government was favouring a large pumped hydro facility at Lake Onslow and committed $30 million to investigate it. However, the public baulked at the estimated $16 billion price tag to build it and the current Government canned the entire Battery Project (not just Onslow) in 2023.
Since then, National has realised that energy storage is indeed needed, launching a plan to import and store liquefied natural gas.
Using LNG in the long term will not get us to our committed goal of net zero carbon emissions by 2050. As an interim measure it might be acceptable, but we will eventually need a way to store our abundant renewable energy.
Moreover, given the recent global energy crisis, locking ourselves into further dependence on foreign energy is a highly questionable strategy, as the OECD has pointed out. The recent explosion at the world’s largest LNG plant only underlines the risk of relying on LNG for our energy.
Making an objective choice
The relative merits of LNG, Lake Onslow or other options (such as wood pellets or flexible geothermal) have been widely discussed, so I won’t delve into them here.
What we need now is an independent assessment of the different options, which was started under the Battery Project, and for the Government to clearly explain why its choice is better than the alternatives.
What are the financial and environmental costs of each option? What are the risks associated with these projects? These questions need to be answered satisfactorily for the New Zealand public to buy into the Government’s decision.
Due to the large scale of storage needed, whatever option is chosen will come at a high cost, whether it be capital cost for a Lake Onslow solution or ongoing fuelling payments for an LNG facility. Ultimately it will be the public footing the bill, through taxes or power bills. The cost of not doing anything, however, will be factory closures, power cuts in winter and economic disruption.
Whatever decision is made, it must be made objectively, not based on the Government’s current flavour of the month, because we will live with the consequences for decades to come.
Governments of the 20th century had the foresight to invest in large-scale energy infrastructure that we still use today. It’s time we had a 21st century energy strategy that will serve our mokopuna with clean, reliable and affordable energy into the future.
Energy storage will be a core topic at the 20th Otago Energy Research Centre symposium November 26-27, 2026.
