Genesis CEO: Energy independence within New Zealand's grasp

Genesis is replacing thermal baseload at Huntly with new renewable generation - a mix of wind and solar. Photo / File

Opinion

OPINION:

The results of Genesis' annual Energy Survey make sobering reading. New Zealanders are less optimistic about reaching the goal of being carbon neutral by 2050, less sure how to get there, and less certain about the timeframe for a move to totally renewable electricity generation.

This lack of belief in the county's ability to meet its goals is perhaps reflective of the mood of uncertainty brought on by the pandemic, exacerbated by the war in Ukraine and its effect on energy supplies and prices.

Perhaps most worrying in our survey of 1000 people, fewer believe climate change will have an impact on the way they live and work over the next 10 years. The 58 per cent who do was down 10 per cent on last year; the 32 per cent who think climate change will have almost no impact on their lives was up 3 per cent.

Are people giving up? Burying their heads in the sand? I hope not, because the electricity industry is doing a great deal to address climate change. It may be up to us, in partnership with Government, to restore New Zealanders' faith in the country's progress to a low-carbon future.

The Ukraine war's effect on energy supplies and prices has focused many countries on the need for energy independence. Renewable energy enables more energy independence, so rather than the war causing a reversal of the climate change agenda as some commentators are suggesting, I believe we'll see an increasing alignment of geopolitical energy dynamics with the climate change agenda as more nations seek energy independence.

New Zealand is better placed than most to not only be energy independent, but for nearly all our electricity to be renewable. Our analysis of future market scenarios show that by 2030, the existing pipeline of projects will lift New Zealand from about 85 per cent renewable electricity generation to the lofty heights of 96-98 per cent – a remarkable achievement of investment, risk, planning, logistics and flexibility.

Genesis is contributing to this transition by replacing thermal baseload at Huntly with new renewable generation – a mix of wind and solar. This Future-gen strategy, as we call it, will result in the removal of 1.8 million tonnes of carbon emissions per year by 2030.

Coal burn is declining rapidly as new renewable generation comes online, and soon we'll run a biomass trial at Huntly to see if we could one day replace coal entirely as a back up to weather-dependant renewable generation. We're challenging ourselves to think about other changes we can make to our business as the country aims to be net zero by 2050.

This includes diversifying our generation portfolio with investment in grid scale solar and innovating to provide our customers with insights and information to tackle their business and household emissions.

Our county's highly renewable electricity system gives us the unique opportunity to use it to decarbonise the rest of NZ Inc – to help other industries switch from coal and gas to clean electricity for process heat, and support the move away from petrol and diesel-powered vehicles to EVs.

When 26 per cent of New Zealand's emissions come from industrial process heat, and 21 per cent from transport, compared to only 5 per cent from electricity generation, it makes sense to spread our resource where it's most useful, while maintaining its reliability.

Although it's highly likely we'll get to 98 per cent renewable electricity, getting higher than that with existing technologies will be hard and expensive. At a certain point, the new wind and solar generation starts displacing hydro, the lakes spill more often, and our relatively low lake storage means we still need back-up for the system to ensure it remains reliable and low cost as well as low carbon – what we call the energy trilemma.

Genesis Energy chief executive Marc England. Photo / Brett Phibbs, PhibbsVisuals

Reliability is increasingly important, as highlighted by our survey respondents; 49 per cent of those surveyed (up 5 per cent from last year) named reliability their second most important consideration after price. A further 35 per cent said reliability was the most important factor in their electricity supply, with price second.

Perhaps this is in response to the uncertain times brought on by Covid-19 and the Ukraine conflict, the number of people working from home, and the unexpected power outage last August.

People's need for reliability reinforced for us the importance of back-up generation in New Zealand's highly renewable electricity system. Huntly will continue to play a key role in providing crucial back-up through the renewable transition, whether by burning biomass or coal, though in far smaller quantities than today.

Like our navigation through Covid-19, the road to carbon zero will be a marathon, not a sprint, and it will take all of us to deliver that outcome for New Zealand. In the past year, confidence that we'll reach that goal has dropped from 68 per cent to 46 per cent.

Those who think reaching that goal "not likely at all" increased by 8 per cent, and those unsure also increased by the same amount. That uncertainty presents an opportunity for industries like ours, in partnership with Government, to reassure New Zealanders that yes, we can reduce the country's emissions, and provide tools to help.

We look forward to the Government's release of the Emissions Reduction Plan in May and the sector working together on a National Energy Strategy to create the momentum the country needs.

New Zealand can lead the world in showing how a highly renewable electricity sector can help decarbonise the country's energy system as a whole, remain secure, and provide energy independence.

• Marc England is the chief executive of Genesis Energy.