KEY POINTS:
The costs of integrating wind power into the electricity system are relatively low, a study has found.
The study was headed by Professor Goran Strbac of Imperial College London and commissioned by Meridian Energy. It was not concerned with the cost of building and operating wind farms or of any additional transmission investment needed to connect them to the national grid.
Rather it examined the additional costs of integrating wind power into the system which arises from the fact that it is variable (the wind doesn't blow all the time) and unpredictable (it may be blowing now but you can't be sure it will be in an hour's time).
The study concluded that:
* By 2012, if wind was providing 5 per cent of the country's power, system integration costs would add $1.90 to $2.70 a megawatt/hour to the cost of wind. As the cost of generating from a good wind site was about $75 to $85 a megawatt/hour, that would represent an additional 2 to 4 per cent. It would represent less that a quarter of a cent per unit on a consumer's power bill.
* By 2020, with 2000MW of wind providing 12.5 per cent of the country's power, the system costs would still be in a similar range of $2.10 to $2.80/MWh.
* By 2030, with 3500MW of wind meeting 18 per cent of national demand, the system integration costs would be in the $8.60 to $11.7/MWh range.
Wind's variability meant 100MW of wind turbines on a New Zealand hilltop can displace or substitute for only 20 to 30MW of baseload combined cycle gas turbine plant, Strbac said.
That is much better than in the Britain, where it is between 10 and 20MW, or Germany where it is less than 5MW.
But it still means that the system has to have spare capacity to cope with times when wind is not available, and that comes at a cost.
In New Zealand's case, that "capacity cost" was quite low, Strbac said. Partly that was because of the quality of the wind resource - high load factors, reflecting how much of the time it blows. But it was also because of the high proportion of hydro generation in the electricity system.
The hydro power stations operate with an average load factor of around 58 per cent. That is, they generate 58 per cent of what they could if there was an unlimited supply of water and they ran flat out all the time.
The hydro lakes can act as a buffer between fluctuating supply from wind farms and fluctuating demand. Only up to a point, however. If a high percentage of generation were to come from wind - like the 18 per cent by 2030 scenario modelled - more gas-fired back-up plant would be needed and the costs would rise.
"But up to 2000MW of wind, hydro almost perfectly absorbs the fluctuation in wind. It doesn't matter if the wind doesn't blow for seven days. It is not an issue," Strbac said.
That amount of wind generation could provide one-eighth of the country's expected electricity demand in 2020.
Wind's share now is little more than 2 per cent but much of the additional generating capacity being built is wind-powered. In addition to the capacity cost, which is about variability or covering calm days, there is the cost of covering sudden and inherently unpredictable drops in wind output over a time horizon of minutes or hours.
