New Zealand’s wind power capacity will soon be double what it was in 2020, thanks to a raft of new projects coming on stream.
As well as the wind farms already being built, a pipeline of development is building for both onshore and offshore wind generation projects to support the country’s decarbonisation ambitions.
The Climate Change Commission and grid operator Transpower have said wind energy could meet up to 28 per cent of total electricity demand, with a capacity of around 6500 megawatts (MW) by 2050.
The sector is coming into sharper focus, given the Government’s stated intention of having 100 per cent renewable electricity by 2030.
In addition, the Government’s Emissions Reduction Plan aims to achieve 50 per cent of total final energy consumption being provided by renewables by 2035.
Not so long ago, wind energy sat at around 6 per cent of the electricity supply. Once new projects come on stream, that figure will be close to 10 per cent.
“We have come a long way in a very short period of time,” says Grenville Gaskell, chief executive of the New Zealand Wind Energy Association.
“If you take what’s been built and what is currently being built, then we have seen a near doubling of wind farm capacity.”
The Waipipi wind farm near Pātea in South Taranaki, and Mercury’s Turitea North near Palmerston North, both completed in 2021, had kicked off a new phase for wind, representing a big step up in capacity.
“There is already multimillion-dollar investment that is already happening,” Gaskell says.
“The material scaling up of new-build investment has started.”
There are three big wind projects under way: Mercury’s Turitea South (103MW) in Manawatū; Meridian’s Harapaki (176MW) in Hawke’s Bay; and Mercury’s Kaiwera Downs (43MW), near Gore.
And it’s all big money.
NZX-listed Meridian alone has $3 billion in projects either under way or on the drawing board.
Its 100MW battery project at Ruakaka in Northland is scheduled for completion in 2024, as is Harapaki.
Planning is under way for a 120MW solar project - also at Ruakaka - and a 90MW wind farm at Mount Munro in Wairarapa is in the planning process.
Meridian also has scoping studies underway for solar, wind and battery projects in Canterbury, Manawatū, Taranaki and Auckland.
As always, the future of the Tiwai Point aluminium smelter near Bluff remains an issue for energy planners, but there is a growing expectation that the 50-year-old smelter may continue on beyond its owner’s 2024 deadline.
Likewise, the NZ Battery Project, otherwise known as Lake Onslow, has created a degree of market uncertainty for energy developers.
Electricity can enable rapid decarbonisation of the energy system, the Boston Consulting Group said in a report last year.
It described the 2020s as a critical decade for the electricity sector and for New Zealand’s transition to net zero carbon.
“The transition that enables deep, rapid decarbonisation at the lowest cost relies on a rapid build-out of renewable generation and sees peaks and dry years supported by batteries, demand response, some renewable overbuild and a small amount of fossil-fuelled generation (2 per cent of total generation) in 2030,” it said.
That would require an investment of $42b in the current decade, including increased spending on generation, transmission and distribution, the consultancy said.
Wind farm generation has in the past tended to be concentrated in Manawatū, which has strong wind characteristics, but Gaskell says that is about to change.
“What we are seeing now is more geographical dispersion of wind farms and that’s been great for managing variability because it means you can operate in different weather systems.”
Gaskell says an element of “overbuild” - building extra reserve capacity for dry years - will be required in future projects.
But he says the sector has already come a long way in a very short time. With three major wind farms under construction, Gaskell says there is now no question that the value of wind has been recognised.
There is also likely to be increased demand for power, particularly given the likely proliferation of big, energy-hungry data centres.
In a sign of things to come, Mercury has signed a deal to supply Amazon Web Services with electricity from its soon-to-be-completed Turitea South wind farm.
Billions of dollars have already been invested and Gaskell says there are many new projects to come.
In the South Island, MainPower is working on Mount Cass (93MW). “We are hopeful that Mercury, once it finishes phase one of Kawera Downs [near Gore], might push on and do phase two [near Mataura], which would mean another 200MW.”
While not large in scale, there is also the Hiringa/Ballance Kapuni project that aims to use wind power from four new turbines to make “green” hydrogen.
Gaskell says one of the positives of wind is that output is remarkably flat, both annually and seasonally, so it provides just about even generation in each quarter.
Wind generation does not drop during winter, and there is slightly more in spring, by a few percentage points.
“From a seasonal perspective, wind is ideal for New Zealand in terms of renewables because hydro falls away over winter because of the snow.
“In terms of variable renewables, wind is best suited to New Zealand’s demand profile.
“The outlook is outstanding - and we haven’t even talked about offshore yet.”
The South Taranaki Bight offshore wind project is not even on the drawing board, yet the potential of New Zealand for power generation at sea is drawing worldwide attention.
The New Zealand Super Fund last year announced that, together with Danish investment firm Copenhagen Infrastructure Partners (CIP), it would jointly investigate the feasibility of the project in the area.
While the project, expected to cost about $5 billion, is still in its formative stage, the wind energy world is excited about the possibilities.
And the New Zealand Super Fund and CIP are not the only ones looking at offshore wind in this country.
Last year, a consortium formed by BlueFloat Energy, Energy Estate and Elemental Group announced plans for a multibillion-dollar investment in offshore wind projects in South Auckland and west Waikato.
The South Auckland-Waikato offshore wind project is the second planned investment to be announced by the partnership in New Zealand, as part of a nationwide programme to develop up to 5 gigawatts (GW) of offshore wind.
BlueFloat’s South Taranaki project is designed to involve about 900MW of offshore wind development, using generators fixed to the seabed, located to the west of Beach Energy’s Kupe oil and gas platform in the South Taranaki Bight.
Belgium-based Parkwind, meanwhile, wants to build between 500MW and 1GW of offshore operations in New Zealand, with South Taranaki of prime interest.
And Australia’s Oceanex Energy has announced a portfolio of three projects: Taranaki A and B, of 1GW each; and Waikato, also 1GW.
But the elephant in the room for power project developers is the Government’s proposal for pumped hydro at Lake Onslow in Central Otago, which is aimed at solving New Zealand’s dry-year power conundrum.
If it goes ahead, Onslow, also known as the NZ Battery Project, will cost $15.7b - nearly four times as much as a high-level estimate made in 2006.
One often-voiced concern is that if Onslow does go ahead, it will deter private-sector development of other renewable energy sources.
But for the moment at least, Onslow has done little to dampen enthusiasm for wind power projects, even though it will change the electricity market if it does become a reality.
BlueFloat’s country manager Nathan Turner says significant investments in energy storage will be required to support energy transition in New Zealand.
“Regardless of the outcome of the NZ Battery Project, we strongly believe that Aotearoa New Zealand will require significant amounts of new green generation to decarbonise our existing economy,” Turner says.
The regulatory framework for developing offshore wind generation is in its formative stages, with the Ministry of Business, Innovation and Employment (MBIE) consulting on what that framework will be.
The first phase is a proposal to grant permits to undertake feasibility studies. That will allow developers to apply for areas of ocean where they will be allowed to undertake the next stage of feasibility studies for their projects.
Most of BlueFloat’s proposed developments are beyond the 12 nautical mile territorial waters limit and into New Zealand’s Exclusive Economic Zone.
As it stands, BlueFloat’s proposals are based on “desktop” studies, which led the joint venture to its two planned projects. “Once those feasibility permits are granted by the Government, that will kick off the next more defined phase of feasibility studies, leading up to the consenting process,” Turner says.
He adds that this country will need to lift its game to meet its decarbonisation targets.
“If New Zealand is to make some simple wins in decarbonisation to meet its global commitments, we need to build at least 500MW of renewable generation a year - just to decarbonise light to medium transport and low to medium processing,” Turner says.
“That’s like a new Clyde dam every year until 2050.”
New Zealand has not built electricity generation on that scale for a long time.
“There is lots of stuff happening in the onshore space and there is a big pipeline of potential out there,” he says.
“But there are not many of them that have a consent and an offtake agreement, which is what a project developer needs to make them bankable.
“We think that offshore wind is a nice complement to the onshore activities, even though onshore activities are more important and will probably do more of the heavy lifting in the next decade,” says Turner.
Gaskell says the association has embraced the fact that some of the leading offshore developers want to invest in New Zealand because of its abundant wind resource.
“And given the messages around decarbonisation and taking climate change seriously, the outlook is outstanding. Seriously, they can see an opportunity here.”
The association now has four offshore wind members, which have all established New Zealand development capacity.
“There are a lot of independent generators aside from the current generator-retailers looking at New Zealand for both onshore and offshore,” Gaskell says.
“So I think we are on the cusp of very significant growth.”
While offshore wind power has sparked significant interest, projects will take a few more years to get under way.
“From a wind perspective, we clearly know that we have got far a far bigger wind resource than we could ever use for domestic demand,” Gaskell says.
“We have a resource that is exceptional on an international scale, so I think that’s why the offshore developers will come here.
“The big story there is that we can now embrace wind, not only for improving the quality of life in terms of decarbonising, but also as an engine for growth.”
Gaskell says the sector does face significant challenges. Among them is uncertainty over the final shape of changes to the resource management system, and whether that will enable new projects. Then there is the global environment, with accelerating demand amid shortages of labour and materials, and cost increases.
“Key will be the timing of Government initiatives to reduce emissions, which will stimulate electricity demand growth and the impact of resource management system reforms on the ability to consent new wind farms.”
National grid operator Transpower says it is closely monitoring the pipeline of generation projects after a clear “ramp-up” of enquiries in 2022.
Firm interest in wind and solar continued, with grid-scale solar currently making up about half of the new connection pipeline, Transpower said in its latest six-month report.
While this pointed to a highly-renewable energy future, the central challenge for New Zealand remained the management of peak electricity demand, the agency said.
Transpower estimated grid-scale solar could exceed all expectations, with a potential of 7360MW to be connected by 2030.
Among renewable projects planned or under way:
The 19 Waikato projects are spread across infrastructure, energy, housing and mining.