Spanish wind power developer BlueFloat Energy says offshore wind power could become a reality in New Zealand within a decade.
BlueFloat Energy, the Spanish company sizing up its prospects in New Zealand, says wind power generation off the Taranaki and Waikato coasts could become a reality within a decade.
The wind energy developer, which is owned by US green energy investor 547 Energy, is one of a handful of companies looking into wind power possibilities off the coast - a region better known for oil and gas production.
BlueFloat is not the first kid on the block.
The New Zealand Super Fund has teamed up with Denmark’s Copenhagen Infrastructure Partners, and the pair are looking to bring large-scale offshore wind power generation to South Taranaki.
Australia’s Oceanex Energy is also in early-stage development of up to three projects off the New Zealand coast. And Belgium’s Parkwind has offshore wind ambitions for Australia and New Zealand.
Then there is Wind Quarry Zealandia — a privately held wind development company based in New Zealand affiliated with US-based Wind Quarry LLC.
At this stage, BlueFloat’s plans are still at the “desktop phase”, says chief executive Carlos Martin, but he’s enthusiastic about the potential.
BlueFloat’s plans involve wind farms made up of turbines that are either anchored to the sea floor, or tethered and mounted on floats.
Along with New Plymouth-based developer Elemental, BlueFloat has proposed an offshore Waikato project, which will involve a bottom-fixed platform and a floating platform in deeper water.
Off the South Taranaki coast, it is proposing an anchored platform.
The company says the Waikato project could supply up to 400,000 homes with green energy, while the Taranaki platform would serve up to 600,000.
As a developer, BlueFloat identifies new projects and puts them through the permitting and consenting process. An engineering phase follows before the final investment decision is reached, which marks the beginning of construction.
Martin and BlueFloat’s New Zealand country manager Nathan Turner have been engaging with local communities, which they say is an important first step with all developments.
While it’s early days yet, they say there has been no pushback so far.
“But there is a risk, and that’s what happens if you don’t engage in the early stages with the local communities,” Turner says.
“We are at the stage where we are strong believers that offshore wind is coming to New Zealand and that it will play a big role in the energy mix in the future.
“But before we can start putting turbines in the water, it’s important that the Government establishes a regulatory framework, which will govern how these projects will proceed.”
As it stands, the Government is consulting on that framework, having already completed the first phase. Phase two is due to start and a second discussion paper from the Ministry of Business, Innovation and Employment is due soon.
A big part of BlueFloat’s current activities centre on working with the Government on the framework.
“I guess the pace at which the regulatory framework comes in part dictates how we mature our projects and invest in them,” Turner says.
In the meantime, much of BlueFloat’s activities are tied up with design.
“When the regulation comes, we can start moving into the field quite quickly,” he says.
Turner talks at length about gaining a social licence for big offshore wind farms.
In BlueFloat’s case, its proposals involve building structures 20 kilometres off the coast, where there will be fewer visual and other impacts than there would be closer to land.
In terms of regulation, he expects the framework to be broadly similar to the way the oil and gas exploration system works under the Crown Minerals Act.
Companies will first apply for a prospecting licence over a piece of ocean to find out if it is suitable. Then comes a construction licence.
“In New Zealand, based on what the Government has consulted on thus far, it’s going to be a similar type of process.
“What we are looking for from the legislation is certainty around the permitting structure and the line of sight of some of the commercial aspects that are required for projects.”
For BlueFloat, the final investment decision is still years away.
“Then there is a broader ecosystem of support, and the Government will play a key role in that,” Turner says, adding it may involve upgrading power transmission lines and other infrastructure.
“The range of activities that you do after that can take three to five years before you have a consent and a bankable project.
“It does depend on the framework itself.
“All going well, by 2027-29 we should be able to consider a final investment decision.”
Construction of BlueFloat’s first project was possible within the decade.
Martin, who was in New Zealand for a week while much of Europe sweltered through an extreme heatwave, says the pace of renewable energy construction worldwide must pick up.
“We are talking about a climate emergency at a global level, and that emergency requires fast development, and that’s what we are working for.”
While a field of five potential developers might seem a little crowded, Martin points to the Gippsland coast of Victoria, where BlueFloat also has plans, and where there are 40 other offshore wind farm hopefuls lining up.
Martin says a trend towards offshore wind power is developing fast in many parts of the world, and there is an opportunity for New Zealand to be part of that.
“New Zealand is blessed with very strong winds — probably the best in class worldwide — and that is a major opportunity,” he says.
“The way we see it is that offshore wind, together with other renewables, has the potential to respond not just to the need for decarbonisation of the power mix, but more importantly, to transform the economy and make renewable energy — in the broader sense — a key export for the New Zealand economy.
“There is potential for that in terms of a sufficient wind resource,” he says.
“And there are projects and investment available for the ‘Power-to-X’ opportunities.”
“Power-to-X” refers to technologies that allow for the decoupling of power from the electricity sector for use in other industries such as transport or chemicals, possibly using power that has been provided by additional investments in generation.
As it stands, New Zealand now has 10 gigawatts (GW) of installed power generation.
“For ‘easy’ decarbonisation — adoption of electric vehicles and replacing coal boilers in schools and replacing them with heat pumps — New Zealand will need to add 500 megawatts each and every year for the next 30 years, so that’s 15GW on top of today’s 10GW,” Turner says.
“If you then want to decarbonise planes, trucks, boats, the Glenbrook steel plant etc, it’s more like another 20GW.
“Not all of that will come from offshore wind, but there is an enormous amount of new generation that needs to be built in New Zealand.
“Because offshore wind projects can be built at scale, and with more regular generation frequency, we think that they can play a really big role in that mix,” Turner says.
“If you think about how we become more than just an exporter of dried milk powder and logs, and all those other opportunities that are going to be driven by reliable, green, affordable electricity, then there is a big opportunity out there for the economy.”
From a global investment perspective, Martin says there is a keen appetite for opportunities in renewables.
“Today, the reality is that if anybody wanted to develop a coal-powered generation plant, they would struggle to find investors willing to lend the money for that kind of CO2-emitting generation.
“That doesn’t mean that any renewables project can be easily financed.”
As well as plenty of wind, Taranaki has another advantage. Turner says the region, with its long history of oil and gas production, already has a workforce with experience in offshore projects.
“There are a lot of people out there who are really excited about the opportunity that it presents for the region to transition away from offshore oil and gas into retaining that strong position in the energy sector.”
BlueFloat has partnered with Elemental Group, which has been involved in the local energy sector for many years — initially in oil and gas —but later went into renewable developments.
Offshore wind is credited with having “semi-baseload” or continuous generating characteristics, given that the wind blows more consistently offshore than it does on land.
“From a green integration point of view, it offers advantages to other types of renewables which are more intermittent,” Martin says.
“You need baseload or semi-baseload to keep the system stable, and that’s one of the advantages offered by offshore wind.
The El Nino and La Nina weather patterns had made the hydro-generating system less reliable and more unpredictable from one year to the next.
“From a grid management perspective, having that energy stored in the form of hydro power allows for better management of the grid. We tend to see hydro power and wind as being quite symbiotic,” Martin says.
BlueFloat has engaged with Transpower to understand how it could best fit into the existing grid.
Green integration into the power grid should not be a problem if it is planned, Turner says, pointing to Meridian Energy’s battery project at Ruakākā as one of the future ways to support peak power demand.
“Also, the demand side from large industrial customers is starting to make its way into the market, such as NZ Steel at Glenbrook.”
As BlueFloat and others head towards making final investment decisions, some people in the energy industry fear the Government’s ambitious Lake Onslow power project, which would see the South Island lake operate as a kind of hydro-powered battery, could stifle energy investment.
As Turner sees it, New Zealand will need more electricity storage capacity, in one form or another.
“The Government is looking at Onslow and lots of smaller storage schemes around New Zealand.”
“As a renewables developer, with intermittent generation, we acknowledge that more storage in the system is required, so it’s not so much Onslow itself that worries me. It’s how long the uncertainty will hang around.
“If Onslow is not going to happen, then private capital needs to be investing in other storage solutions today.
“Whereas the longer Onslow remains on the table as a possibility, I think the more it will deter investment in other storage solutions.
“Whether Onslow comes or not, New Zealand needs a lot more green generation.
“From that perspective, we need to carry on with our own projects as fast as possible.
“But I can certainly see that if I were a storage investor, I might be thinking twice about my investment if Onslow is out there on the horizon.”
Onslow will move power from one period to another, but it won’t change how much power we need in total, so from that perspective, New Zealand still needs plenty more green generation, Turner says.
Building wind turbines off the often-hostile west coast of the North Island west may seem a bridge too far. But, “technically, we can be pretty confident in saying that these structures can be engineered, designed and installed in New Zealand waters”, Turner says.
“Yes, ocean conditions on the west coast are pretty gnarly, but New Zealand has been installing and maintaining oil and gas structures in those same waters for some years now.
“We are confident that there is no technical barrier.
“We are also confident that New Zealand needs a lot more green generation and that developing that only through onshore resources is not the right way to do it.”
Martin says that in time, offshore wind will play a role in developing green hydrogen. “We believe offshore wind and green hydrogen will develop together because green hydrogen requires a vast amount of power, and if you want to secure that power through renewable means, you would be covering big parts of the country with solar panels or turbines,” he says.
He’s confident that offshore wind will soon become part of New Zealand’s power generation mix.
“We feel strongly about that, but we are also conscious it will not happen from one day to the next,” he says. “But it is going to happen, for sure.”
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
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