James Glennie: Harnessing the right mix

Opinion

Electricity use reached an all-time high in New Zealand last week - 92 per cent of total capacity. At the same time hydro lake levels are 10 per cent below average. This situation emphasises the timeliness and value of wind energy in the mix of generation sources.

We have had recent confirmation of the substantial and expanding role of wind energy not just in the number of turbines going up and Government reports lauding the new energy source, but also because critics are attempting to misrepresent wind energy.

The critics are trying to run down wind energy by claiming it is not reliable enough to be a replacement for present energy sources.

I don't think anyone reputable in New Zealand has ever claimed wind energy to be more than a very good energy source to have alongside others.

The critics seem to acknowledge its benefits but say that technical reasons mean it might never provide more than, say, 20 per cent of our generation.

That is hardly an argument against wind energy, just an acknowledgement that all energy sources have their advantages and disadvantages.

The question is really what the nation thinks is the right mix of energy sources, whether they be hydro, geothermal, wind, gas, coal, oil or anything else.

Wind turbines are an attractive part of the mix because in New Zealand they can supply large amounts of cheap electricity and can do so using an inexhaustible natural resource.

They do so without the emission of large amounts of climate-changing gases and without increasing our dependence on imported or domestic fuels, both of which are rapidly depleting.

The critics seem to be wrongly worried that intermittent wind generation will make the lights go out. They say that wind energy incurs a stand-by cost.

However, wind enhances the nation's limited hydro storage capacity and, in so doing, increases hydro reliability.

That Meridian and TrustPower, to name but two, are self-hedged, tends to support the idea that it is economically rational to have wind and hydro working together in this fashion.

The New Zealand Wind Energy Association also takes issue with the claim that wind creates more intermittency risk than thermal generation. At present, the System Operator (Transpower) has to continually dispatch adequate instantaneous reserves to ensure that the worst single power system contingency will not lead to a power system collapse.

The worst North Island contingencies are a Cook Strait Cable, Huntly unit, Otahuhu B or Taranaki Combined Cycle trip where 250-370 MW of generation can be instantaneously lost at any moment. This amount of reserve must be kept constantly available to cope with an instantaneous trip of this magnitude. Who pays for this?

The nature of wind farms means that there would never be an instantaneous loss of this magnitude arising from wind turbines tripping off the system.

Clearly the matter of back-up reserve needs further analysis but until that analysis has been done it is simply wrong to imply that standby generation costs are exclusive to wind farms.

Then we come to the nub of what is worrying critics - carbon taxes. They claim a significant problem of wind farm developments is "the bias of Government in supporting sustainable projects".

This statement is odd for several reasons, not least of which is that it ignores the issue of climate change and the increasing need to address the problem.

The electricity generation sector is rife with subsidies and has been since electricity was first generated. The hydro stations, which form the backbone of the nation's electricity supply, and all the country's transmission assets were built using the resources of the state.

The Maui gas field was only developed because of huge taxpayer subsidies for the development, as well as the associated onshore infrastructure.

These subsidies, through the guaranteed price paid by the Government for the gas produced by the Maui field, have kept electricity prices artificially low for many years, to the benefit of Major Energy User Group members.

In August last year, the Government announced a thoroughly non-transparent taxpayer subsidy in accordance with which it agreed to underwrite the gas supplies to Genesis Energy's 385 MW gas-fired power station at Huntly.

The details of the cost to the taxpayer were requested but not released and probably never will be. However, the ultimate cost to the taxpayer could be many tens of millions of dollars, if not more.

Last August, then Energy Minister, Pete Hodgson, announced the Gas Exploration Incentives Package, which offered several financial incentives to encourage gas exploration and production.

This February, the Government paid for and launched a $15 million oil and gas seismic data acquisition project.

Energy consumers and generators need to stop taking pot shots at each other over the relative advantages of generation sources and delivery systems.

We must come up with intelligent solutions to the bewildering array of complex challenges with which the electricity sector is faced.

Only by working together to address these challenges will we be able to continue to deliver affordably priced electricity in a manner which does not involving mortgaging the environmental legacy we bequeath to future generations.

* James Glennie, CEO of the New Zealand Wind Energy Association (NZWEA) is responding to the views of the Major Energy Users Group in the Herald on June 20.