Electricity sector in New Zealand

The electricity sector in New Zealand uses mainly renewable energy sources such as hydropower, geothermal power and increasingly wind energy. The 70% share of renewable energy sources makes New Zealand one of the most sustainable countries in terms of energy generation. Electricity demand is also still growing, by an average of 2.4% per year since 1974 and 1.7% over 1997 - 2007 [http://www.med.govt.nz/templates/MultipageDocumentTOC____36571.aspx MED Energy Data File 2008] ] . The country has been called one of the least energy efficient countries in the OECD.Fact|date=October 2008

New Zealand suffers from a geographical imbalance between energy production and consumption. The most substantial energy generation (both existing and as remaining potential) is located on the South Island and to a lesser degree in the central North Island, while the main demand (which is continuing to grow quickly) is in the northern North Island in the Auckland Region. This requires energy to be transmitted north through a power grid which is increasingly over its capacity. While initiatives are underway to build new transmission power lines, especially in the Waikato, there is substantial local protest against these initiatives. Facts|date=October 2008

Regulation and control of the energy industry is mainly within the portfolio of the Minister of Energy in the New Zealand Cabinet, though the Minister for State-Owned Enterprises and the Minister for Climate Change also have some powers by virtue of their positions and policy influence in the current Labour government.

History

Initial use of electricity in New Zealand was tied to mining, with Reefton on the West Coast becoming the first electrified city in 1888, while the first sizable power station was built for the Waihi gold mines at Horahora on the Waikato River. This set a precedent which was to dominate New Zealand's electricity generation, with hydropower becoming and remaining the dominant source. In 1930, the percentage was at 92%."New Zealand Historical Atlas" - McKinnon, Malcolm (Editor); David Bateman, 1997, Plate 88]

While industrial use quickly took off, it was only government programmes in the first two thirds of the 20th century that caused private demand to climb strongly as well. Especially the rural areas were beneficiaries of subsidies for electrical grid systems, where supply literally was provided to create demand, with an intention to modernise the countryside. The results were notable - in the 1920s, electricity use increased at a rate of 22% per year. In fact, the 'load building' programmes were so successful that shortages started to occur from 1936 on, though a large number of new power stations built in the 1950s enabled supply to catch up again.

After the massive construction programmes had created a substantial supply of energy not dependent on international fossil fuel prices, New Zealand became less frugal with its energy use. While in 1978, its energy consumption (as expressed against economic output) hovered around the average of all OECD countries, during the 1980s New Zealand dropped far behind, increasing its energy use per economic unit by over 25%, while other nations slowly reduced their energy usage levels. Based on this economic comparison, in 1991 it was the second-least energy-efficient country out of 41 OECD countries."New Zealand Historical Atlas" - McKinnon, Malcolm (Editor); David Bateman, 1997, Plate 98]

Generation

The installed generating capacity of New Zealand (all sources) as of December 2007 was 9,133 megawatts (MW) [http://www.med.govt.nz/templates/MultipageDocumentTOC____36571.aspx MED Energy Data File 2008] ] . In 2007, 55% of electricity came from hydro power, 26% from natural gas, 8% from geothermal, 7% from coal. Other sources include wind and biomass. [http://www.med.govt.nz/upload/59482/03_Overview.pdf] (See chart for more information.)

Generation is dominated by five companies, which are Meridian Energy, Contact Energy, Genesis Energy, Mighty River Power and TrustPower.

Hydro

Large-scale hydro facilities or schemes in New Zealand include the Waitaki River Hydroelectric System on the Waitaki in the South Island. Approximately 4000 gigawatt hours (GWh) of electricity is generated annually by the Waikato River scheme, which supplies around 30% of New Zealand's hydropower.cite web
url = http://www.urscorp.com/URS_Division/projectsDetail.php?section=07&project=354&service=96
title = Aviemore Dam
publisher= URS
accessdate=2007-10-10] and accounts for 13% of New Zealand's total electrical generating capacity.Fact|date=August 2008

Between 1929 and 1971, eight dams and nine powerhouses were built on the Waikato River to meet demand. The Aviemore Dam and the Benmore Dam are some of the largest generation stations of the scheme. With the original scheme built in the 1960s, Project Aqua was to expand on the existing scheme in the 2000s with further generation capacity on the lower Waitaki, but was abandoned before construction due to costs and substantial civic protests.

Other large dams/power stations include the Clyde Dam, Roxburgh Dam and the Manapouri Power Station (all South Island), as well as the various facilities of the Waikato River Hydro System on the Waikato River in the North Island.

Geothermal

New Zealand, similar to Iceland, has favourable geological conditions for the exploitation of geothermal power. However, while there are several very old and large-scale geothermal power stations in the country, much potential still lies untapped, with the New Zealand Geothermal Association estimating an installation capacity (using only existing technology) of around 3,600 MW.cite web
url = http://www.nzgeothermal.org.nz/geothermal_energy/geothermal_development.asp
title = Development Potential
publisher= New Zealand Geothermal Association
accessdate=2008-02-23] Existing installed capacity is over 400 MW, supplying 7% of the country's electricity use.cite web
url = http://www.nzgeothermal.org.nz/geothermal_energy/electricity_generation.asp
title = Geothermal Energy and Electricity Generation
publisher= New Zealand Geothermal Association
accessdate=2008-02-23]

Wind

As of late 2007, 321 MW of generation capacity in New Zealand was from wind, almost doubling the capacity from the previous year. This capacity is sufficient to power over 110,000 average New Zealand households.

Wind power in New Zealand shares the difficulties typical to other nations (uneven wind strengths, ideal locations often remote from power demand areas). The Tararua windfarm, currently (November 2007) New Zealand's largest wind power facility, averages slightly more than New Zealand's 45% full capacity usage (in other words, wind farms in New Zealand produce more than double their average energy during periods of maximum useful wind strengths). However, New Zealand Energy Efficiency and Conservation Authority figures indicate that wind power is also expected to operate at maximum capacity for around 4,000 hours a year, much more than for example the approximately 2,000 hours (Germany) to 3,000 hours (Scotland, Wales, Western Ireland) found in European countries.

Fossil fuels

There are a number of fossil fuels-fired generation facilities in New Zealand, mainly coal and gas-fired power stations. Huntly power station in the Upper Waikato is the biggest facility, its approximately 1,435 MW supplying around 17% of the country's electricity.cite web
url = http://www.genesisenergy.co.nz/genesis/generation/our-thermal-plants/en/our-thermal-plants_home.cfm
title = Huntly Power Station
publisher= Genesis Energy
accessdate=2008-07-26]

Marine

New Zealand is considered to have abundant marine energy resources, although this is yet to be tapped. Tidal current projects are being considered in the Kaipara Harbour and in Cook Strait. The Aotearoa Wave and Tide Energy Association was established by firms and people interested in promoting New Zealand marine energy.

Proposed

Most of New Zealand's proposed generation capacity is to come from new wind or geothermal energy sources. 2,700 MW of wind energy plants are to be installed within the coming years, though the first of the larger wind farms is not to be completed before several years (as of 2007), and many are facing legal challenges in receiving resource consent due to perceived visual or noise pollution.

Major possible future facilities as of 2008 are (amongst many others) a 650 MW wind farm (Hauāuru mā raki) near Port Waikato (planned, and with 218 turbines of convert|150|m|ft height each, one of the largest in the world if constructed) [cite news
url= http://www.nzherald.co.nz/topic/story.cfm?c_id=187&objectid=10470514
title = You asked about: Wind turbines
publisher= The New Zealand Herald
date=2007-10-18
page = C14] , four geothermal facilities with a total of 532 MW near Taupo (awaiting consent or planned) and 'Project Hayes', a 630 MW wind farm near Dunedin (consented). [cite news
title = New Power Projects
publisher= The New Zealand Herald
date=2007-11-26
page = C14] .

Power grid

Existing

One of New Zealand's main grid elements is the inter-island connection, which transfers South Island energy northwards to Wellington, in turn allowing power generation north of the city to be used mainly for demand further north in areas such as Hamilton, Tauranga and Auckland.

Often in the media is the state of Auckland's power grid, which had several famous blackouts, such as the 5-weeks long 1998 Auckland power crisis or the much shorter 2006 Auckland Blackout. Both were caused when crucial elements of the grid failed. Due to the rising power demand and the geographical nature of the grid (with almost all power routed through to Auckland from the south), there was (and still is) only very limited redundancy in the local grid.

Proposed

One of the largest and most contentious current projects (as of 2008) is a Transpower grid upgrade plan through the Waikato, which is being fought by numerous local farmers and lifestyle block owners who consider that the new pylon lines and upgrades to existing lines would cause significant amenity loss. They also allege that the process that led to the decision to construct the network upgrade was legally flawed. An appeal currently being prepared to go to the High Court of New Zealand is expected to cost up to NZ 1 million. [" [http://www.nzherald.co.nz/topic/story.cfm?c_id=187&objectid=10477871 Farmers and lifestylers digging deep to continue battle against pylons] " - "The New Zealand Herald", Friday 23 November 2007] Anger about the proposal, claimed to intend the construction of pylons three times as high as previous New Zealand projects, has already led to threats of sabotage against a future line. [" [http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10486520 Pylons apart in NZ's power war] " - "The New Zealand Herald", Sunday 13 January 2008]

Other major projects currently proposed are Transpower's plan for a NZ $ 600 million line upgrade from Benmore to Wellington, and a NZ $ 521 million upgrade to the Auckland grid, involving a new (underground) 220 kV cable from Pakuranga to Albany. [" [http://www.nzherald.co.nz/topic/story.cfm?c_id=187&objectid=10465791 Transpower submits $521m grid upgrade plans] " - "The New Zealand Herald", Tuesday 25 September 2007]

upply issues

For the 2008 winter, the chief executive of Meridian Energy, speaking for the electricity industry, warned in February that safety margins in both the capacity of the supply grid and power generation are very low, and limited cuts in supply may become necessary (such as cutting off hot-water supply systems from the power grid). [" [http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10492585 On the edge - power cut warning] " - "The New Zealand Herald", Friday 15 February 2008, Page 1.] However, no substantial problems occurred, mainly because the levels of water remaining in the hydropower storage lakes remained sufficient.

Electricity market

New Zealand's electrical energy generation, previously state-owned as in most countries, was deregulated and partly sold off in the preceding decades, following a model typical in the Western world. However, a number of companies are still state-owned enterprises.

All of the governments energy assets originally came under the Public Works Department. From 1946, the management of generation and transmission came under a new department, the State Hydro-Electric Department, later renamed in 1958 as the New Zealand Electricity Department (NZED). The reformist Fourth Labour Government corporatised the department as a State-owned enterprise in 1987, as ElectriCorp, later renamed as the Electricity Corporation of New Zealand (ECNZ). In 1994, ECNZ's transmission business was split off as Transpower New Zealand Limited. In 1996 ECNZ was split again, with a new generation business, Contact Energy, being formed. The Shipley Government privatised Contact Energy in 1998. From 1 April 1999 ECNZ was split again, this time into three new SOEs - Mighty River Power Limited, Genesis Power Limited and Meridian Energy Limited.cite web|url=http://72.14.253.104/search?q=cache:V9kb3tBAQ8EJ:www.archives.govt.nz/appraisalanddisposal/viewAttachment.php%3Fid%3D165+State+Hydro-Electric+Department&hl=en&ct=clnk&cd=1&gl=nz&client=firefox-a|title=Wellington City Archives - State Hydro-Electric Department - Appraisal Report|publisher=Archives New Zealand|accessdate=2008-03-30]

Major consumers

In addition to the urban areas of Auckland, Wellington and Christchurch, which are the main electricity consumers of the country, New Zealand also has another major energy consumer which uses 15% of the national energy production - the Tiwai Point Aluminium Smelter in Southland, which effectively has a dedicated power generator in the Manapouri power station." [http://www.nzherald.co.nz/category/story.cfm?c_id=37&objectid=10467340 Meridian boss hails deal with smelter] " - "The New Zealand Herald", Wednesday 03 October 2007]

Energy policy

As of 2007, renewable energy sources made up 70% of the nation's (electric) energy production, with a commitment by the government to increase the share to 90% by 2025 [" [http://www.renewableenergyaccess.com/rea/news/story?id=50075 New Zealand Commits to 90% Renewable Electricity by 2025] " (from the 'renewableenergyaccess.com' website, Wednesday 26 September 2007. Retrieved 2007-11-26.)] (however, Greenpeace estimates only about 60% of New Zealand's energy as currently being from renewable sources). [http://www.cleanenergyguide.org.nz/ceg/nz-energy-scene.asp The New Zealand energy scene] (from 'cleanenergyguide.com', a Greenpeace website. Retrieved 2007-11-26.)] Only one major coal-fired plant exists, the Huntly power station, and proposals for new construction/reactivation of other coal plants have been brought down by legal or political means.

There is also a ban on government-owned electricity companies building new fossil fuel plants, which is considered for extension to the private industry." [http://www.nzherald.co.nz/topic/story.cfm?c_id=187&objectid=10478280 Big tick for wind as power of the future] " - "The New Zealand Herald", Monday 26 November 2007] This is part of New Zealand's Labour government's vision of becoming carbon neutral by 2020. [" [http://www.publish.csiro.au/?act=view_file&file_id=EC136p7b.pdf New Zealand to be carbon neutral by 2020] " (from "Ecos 7", April-May 2007, Page 136. Retrieved 2007-11-26.)]

From 2010, on, New Zealand Energy Strategy will see levies for Greenhouse effect emissions to be added to power prices depending on the level of emissions. [ [http://www.beehive.govt.nz/ViewDocument.aspx?DocumentID=30955 Energy strategy delivers sustainable energy system] (from the website of the New Zealand government, Thursday 11 October 2007. Retrieved 2007-11-26.)]

ee also

*List of power stations in New Zealand

References

External links

* [http://www.beehive.govt.nz/Portfolio.aspx?PortfolioID=32 Energy - Associated Ministers] (from the official website of the New Zealand government)