Renewable energy consent cliff warning issued

Sunday, 15 July 2018, 6:47 pm
Article: NZ Energy and Environment Business Week

Renewable energy consent cliff warning issued

This report was first published in the Energy and Environment bulletin on July 11

The electricity sector is facing a “consents cliff” to build new renewable generation within the next five years, the Electricity Authority has been warned.

The EA’s Security and Reliability Council has reported on Transpower’s annual assessment of security of supply for 2018.

The SRC’s advice to the Authority is the assessment indicates the pipeline of generation available for development is adequate for at least five years under a wide variety of scenarios. However, it warns “there is a ‘consents cliff’ approaching with a significant number of resource consents for prospective electricity generation expiring in 2022-23. Consents for wind generation may be particularly challenging to re-consent, as the optimal technology has developed significantly and is now more intrusive (larger and taller) than when consents were issued over 10 years ago”.

The EA told the committee one of the most significant developments in strategic issues facing the sector was the shift to electrification of the economy. This would lead to increased importance of reliability due to greater dependence on electricity and therefore more significant consequences to the economy if there is a shortage or interruption.

Other issues included increased exposure to renewable supply shortages in dry years and challenges to capacity security with increasing charging of EVs/batteries.

Climate change policy implications included:
•reduced thermal contribution and increased renewables contribution to generation
•recent Government policy on gas exploration
•phasing out of coal at Huntly
•direct impacts of climate change on inflows and demand

There was also potential for further change following the Productivity Commission’s report on transitioning to a low-emissions economy, as well at the Climate Change Commission’s work on creating a net zero emissions economy by 2050, including planning now for the transition to 100% renewable electricity generation by 2035. On top of this there is the Electricity Pricing Review with its objectives also including the need to maintain security and reliability of supply as technology evolves with a transition to a lower emissions future.

The Security and Reliability Council said there was value in Transpower’s focus on physical capability and there should be more work done on illustrating the dynamic nature of the generation market.

Transpower should also consider analysis to better account for climate change, such as giving more weight to recent hydro sequences as a better indication of the future.

The SRC has requested further reports on the treatment of thermal fuel availability in the security of supply forecasting and expects to give advice to the Authority on this.

The SRC also gave it views on gas supplies and said there are there are good reasons to suppose the gas industry is well-placed to meet future demand with NZ maintaining for many years 10-12 years of gas reserves. “There are exploration options available should developers be incentivised to make additional investment… recent exits and acquisitions of companies in the upstream gas industry indicate greater investment will be made in extending the life of existing gas production assets.”

The SRC said there is demand-side flexibility with the country’s largest gas user also being sensitive to gas prices, as well as the potential for expanding gas storage at Ahuroa.

“However, there is some delivery risk posed by major gas fields with declining extraction rates leading to insufficient intra-day supply to meet peak capacity demand for gas. Owners of gas-fired electricity generation appear to be contracting for less gas supply in advance and having more options to procure additional supply.”

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