Genesis welcomes Government’s dry year risk review, but urges caution on what the best outcome could be for New Zealand’s low carbon future

Genesis welcomes the Government’s proposal to look at solutions to alleviate New Zealand’s seasonal electricity generation shortfall, especially during dry years.

“Any solutions for New Zealand’s dry year risk that can provide deep energy storage at affordable prices are welcomed. This would help New Zealand reach its wider emissions targets and reduce the pressure on Huntly Power Station to provide backup support to all market participants,” said Marc England, Genesis CEO.

Existing hydro lakes currently provide about 4,000 GWh of storage, leaving a 3,000 GWh gap during a dry winter. For scale, 3,000 GWh is about five times what Lake Taupo currently stores for generation, or 140 home batteries for every household in New Zealand. That gap is currently met by the Huntly Power Station.

The Government’s plan to explore solutions to New Zealand’s dry year risk aligns to Genesis’ own thermal generation commitments to replace baseload thermal generation with new renewables and to remove the remaining coal from its back-up thermal generation under normal hydrological conditions by 2025, with an intent to remove it altogether by 2030. Genesis has removed 1.8 million tonnes of carbon from its generation activities over the last ten years and aims to remove another 1 million tonnes over the next few years. However, backing up New Zealand’s notoriously weather dependant renewable electricity system remains a challenge and a whole energy system perspective should be considered.

“It is good to see the Government taking a long-term strategic approach to this complex challenge. However, Genesis urges caution that aggressively pursuing a 100% renewable electricity may be very expensive for consumers. As electricity generation contributes only 4.2% of New Zealand’s emissions, a bigger decarbonising prize would be the electrification of transport (21%) and industrial heat (8%) first. We have long maintained that the key to widespread electrification of these sectors lies in ensuring that electricity remains affordable, reliable and flexible enough to adapt to tough market conditions.

“Alongside a review of dry year risk support, Genesis would like to see a clear policy framework for new grid connections, focused on removing the first mover disadvantage that exists for businesses wanting to connect to the grid to support the electrification of industrial coal or gas-fired boilers. We would also like to see more support for EV adoption. The Government has the opportunity to lead the way through centralised EV procurement of the Government fleet.

“Any renewable energy related review should focus on what investments and subsidies will drive the lowest carbon outcome for New Zealand’s energy consumption as a whole, not just electricity.”

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