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Will NZ’s future energy be clean? – Expert Q&A

Posted in Q&As on February 16th, 2017.

Approximately 80 per cent of New Zealand’s electricity comes from renewable energy sources. But is this the full picture behind NZ’s clean and green reputation? 

This week the University of Otago’s Centre for Sustainability releases ten policy briefs from its Energy Cultures research.

The SMC asked experts how New Zealand’s energy usage compares to the rest of the world and what our Energy Future might look like. Feel free to use these comments in your reporting.

Q&A with Janet Stephenson

Dr Janet Stephenson
Director, Centre for Sustainability, University of Otago

How readily have New Zealanders been taking up home energy options like solar, and how do we compare to other developed nations? Has anything held New Zealanders back?

“From our national household survey in 2016, we know that 55 per cent of New Zealanders would like to generate their own electricity.  Of these, around a third would ideally like to be independent of the electricity grid, and around two-thirds would like to stay connected to the grid while supplementing this with their own generation. These results are very similar to a previous survey in 2014.

“So, there is a huge interest in solar generation despite the fact that there is no subsidy in New Zealand, unlike many other nations. Indeed, photovoltaic (PV) prices are now becoming so low that they are increasingly cost-effective to install without subsidies. Oxford University research published last year showed PV panels globally have become approximately 10 per cent cheaper each year since the 1980s, and this trend is likely to continue for some time.

“Whether PV is cost-effective compared to buying off the grid varies greatly with where people live in New Zealand and other factors like their patterns of electricity use (and this can be calculated on the EECA website) but our research shows that many New Zealanders are not so fixated on financial savings – they are more interested in independence and greater certainty over their future energy bill.  This contrasts with other nations where the financial aspects and environmental benefits tend to be more dominant drivers.

“The percentage of NZ households with PV today is still less than 1 per cent compared to places like Australia (around 16 per cent), Italy and Germany, where there have been subsidy schemes. But New Zealand has seen a surprising level of uptake given the absence of any subsidy scheme, going from negligible numbers of households with PV in 2011 to around 12,000 household installations in early 2017.

“Given the combination of decreasing prices and appetite for self-generation, it is likely that PV growth for homes will continue. In contrast, adoption of other home energy generation options are minimal – for example, only 47 households generate electricity with wind.”

What needs to change to transition NZ towards a clean energy future without risking our energy security?

“New Zealand tends to pat itself on the back about our renewable electricity. Around 80 per cent of our electricity is currently generated from renewable resources, mainly hydro, geothermal and wind. However only around 40 per cent of ALL energy used in New Zealand is renewable.

“So around 60 per cent of our total energy use is fossil fuels – coal, oil (mainly petrol and diesel) and gas. We tend to conveniently forget this when we talk about how clean and green NZ is, and just focus on the electricity story. It will take some major changes to shift away from fossil fuels, which are mainly used for transport and in industry. And a clean energy future is not just about switching to renewables – it’s about using ALL energy much more efficiently, so it takes less energy to do the same amount of work (or more work).

“For New Zealand, changing to renewable fuels for transport and industrial processes offers great opportunities to improve productivity and to reduce our greenhouse gas emissions. Given the quality of our renewable resources for electricity generation, it makes sense to seek to electrify transport and industry, and we’re already seeing the start of this with the government’s support for uptake of electric vehicles, and the focus in the proposed NZ Energy Efficiency and Conservation Strategy on using renewable energy in process heat for industry.

“Using ‘home-grown’ electricity actually improves our energy security, as imported petrol and diesel is at the mercy of global market fluctuations. But NZ’s current policy settings are not very supportive of transitioning to a clean energy future.

“For example, the transport sector currently contributes around 20% of NZ’s total greenhouse gas emission. Just relying on EV uptake won’t take us very far very quickly. Even if we got to 2% of the light vehicle fleet being electric by 2022, this represents only about a 0.18% reduction in New Zealand’s greenhouse gas emissions.

“Policy is needed to influence all the other vehicle imports so that the right signals are sent that we want efficient vehicles entering the fleet, such as fuel efficiency standards, given we are one of the few developed nations without them.

“We cover off many other needed changes in the Energy Cultures policy briefs [see attached PDF]. These include:

  • Helping households improve efficiency, warmth and comfort;
  • Improving rental housing performance;
  • Improving efficiency and productivity in businesses;
  • Improving driving efficiency;
  • Investing in infrastructure to support people to use active transport (walking and biking) and public transport;
  • Investing in rail improvements;
  • Changing funding mechanisms for transport”

What is the theory around smart grids and is this something that NZ should be looking at and aiming for?

“The definition of a smart grid adopted by the Smart Grid Forum describes an orderly network that intelligently delivers electricity. My background as a social scientist means that I am particularly interested in the human reality of achieving such a network. Technological change does not just ‘happen’ – it is the result of thousands of decisions by individuals and companies to do things differently, with many different motivations.

“Technological advances and relative changes in costs (such as PV, electric vehicles, battery storage, smart energy management, demand response) will mean that consumers have opportunities not previously available, to change their energy lives to better fit with their values and aspirations. Households and businesses have increasing ability to choose to generate and store electricity, and to collaborate to optimise its value to them. Entrepreneurs are already seeing new opportunities for business offerings that may impact electricity supply, management and consumption patterns. Established players in the sector are re-examining their business models and anticipating how these changes might impact on them and what new opportunities might be on the horizon.

“A smart grid is not so much a piece of intelligent technology as the sum of the interactions between all of these players and the practices and technologies that they utilise at any given point in time; an ever-evolving socio-technical system. New Zealand is already evolving in this direction.”

Are there social or economic repercussions from decentralising power generation? Would it realistically reduce people’s power bills?

“These are important questions that are only starting to be looked at. Part of the reason it is hard to answer is that electricity systems are entering a massive period of change. This change will have to encompass technological shifts, new information systems, changing consumer aspirations, new business models etc, so that it is hard to envisage just what we might end up with.

“Decentralisation is likely to happen to some extent, as with solar uptake, but never entirely, as centralised generation and/or storage and/or demand response will need to be part of the mix to maintain the power supplies we need. Distributed generation has some benefits for grid management but also brings questions such as how electricity grids should be paid for if households don’t need their services very often.

“One social repercussion is that as people become ‘prosumers’ (both producing and consuming energy) they start to think differently about energy, and one repercussion we’re seeing globally is the rise of ‘prosumer collectives’ and community-based renewable energy schemes [see p134 onwards].

“Within New Zealand, there is interest in a number of communities for this kind of locally based energy scheme, notably Blueskin Bay near Dunedin where the local community trust is applying for resource consent for a single 3MW turbine. There are also increasing opportunities offered by new businesses for trading or sharing surplus electricity locally, so that (for example) people could gift it to the local school or pensioner flats, or sell it to their neighbour.

“Whether decentralisation directly reduces power bills is unclear (i.e. it depends on many factors, such as the rate of technology development and price drops, how the electricity market is structured, etc) but questions alongside this need to be – does this provide greater environmental and social benefits? A big question here is the extent to which the combination of PV, electric vehicles, battery storage and smart energy management systems may lead to homes being increasingly able to be largely energy self-sufficient and to extend this to their travel as well; with the additional potential to use home and car batteries to sell back into the grid if there is a need. The implications of this for both homes and businesses, and for the grid as a whole, as significant.

“However, the key crunch point will remain in the dead of winter when there is little sun and a high power demand … we are likely to always need centralised backup.”

What do you think NZ’s Energy Future looks like?

“We need to get to a net zero carbon world by the second half of this century and NZ must play its part in this transition. For NZ, opportunities to reduce biological emissions will take longer to develop than opportunities to reduce energy-related emissions. Here we must focus on, in order of importance, stopping burning coal, secondly getting away from burning oil (petrol and diesel) and thirdly moving away from gas. This means changes in what fuels we use to be mobile, to heat our homes, to run our businesses, and to produce and transport goods.

“I envisage NZ’s energy future by the second half of this century as one in which we have a high level of electrification of transport (e.g. trains, buses, cars, some heavy vehicles) and some use of biofuels (e.g. in planes and heavy transport). Industrial processes will shift to electricity and biofuels, which will require some adaptation of equipment. Forestry will be more important both because of its use as a carbon sink and also its use for biofuels (e.g. solid wood, wood chips, wood pellets, liquid biofuels).  Advances in other forms of biofuel production (e.g. algae) will also have occurred.

“Gas from NZ’s offshore reserves will continue as a bridging fuel, e.g. for backup electricity generation, some industrial processes) but will eventually be replaced by renewables.

“Another incredibly important aspect of NZ’s energy future will be that houses and commercial buildings will be well built and insulated, so are easy to heat and to maintain warmth and wellbeing. Energy efficiency actions are the most cost-effective way to reduce emissions and reduce energy use, so vehicles, industrial processes, lighting, heating etc will all have a very high level of efficiency – which is an important adjunct of using electricity.

“As well as being low-carbon, NZ’s energy future will also need to take account of climate impacts. Changing weather patterns will have implications for hydro dams and wind; they may increase the use of air conditioning as the climate gets warmer, but may also reduce the need for heating in some places. Sea level rise may have implications for energy infrastructure and impact on transport infrastructure.

“Finally, New Zealand will be able to take advantage of an increasingly discerning international market by selling products which are made with 100% renewable energy and low carbon emissions.”

Further Information Links:

– Oxford University research: http://www.sciencedirect.com/science/article/pii/S0048733315001699
– EECA http://www.sciencedirect.com/science/article/pii/S0048733315001699
– Energy Independence http://www.sciencedirect.com/science/article/pii/S0048733315001699
– NZ PV installations: https://goo.gl/tUumog
– NZ Royal Society report: http://royalsociety.org.nz/expert-advice/papers/yr2016/mitigation-options-for-new-zealand/
– Prosumer collectives: https://ourarchive.otago.ac.nz/handle/10523/6646
– Community based renewables: http://www.ren21.net/status-of-renewables/global-status-report/ (p134 onwards)

Q&A with Ralph Sims

Professor Ralph Sims
Professor of Sustainable Energy, Massey University

How are NZ’s greenhouse emissions trending and how important is it that we transition to cleaner energy?

“New Zealand’s greenhouse gas (GHG) emissions are trending upwards, especially in some sectors such as transport. In terms of electricity generation the share of renewables stands at ~82%, which has stabilised emissions from the electricity sector.

“Agricultural emissions are challenging to reduce, so we have to deliver more from the energy sector to meet our international obligation and also increase our GHG reduction ambitions above the current modest target under the Paris Climate Agreement. Areas such as heat supply for industry and buildings has good emission reduction potential.

“Details are contained in the Royal Society report May 2016 “Transition to a low carbon economy” that I led.”

Does anything need to change in government policy or action to assist all New Zealanders to transition to a clean energy future?

“The problem is that there is no government policy! There is a weak emission trading scheme (under review) that a) most people don’t realise exists even though they contribute to it in their gas and petrol bills, and b) has had no effect on reducing GHG emissions whatsoever – even at the current carbon price of around $18/t CO2. A small car typically produces 2 tonnes of CO2 per year – so paying around $36/yr through the ETS, there is little incentive to reduce GHG emissions.

“To reach a major tipping point of emissions reductions requires behavioural change linked with low-carbon technologies – but there is no leadership to drive that change and therefore no signs that the government wishes to significantly reduce our emissions. New Zealand has an opportunity to be a leader in the international aim, from Paris, to stay below a 2oC  temperature rise, but is has dropped the ball. If all the world’s countries were to match New Zealand’s target of 11.2% GHG reduction below 1990 levels by 2030, then the world will be on track for a 3-4 oC temp rise. This is obviously untenable.

“On a per capita basis, our GHG emissions are one of the highest in the world, so we are yet to show that we’re willing to ‘do our fair share’ to reduce emissions. Increasing the plantation forest area to remove CO2 gives us some breathing space, but this can only be a temporary solution as land area is constrained. Buying carbon credits from off-shore is also not a long-term solution, and may postpone the inevitable need to reduce our domestic emissions and make the transition to a low carbon economy.

“The planet is at a critical juncture – and not just in regards to climate change impacts. We will all have to make changes to our current lifestyle because, quite simply, “business as usual” is not sustainable.”

How well does New Zealand’s power network cater for people living beyond the major population centres? Should the government be doing more to encourage home energy options, such as solar, for people living rurally?

“a)      Since the rural electrification scheme of the 1950/60s, NZ has a strong network to connect all small towns and most remote individual rural dwellers. (The only main exceptions are really remote locations such as Great Barrier Island). The distribution grid is managed by 27 line companies. Some are fully commercial, others are trust owned or linked with local municipalities. The service provided – eg. to repair lines down after storms, falling trees, possums up power poles etc. is usually very good but some farms will have their own generators for grid power outages.

“One of the deterrents to reducing electricity demand via energy efficiency are the separate fixed line charges for domestic customers. Say I pay a $1 per day fixed charges, that’s $30 a month. If my energy bill is $50 a month, that’s a total of $80 a month. Currently, if I reduce my energy consumption by 10% it reduces my bill by $5, I still pay $75 a month because of the fixed charge. If the bill was calculated on energy plus fixed, then a 10% saving would be $8, I instead pay $72 a month. There is more impetus to reduce consumption if the line charge is not a separate fixed charge, but instead dependent on usage.

“b)      Several line companies are actively encouraging local generation in more remote areas to avoid the costs of time and travel to repair remote lines that only service one or two customers. (Eg. Powerco’s “basepower” concept using solar PV and batteries for remote woolsheds etc.). Solar PV installations give similar benefits to line companies servicing rural areas and can avoid the need to upgrade lines to increase capacity when there is growing demand in the locality. Small hydro and small wind can achieve similar results.”

What do you think NZ’s Energy Future looks like?

“New Zealand is in a good position with our high level of renewable resources, so it is technically possible to reach almost 100% renewable electricity. Our wind, hydro, biomass and geothermal resources are all in a good position, solar is growing from a small base, and ocean energy has some potential as technologies evolve.

“We could encourage more renewable heat – eg. Fonterra using woody biomass for fuel instead of coal.

“Our renewable energy resources currently receive no subsidies – which is a good thing – but compete against fossil fuels, which do receive some supply subsidies but also pay a very small carbon charge. This makes capturing these renewable resources challenging from a cost-effectiveness perspective.

“But New Zealand is better placed than most countries to decarbonise the energy and transport sectors by mid-century.”

Q&A with Robyn Phipps

Professor Robyn Phipps
Professor of Construction, Massey University

When it comes to energy efficiency, is NZ’s construction industry progressive in their adoption of technology? Or are we lagging behind the rest of the developed world?

“NZ is lagging behind much of the world with regard to energy efficiency. Our insulation standards are lower than many countries with even warmer climate. The amount of PV panels installed is less than countries, such as Germany, which have low sunshine hours.

“One of the main hurdles in increasing energy efficiency in home construction is the fact that many people regard going anywhere above the requirements stipulated in the Building Code as frivolous. The Building Code is only the lowest legally acceptable solution, it is not the best solution. In the car industry, producers have done a far better job of educating the public that safety features above and beyond the basic requirements to pass a WOF are advantageous and desirable.

“The construction industry needs to be getting a similar message out to the public.”

What home energy solutions are good options for New Zealanders? Is there anything that needs to change in order to encourage uptake of such technologies?

“Insulation, heating and ventilation are required. A properly insulated home, with some thermal mass being warmed by correctly placed windows will need almost no extra heating or cooling. Regrettably, many home designers turn to heat pumps rather than good design solutions.

“We’re currently researching solar air heaters and finding really good results.”

In NZ we have an ageing housing stock – what options are there for retrofitting these homes to be more energy efficient or to use alternate energy sources? Is it likely to happen?

“When redecorating, it’s not a huge cost to remove the wall linings and insulate the walls and replace any aged wiring. The result will be a warmer home, reduced risk of fires, and better-looking walls.

“An alternative energy often overlooked is the sun – it’s not metered so there is little incentive for any commercial parties to push passive solar design.”

Is it becoming more cost effective for homes to become more energy efficient? What are the easiest ways for people to lower their energy bills?

“A third of energy in the home is spent on heating the interior and a third on heating water. So insulating the walls, ceiling and subfloor, and double glazing windows is a priority.

“Sealing gaps is important to reduce heat loss. A well-insulated hot water cylinder will save energy.

“And turning off appliances instead of having them on stand by mode will save about 10% of a typical power bill.”

What do you think NZ’s Energy Future looks like?

“We need to insulate all homes to reduce wasted energy and improve health.

“More energy generation close to users, such as PV panels, will decrease power bills and improve energy security.”

Q&A with Ben Wooliscroft

Associate Professor Ben Wooliscroft
Associate Professor at the University of Otago

In general terms, what does New Zealand’s energy network currently look like, and does anything need to change to transition towards a cleaner energy future?

“The respondents to the surveys I’ve administered don’t think that we have a fair electricity market.

“That appears to be why so many (around a quarter) would like to move off-grid, which would be with renewable energy.”

What energy solutions should NZ be looking to adopt? Should the government be doing more to encourage home energy solutions?

“That depends on your perspective. If we value our environment and our reputation as a green country then moving as quickly as practically to 100% renewable electricity would be a wise move.

“That would certainly involve an increase in electricity production in and around the home.”

In NZ we have an aging housing stock – what options are there for retrofitting these homes to be more energy efficient or to use alternate energy sources? Is it likely to happen?

“The first requirement is to insulate our houses, in the ceiling, in the walls and under the floor.

“We also should have double glazing in all our domestic and commercial buildings. The new photovoltaic roof tiles that Tesla has developed would offer the opportunity to re-roof and produce energy in the home.

“The feed-in tariff offered by electricity companies appears to be designed to suppress adoption of PV, but will likely lead to local energy sharing systems that cut electricity companies out.”

Is it becoming more cost effective for homes to become more energy efficient? What are the easiest ways for people to lower their energy bills?

“Smart heating, appropriate heat pump technology (too often the wrong unit is placed in the wrong part of the house), good insulation and domestic consumption of energy all lead to lower bills, but require some outlay.

“The EECA does a good job of telling households what they can do for little or no outlay.”

What do you think NZ’s Energy Future looks like?

“I am optimistic that NZ’s energy future will be renewable and fairer. There is certainly a groundswell of interest in moving off grid, or producing some of the energy used in the household.

“Unfortunately that option is not available to all people, the poor are likely going to be stuck in the situation of buying electricity with little real choice.”

No Conflicts of Interests stated by participants

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