Wind power in New Zealand: A tremendous untapped resource

New Zealand has an excellent wind resource, which is largely untapped. A study completed for the Electricity Commission (New Zealand’s electricity market regulator) indicated that the country’s economic wind resource is sufficient to meet annual demand several times over. The study identified that areas with an annual wind speed of greater than about 8.5 metres/second have the potential to generate over 50,000 GWh per year. An even larger resource was identified in the next band of wind speed, from 7.5 m/s to 8.5m/s. New Zealand’s total electricity generation in 2007 was 42,374 GWh.

While this wind energy potential is unlikely to be realised in full because of economic, environmental and community considerations, it is realistic for wind to generate 15 to 20% of electricity by 2025.

New Zealand’s installed wind energy capacity grew from 322 to 325 megawatts during 2008. This small growth in installed capacity, however, does not adequately reflect the wind industry’s activity over the year: while only 3.5 megawatts were installed, a further 187 MW are now under construction.

Meridian Energy’s Project West Wind (142 MW), near Wellington, is expected to be completed by the end of 2009. The completion of the Te Rere Hau wind farm (48.5 MW) will see New Zealand’s installed wind capacity pass the 500 MW milestone in early 2010.

Three projects were granted final approval in 2008 (with a combined capacity of up to 350 MW), and projects ranging from a few megawatts to several hundred megawatts are progressing through the consenting process.

However, the financial crisis did not pass New Zealand by. Developers are assessing the economics of their consented projects in light of the tightening global credit markets and the fall in value of the New Zealand dollar against the Euro. It also remains to be seen if the slowing economy will reduce demand for electricity, and how this will affect short-term demand for new generation.

Nonetheless, NZ’s wind energy industry is set to expand over the coming years, with interest in New Zealand’s world class wind resource from local and international developers, an ambitious but achievable renewable electricity target, and policy developments that should benefit the industry.

In 2007, the Labour-led Government announced an ambitious target for New Zealand to generate 90% of its electricity from renewable resources by 2025. While this target appears ambitious, New Zealand already generates about 65-70% of its electricity from renewable resources, with roughly 55% of total generation coming from hydro, 10% from geothermal and 2.5% from wind.

A general election in November 2008 saw the incumbent Labour Government replaced with the centre-right National Party and its coalition partners. The global economy took centre stage in the election, pushing energy issues down the agenda despite winter supply issues.

The new National-led Government supports the target, but is concerned about security of electricity supply. This is a sensitive issue in New Zealand, as fluctuations in rainfall significantly impact hydro generation. Late 2007 to mid 2008 was one of the driest periods on record in the South Island hydro lake catchments. Low hydro lake levels resulted in a power savings campaign during the winter months, and highlighted the need for greater diversity in the energy sources used for generation and investment in the transmission system.

In late 2008, the Labour-led Government passed legislation to introduce an Emissions Trading Scheme (ETS) and a restriction to the development of new base load thermal generation. Following the election, the National-led government has instigated a review of the ETS and has repealed the restriction on thermal generation. The review of the ETS is expected to be concluded, and new legislation tabled in Parliament, by September 2009.

Under current legislation the electricity sector will enter the ETS in January 2010. This entry date is likely to be delayed as a result of the review. The ETS, in its current form, would require all thermal generators to purchase carbon offsets or credits equal to their total greenhouse gas emissions, with no free allocation of credits. It is not accompanied by any mechanisms that directly encourage the uptake of renewable generation.

The review is not expected to result in any change to this approach, so no feed-in tariffs or other support mechanisms are anticipated. While the mechanisms for pricing emissions and the timing for introducing the cost are unclear, it is still expected that generators will bear the cost of their emissions, and this will make wind energy one of the lower-cost options for new electricity generation.

Obtaining consent for wind farms under the Resource Management Act (RMA) continues to be a major obstacle for developers. Once consent has been granted to a developer by the local council to build a wind farm, anyone can appeal this decision to the Environment Court, resulting in an expensive repetition of the decision-making process. In recent years, all significant wind farm projects have seen their successful consent decisions appealed to the Environment Court. The Environment Court’s decisions can then only be appealed to the High Court on a point of law.

In order to simplify the consent process for ‘nationally significant’ projects, the government is making greater use of the RMA’s ‘call-in’ provisions, which can reduce the consenting timeframe by calling a project directly to the Environment Court, effectively cutting out the first step of the process.

Three wind farm projects have been called in during the past year, and a decision for the first of these is expected in the coming months. The industry continues to wait with interest to see whether these ‘call ins’ will establish any useful precedents.

The new National-led government has initiated a process to amend the RMA, with the intention to simplify the consenting process and reduce costs and delays. Draft amendments to the Act are expected to be tabled in February 2009. The government’s longer-term objective is to create an Environmental Protection Agency to deal with consent applications for significant infrastructure projects, including large wind farms.

Like many other markets, issues around the timing and extent of new transmission investment are looming as an issue for the wind industry.

New Zealand’s electricity market rules require Transpower, the owner and operator of the transmission system, to demonstrate that any new transmission investment provides a net economic benefit. This creates a vicious circle, in which no new generation will proceed without adequate transmission capacity in place, yet that capacity is unlikely to be built unless it can demonstrate that the new generation will definitely be installed.

Wind power in New Zealand
End 2002 : 36 MW
End 2003 : 36 MW
End 2004 : 168 MW
End 2005 : 168 MW
End 2006 : 171 MW
End 2007 : 322 MW
End 2008 : 326 MW
2009: 404 MW

New Zealand has nine operating wind farms. These wind farms have a combined installed capacity of 404 megawatts. They supply about 3% of New Zealand’s annual electricity generation, which is about the same amount of electricity as 160,000 New Zealand homes use in a year. Developers are exploring sites throughout New Zealand for new wind farms.

The New Zealand Wind Energy Association (NZWEA) is a membership-based industry association that works towards the development of wind as a reliable, sustainable, clean and commercially viable energy source.

NZWEA aims to fairly represent wind energy to the public, government and the energy sector, with a focus on utility-scale wind generation (generally over 100 kilowatts). The association works hard to ensure that New Zealand’s world class wind energy resource is harnessed in a responsible and sustainable manner for our generation and generations to come.

NZWEA’s members include over 80 companies involved in New Zealand’s wind energy sector, from electricity generators, wind farm developers and turbine manufacturers to consulting firms, researchers and law firms.

For more information on wind energy in New Zealand, contact New Zealand Wind Energy Association: 

Electric car fleet could run on wind power

New Zealand’s entire fleet of cars could be made up of electric vehicles powered by wind turbines. Dr Bruce Smith, director of modelling and forecasting at the Electricity Commission, will tell a biofuels and electric vehicles conference in Wellington that electric vehicles have the ability to smooth the peaks and troughs of electricity supply so efficiently they could triple the country’s capacity to use wind power.

He estimates that if 2.5 million of New Zealand’s roughly 4 million registered vehicles were electric, the whole electric fleet could run off 3000 MW of wind generation – about three times the amount of wind power that is built or ready for construction today.

Electric vehicles are not yet widely available in New Zealand but car companies are already touting them as a way to reduce greenhouse gas emissions.

However in order for their owners to get maximum reduction in greenhouse emissions, the cars must be powered by electricity generated from renewable sources such as wind and water rather than fossil fuels.

About 70 per cent of New Zealand’s electricity comes from renewable sources. Dr Smith said he had not finished the calculations required to prove wind energy could power all the country’s cars.

But electric cars could make it possible to build many more wind turbines because they solved one of wind power’s major inefficiencies – that energy is wasted overnight and at other times when people use little electricity because the wind is blowing and not being used.

Dr Smith said electric cars could be plugged into smart electricity meters, similar to ones already being rolled out by major electricity retailers, designed to recharge the car’s batteries whenever electricity was most plentiful.

When the wind stopped blowing and electricity ran short, the cars could give some of their energy back to the system until the supply of power was restored.

Dr Smith said it would be economic to ramp up wind power only if the price of carbon reached about $60 a tonne. Forecasters predicted it would do so by 2020 but the actual price would depend on the exchange rate and overseas carbon markets.

If carbon emissions topped that price, a fleet of electric cars could improve energy efficiency so much that "spare" electricity from wind power built to supply cars could be used for other things.

Dr Smith has asked the National Institute of Water and Atmospheric Research and the MetService to prepare a model showing how much wind there was in 15 spots around the country every 10 minutes over the past several years to help the Electricity Commission work out how much wind power was available and where.

For every megawatt of wind power that is built at the moment, about half as much electricity again is needed from another source – such as hydro, geothermal or burning fossil fuels – to provide back-up when the wind drops.

Dr Smith said that if electric vehicles became popular, it was not expected to be until after 2020. But he wants the electricity grid to develop in such a way that enough wind power to supply electric cars can be made available if needed.

Meridian Energy is running a trial with Mitsubishi Motors New Zealand to test the iMiEV electric car in New Zealand. The car will be built in Japan from August, initially priced at about $60,000, and Mitsubishi NZ hopes it will be on sale here from next year.