Genesis Energy has started building a $150 million, grid-scale battery.
A new grid-scale battery will give Genesis Energy’s Huntly Power Station the versatility of a Swiss army knife, chief executive Malcolm Johns says.
Speaking at a ceremony to mark the start of the $150 million battery project, Johns – who has been in the job for two and a half years – said talk of the demise of the coal- and gas-fired station at Huntly was greatly exaggerated.
“Most people said to me one of the most challenging things would be how you set about closing down the Huntly Power Station and today we’re announcing a $150m investment in the Huntly Power Station,” he said.
Huntly is often described as the backbone of the hydro-dominated electricity system, supplying power to the grid in dry years or when there is a cold snap.
“The reality of the site is that it no longer just backs up hydro-generation in New Zealand, it also backs up New Zealand’s wind generation.
“And as we get to the energy transition, there are three things that are really critical to achieve that.
“By 2050, at least 60% of New Zealand’s total energy needs to come from electricity. That’s 38% today.
“At least 95% of electricity needs to come from renewable sources [85% today].
“But most importantly, electricity has to be available 100% of the time.
“And so it’s really dangerous to look at averages when you look at electricity, because if at least 95% of electricity comes from renewable sources that means that in dry years when the wind’s not blowing, up to 15% of back-up generation will be needed to keep delivering electricity 100% of the time,” Johns said.
As it stands, Huntly’s thermal assets can deliver between 15% and 20% of New Zealand’s total electricity.
“Adding assets like this battery allows us to increase the flexibility of the site, but also to turn it into the Swiss army knife of the electricity system of the future.
“The investments that we’re making now and will make over the next decade will be critical for the next 50 years of economic and social prosperity for the generations that come after us.”
The 70 battery units at Huntly are being supplied by Saft, based in France, and installed by Northpower. The site is expected to be operational by late-2026.
Johns said the project was the first stage of a multi-stage project in which the Huntly portfolio would develop a battery system of up to 400MW by 2035.
Asked to comment on data showing the depletion of New Zealand’s gas reserves, Energy Minister Simon Watts noted that methanol exporter Methanex had been tapped to supply gas for energy generation.
“We want to see a more long-term arrangement in place with Methanex and industry,” he told reporters after the presentation.
The data showed New Zealand’s gas supply is reducing faster and sooner than previously forecast.
As of January 1 this year, natural gas reserves have reduced 27% compared with last year, the Ministry of Business, Innovation and Employment (MBIE) said.
Karlene Tipler, MBIE’s head of data service delivery, said revised forecasts have annual gas production falling below 100 petajoules (PJ) by 2026 instead of 2029.
“In 2024 natural gas proven plus probable [2P] reserves reduced from 1300 PJ to 948 PJ,” Tipler said.
“The reduction in natural gas reserves is largely driven by field operators reducing their estimates of gas readily extractable in the ground by 234 PJ.”
The big power generators are eager to avoid a repeat performance of last winter, when wholesale power prices spiked to $820 per megawatt hour (MWh).
In March, prices neared $400/MWh – compared with an average winter price between 2018 and 2023 of just $180/MWh.
However, this week heavy rain in both the North and South Islands has resulted in the daily average wholesale price dropping to just $89/MWh.
This week, New Zealand Aluminium Smelters said its plant at Tiwai Pt would ramp up production sooner because of the improved hydro lake storage.
The smelter has a demand response agreement with NZX-listed Meridian Energy that enables the power generator to request Tiwai, the country’s biggest power user, to reduce production when the system is stretched.
Last month Meridian officially opened the country’s first grid-scale battery at its site at Ruakākā, near Whangārei.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.