National grid owner Transpower has over 11,000 kilometres of high voltage lines and more that 170 substations through the length of New Zealand. Its chief executive Alison Andrew talks about the future of the energy system – its challenges and opportunities.
Herald: What are the big issues around planning for the future in an environment with increasing renewable energy?
Alison Andrew: We all know climate change is a big deal and meeting the net carbon zero 2050 is going to be a massive challenge for the country, let alone the world. The challenge for us is how we make that transition and look after the energy reliability, affordability and sustainability.
We are well placed in New Zealand with our largely renewable system. It's been luckily endowed with a good hydro, geothermal system, but getting the last hydrocarbons out of our electricity system is going to be challenging which is why the commissioners are saying "you're better off to focus on decarbonising the energy sector".
Herald: So where are the challenges and opportunities?
Andrew: The big opportunities for the country are in electric vehicles and decarbonising transport, and then decarbonising process heat – these two are the biggest uses of hydrocarbons. The big challenge at Transpower is enabling that transition. To meet the decarbonising goals, you need about 50 to 70 per cent more electricity in the system by 2050. And by 2035 we are anticipating 50 to 60 new or upgraded connections for distribution businesses and new grid scale power plants.
Herald: How do you make sure that you have the right infrastructure in the right place at the right time?
Andrew: Technology is our friend and there's some amazing things happening. If you look at the cost of wind and solar, you can now build new renewables cheaper than you can actually run thermal plants.
We've got a market that's been very one-sided - it's mainly a supply push up to consumers, and it's quite exciting to think about how we can get the demand side to participate.
A new market participant, an aggregator, may come in and manage your home energy system. You may have solar panels on the roof, an electric car, and all the smart home appliances – we could use those devices to take power out when needed and push it back to manage peaks and infrastructure - and you will get financially rewarded in the process.
With good demand side participation and managing the peaks, by 2050 we can avoid about seven billion dollars of infrastructure build, including transmission, distribution and extra generation.
Herald: The Tiwai Point aluminium smelter uses about 13 per cent of the country's power and if it closes, can this chunk of power be used elsewhere in the national grid?
Andrew: We are completing the Clutha to Upper Waitaki Lines project to increase capacity to and from the lower South Island.
It is a rewiring project, costing $100 million, by duplexing or doubling the Roxburgh to Livingstone lines, as well as strengthening towers and foundations.
That will allow the 570 megawatts that goes to Tiwai Point to be moved into the South Island. The Clutha to Upper Waitaki is a very important project to de-bottleneck.
The next constraint is the high-voltage direct current (HVDC) transmission link between Benmore and Haywards in Lower Hutt, effectively the big electricity transfer between the islands and going through the Cook Strait cable.
The HVDC has spare capacity but not at peak times. If the smelter was to close and Meridian was unable to find any more load in the South Island, it could move it into the North Island quite a lot of the time. It just couldn't go across when the cables are constrained.
Herald: So, will Meridian be stuck or is there another alternative?
Andrew: We are working hard on what extra grid capacity is needed to enable renewables. This is called Net Zero Grid Pathways that looks at the whole power system and modelling that includes decarbonisation and investment. Do we need another Cook Strait cable to increase capacity to send power up from the South Island? That will come up for renewal, anyway.
You will be familiar with the pylons or power lines that run from Palmerston North across the central North Island plateau. That's another transmission route that will actually bind in terms of capacity, so when do we upgrade that?
We have the Waikato Upper North Island Voltage Management project which is looking at investments in the grid to ensure that all power can get into Auckland, even if Huntly isn't there in future. The generation in the south is a long way from the load in Auckland and you need to ensure the grid will still deliver when we don't have major thermal generators near Auckland.
Herald: How will the transformation to a net zero carbon economy impact industry sectors and businesses?
Andrew: There are some sectors that are quite hard to decarbonise, and you need to think differently. Take steel – how important is it as a country to have some strategic steel manufacture? You can argue that the Auckland Harbour Bridge repair showed there is value in having steel manufacturing here.
I think of pulp and paper and New Zealand clearly has an advantage with its forestry.
The Marsden Point refinery is now importing finished goods, yet we are not going to have hydrocarbons to drive our cars at some stage in the future.
The transformation may well present some challenges for existing businesses but there could be really good opportunities for new businesses. We're already seeing significant new sums of investment proposed in data centres in New Zealand by the likes of Microsoft and Amazon.
In part they are attracted by our highly renewable electricity system. Having an affordable, reliable, sustainable energy system could be a real bonus for people who want to do things.
Take agriculture, will we go to plant-based diets? Who knows. New Zealand could be a great place to do plant-based protein and things.
I'm in the camp that, yes there may be some changes to our manufacturing mix, but there are opportunities as well.