Hydrogen is coming.
Advocates insist it could be a powerful tool to decarbonise the global economy and combat climate change, and for Aotearoa, create a high-value export product and bring about a new era of energy independence.
But hydrogen also has its sceptics. It is energy-intensive to make and difficult to move around. Hydrogen fuel cell vehicles are still uncommon and come with hefty price tags. Other countries are already investing hundreds of billions in their own hydrogen plants, so why would we?
Meridian is confident hydrogen would provide Aotearoa with a huge opportunity as a significant export earner that would make a strong contribution to the decarbonisation of our economy. We also think it could do a lot more, including helping us tackle some of the unique challenges we face in this part of the world.
One of these challenges is the "dry year" problem when our renewable energy generation falls short of demand and we have historically relied on burning more coal and gas to make up the shortfall.
The inevitable exit of New Zealand Aluminium Smelters (NZAS) from Tiwai Point in Southland presents another challenge to tackle. The smelter's exit will impact many people's livelihoods and whether this happens in a year, or four years, this will be a hard landing for the region. A hydrogen option could be one of the solutions to help Southland reinvigorate its economy.
When you take these challenges in combination, hydrogen starts to become a lot more compelling as an opportunity for Aotearoa.
Over the last few months, Meridian has kicked off discussions with parties keen to establish a large scale, green hydrogen plant in Southland. These parties are excited about the prospect because of the potential to use our renewable energy and in turn, we can see the potential for the country to diversify and grow our exports all while retaining quality jobs in an important region and helping the country move to a 100 per cent renewable grid.
Southland has some unique advantages as a centre for hydrogen production in Aotearoa.
The region has access to substantial existing hydro energy, which is more reliable than standalone wind or solar farms. It also has an existing large-capacity transmission network, a deep water port suited to exports, access to fresh water for hydrogen production, and an available industrial site at Tiwai.
And critically, hydrogen production is flexible, unlike aluminium smelting. A hydrogen plant in Southland can scale down production or even shut down temporarily during dry periods when the lakes of Aotearoa's hydro generation backbone are running low. This would allow the electricity to be diverted from use by a hydrogen plant to instead meet demand from households and businesses throughout the country.
This gives us a superior, low-cost alternative to over-building standby renewable generation for balancing supply and demand in dry years. It could provide reserve energy at a fraction of the cost of building new power stations, and the built-in flexibility will strengthen the security of our energy supply without the risks of asset reliability and unpredictable rainfall.
And when it comes to exports, Aotearoa would have a real competitive advantage. We'd be making green hydrogen with energy from our existing hydro schemes. This would be more valuable than the "brown" hydrogen that many other countries would produce from non-renewable energy.
A major hydrogen plant in Southland would provide a locally made energy source to ensure the region's transition is led by renewables, and it could even open possibilities for new hydrogen-powered industries or heavy transport.
We've got a choice with hydrogen - write it off as hype or embrace the opportunity. At the global level, there's a growing consensus that hydrogen will play a vital role in climate solutions, and particularly in transport.
In Aotearoa, it could also give us a chance to export our natural advantage as a producer of renewable energy, keep a strong employment base in Southland, and make a big contribution to solving the dry year problem in our electricity system.
The real promise of hydrogen could be greater than we think. Southland's renewable energy advantage can make it happen. That's why we're laying the groundwork.
• Neal Barclay is the chief executive of Meridian Energy.