Bryan Leyland: The electricity crisis - what caused it and options for fixing it

On the morning of 19th May blackouts were averted only because New Zealanders made a patriotic effort to reduce demand. Prices went up rapidly and peaked at more than $3/kWh later in the day. This risky situation is likely to continue for a number of years.

The Electricity Authority has ignored it even though their objective is to “…achieve a sustainable, accessible, secure and resilient energy system to keep the lights on…”. Their website also says “Consumers' best interests are at the heart of everything we do.” Perhaps they should be reminded that avoidable high prices, power restrictions and the threat of blackouts are not in the best interest of consumers.

Decisions made over the years have contributed to the crisis.

The first was to establish a market trading short term energy in the belief that “electricity is a commodity like any other”. It isn’t. It is the lifeblood of the economy and there is no alternative. They believed the market would provide an economic and reliable supply: it has produced expensive and unreliable electricity. No one is responsible for making sure the lights stay on. Somebody should be. Other problems are: consumers often pay carbon tax on hydropower; inducements to limit peak demand have largely disappeared; consumers pay the cost of backing up unpredictable wind and solar power. The Electricity Authority is keen on demand-side management while ignoring the contribution that could be made by better use of domestic water heaters for managing peak demand and stabilizing the system. Power prices have steadily increased and a 20% - 30% increase is likely as a result of the recent doubling in the wholesale price of electricity.

A major overhaul of the market is needed.

The crisis is exacerbated by the generally held belief that if New Zealand reduces emissions of carbon dioxide its climate will be better. This belief has led to carbon taxes, the promotion of wind and solar power, electric cars and the electrification of heating. All these have contributed to making electricity expensive and unreliable. The fact that China and India are building coal fired power stations flat out demonstrates that New Zealand cannot affect the world’s climate. We would be far better off diverting our resources to making sure that we can cope with an ever-changing climate.

The ban on gas exploration promoted by the Green Party is a continuing disaster because we finish up burning more coal. It has also reduced the number of drilling rigs in New Zealand. As a result it is now difficult to get one to drill new production wells on existing fields and for geothermal power. It will be very difficult to get the drillers back because they will be scared that the ban will return when the government changes. If they don't come back, we will burn even more coal, import expensive liquefied natural gas and generate less geothermal power. Power prices and blackouts will increase.

What options does the new government have?

• End the ban on oil and gas exploration and do whatever is necessary to induce the drillers to come back. If we have a serious blackout it might be possible to persuade the Labour Party to promise that the ban will not be restored;

• Require wind and solar developers to contribute to the cost of providing the backup needed to keep the lights on when they are not producing;

• Investigate emissions-free and reliable nuclear power. The widely held belief that nuclear power is dangerous is not supported by the evidence. It is 100 times less dangerous than hydropower from large dams;

• Provide the aluminium smelter with a long-term contract on condition that it made a major contribution to managing peak demands and reducing energy demand during a dry year;

• Modernise hot water control using a smart thermostat that can control one water heater, a group of water heaters or all water heaters. It would bring huge benefits to the consumer by providing 10 times more energy storage than all the batteries in New Zealand. It can also contribute to reducing peak demands and helping to manage the frequency. The Electricity Authority is not interested.

• Set up a comprehensive, independent review of the electricity market. An electricity market fit for purpose would hold power prices and massively reduce the risk of blackouts.

• Investigate the proposition that it is better to stop squandering money on futile efforts to change the world’s climate and, instead, concentrate on defending ourselves against whatever an ever changing climate visits upon us.

There are probably several thousand MW of feasible and environmentally acceptable hydropower available. We should be looking at further hydro development, such as the already investigated schemes on the Waitaki, the Clutha and the West Coast. Regulating existing unregulated lakes over their natural range could bring considerable advantages with very little environmental effect.

Although the Lake Onslow debacle has shown that it is seriously expensive to store water for dry years, there is some potential for low-cost pumped storage that could help manage peak demands and wind and solar fluctuations.

If nothing is done poor people will be further disadvantaged and commerce and industry will be forced to install emergency diesel generators so they can stay in business during frequent blackouts and high prices. The economy will dive and New Zealand will become a third world country.

Bryan Leyland MSc, DistFEngNZ, FIMechE, FIEE(rtd) is a power systems engineer with worldwide experience. He has been a climate sceptic for the last 25 years. This article was first published HERE