If you buy electricity from a retailer or gentailer, you won't be directly affected right now.
But if you buy wholesale, you may be shaking.
Prices over $1000/MWhr (megawatt hour) are becoming all-too frequent as the cold winter blast coincides with low lake levels and inflows, and low wind generation.
This is where prices were at 8:30am Tuesday.
Earlier they were even higher, some as much as $300 higher.
Normal used to be <$100/MWhr. So we are running at least 10 times normal, maybe more.
Worse, it is hard to see this pressure ending soon.
The Haywards flow across Cooks Strait is almost at capacity. Brownouts loom. Major users (like Tiwai Point) have already cut back sharply, so that adjustment has already been made.
Huntly's coal-fired capacity is running hard. Gas-fired too. It may not be enough.
At some point this will hit consumers. Wholesales can't keep buying at over $1000/MWhr and on-selling to consumers at low fixed contracted prices. Price signals are important to reducing demand and that isn't happening at present except in the industrial sector.
The mismatch is because we have far too little headroom in our renewables capacity. It's unreliability as baseload is being exposed. We haven't invested in big hydro in decades, preferring to boost alternative renewables. But the rain has to fall, the sun shine, and the wind blow for those to work, and that isn't what is happening in the high-demand 2024 winter.
We have had extreme price stress in the past, but as the chart below shows, things settled back after. But that isn't happening now. A major public policy test looms.
Wholesale electricity
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83 Comments
Would be great to see more geothermal energy development in my opinion - very reliable renewable generation, even if it's more expensive than solar or wind.
Solar and wind definitely have a big part to play in our future (especially offshore wind I reckon), and they do make a big difference to lowering the dry year risk (as you can save up water when it's sunny/windy for when it's not), however unless we have massive grid scale batteries which are still a long way off affordable, they're not gonna help us solve our peaking problem. It'd be great to have enough baseload renewable capacity that we could use some of the big hydro schemes as peakers, but I don't know if that'd ever be feasible.
I have little faith NZ will do anything proactively about our future energy problems though - kick the can down the road until it all collapses is the NZ way.
Onslow would have been a huge, but expensive, step in the right direction but that can has been well and truly kicked down the road.
Back to the piecemeal approach of leaving the driving up the fragmented and self-interested market. I think I've well and truly hedged my exposure with solar panels and shareholdings in the big 4, but I'd still be happy to see a coherent approach to our power market moving towards cheaper prices, allowing us to reduce emissions in the rest of the economy.
No one is going to be converting a coal boiler to electric at these prices.
No one is going to be converting a coal boiler to electric at these prices
Pity the ones that fell for the previous government's shenanigans and did convert. More so their employees who could be out of their jobs if prices persist at these unsustainable levels.
Winstone Pulp International shuts its Karioi Pulp mill and Tangiwai sawmill for two weeks – and possibly permanently
Add this to the growing list of industrial employers in NZ such as Methanex disgruntled by high energy prices and we have a perfect (s**t)storm.
Could there possibly be a worse time to lose hundreds of well-paying jobs in manufacturing as an economy?
It'll be a mixed bag for those who already converted. I know at least some of the gentailers have been signing as many long-term supply contracts with industry as they can over the last few years so some will have booked in their supply much cheaper than the market price. Some may even be able to cash in by forgoing their supply and selling it on at market prices, pocketing the difference (at a certain price it's worth shutting down the factory for a day and selling the power instead, if that's possible).
Could be a tough spot for any gentailers that have overextended on supply contracts and have to buy on market to make it up. I'm not familiar enough with their hedging policies to say whether any are affected in this way.
I would assume that Genesis are doing pretty well right now with Huntly running pretty much flat out.
On a personal level, I thought I had done well locking in a 17c solar rebate with Meridian but looks like that kWh is worth over a dollar to them now...
Advisor - we are at the peak of the carbon-pulse. Nothing scales as a full replacement - not even close.
Stop wittering on about jobs and making money (both future-energy-proxies; assumptions that stuff can be bought). Economic growth, as per since WW2, is on the way out now. That is the reduction in globalisation, that is the increasing angst, that is the rebelling underclasses - now including much of what was the middle class.
We need to measure for the future - and money, because it is unrelated to resources/energy, is increasingly invalid.
1) Shows the sheer stupidity of trying, and completely failing to turn electricity supply into a business. Generators are all getting paid the highest marginal price of worst price power generator (i.e. massive excess profits) in each supply period. The system simply doesn't work no matter how much the regulator tries to fudge it. There is no financial incentive for generators to add capacity.
2) There is a direct correlation between power use and GDP & thus a high benefit/cost ratio of providing NZ Inc with low-cost resilient power supply.
3) NZ would be far better off with a non-profit SOE that runs a system optimal power generation system and only makes enough excess revenue to maintain and upgrade the system & pay the interest on bonds to cover the capital works. We would have had the right investments in the right place at the right time, not this current complete and total failure. Marginal and average power prices would be a lot closer and NZ paying less.
4) What is worse is the govt (as shareholder) is then using the excess dividend profits and tax from the power generators to spend in NZ. Most of that spending will be at lower benefit/cost ratios for NZ Inc, given govt doesn't force all spending through cost benefit assessment and then spend from the highest to lowest by ranking until it's out of budget.
Yes - there is now less than 50% hydro storage for this time of year and Lake Pukaki is lower that it's been since 2008.
However, investing in "large hydro" - only available in the Waitaki and Clutha Rivers - would not be much help now, if we had done that. That would just mean more hydro power stations with reduced output, actually making the impact of dry years worse when it doesn't rain. Nor would the government's "doubling renewables" be of help because nobody is going to build wind and solar power beyond the average demand of normal years.
So I'll say it directly - if the Lake Onslow scheme had been operating now, we wouldn't be in this situation. The present default for dry years is to burn coal and have massive electricity prices, because gas is vanishing fast. Or does the coalition government think that dry years ended with the election?
And before anyone jumps in with a "fag packet calculation" of a business case study of the Onslow scheme - the whole idea of the scheme is public funding for long-term public good. Not a private scheme to give a return on investment to individuals in a short time. Imagine trying to argue against a new hospital on the basis that it would be "uneconomic" because the patients could never afford to pay the fees needed to recover the cost of construction in a reasonable time.
It would be nice also to finally get rid of the misinformation - repeated all the way up to Simeon Brown - that the Onslow scheme would have a "chilling effect" on construction of new renewables by the private sector. Power from Onslow could never undercut power from renewables. The wind and sun are free but Onslow could not offer electricity into the market at a price less than the cost of pumping up the water. However, Onslow could certainly undercut coal power prices and thus massively reduce the high power prices in dry times, like we see right now. That would be welcomed by almost everyone, though not by a few.
However, none of this is a plug for the Lake Onslow scheme. What absolutely is needed is an immediate government policy reversal to allow a revisiting of all options for dry years - other than Indonesian coal. If the government is going to carry on relying on reduced regulations and "the market" so solve dry years, we will be stuck with coal. Perhaps a certain political party should change its name to "Indonesia First"?
...pumped hydro costs & benefits are so predictable...
https://www.abc.net.au/news/2023-10-23/snowy-hydro-sinkhole-toxic-gas-t…
https://www.abc.net.au/news/2024-05-22/tunnel-boring-machine-florence-s…
https://theconversation.com/pushing-water-uphill-snowy-2-0-was-a-bad-id…
No .. the Snowy 2.0 problems are nothing to do with it being a pumped hydro scheme. The issues arise largely because it is a civil engineering scheme involving tunnels in variable geology. Each major civil engineering scheme is different. Snowy 2.0 can no more be used as an argument against Onslow than Snowy 2.0 could be used as an argument in favour of the Onslow scheme if Snowy came in under time and under budget. The Onslow risk is the same as any other big scheme - the possibility of a budget blowout. However, that doesn't mean New Zealand should give up on major schemes from here on.
Surely this planned Cook Strait transmission upgrade should have enough capacity for Manapouri / another hydro generator, not just existing + a little bit: if it's supposed to cater for the next 40 years (eg. population doubled, EVs + zero natural gas/electricity conversions)
https://www.stuff.co.nz/nz-news/350368677/ageing-cook-strait-power-cabl…
This article seems a bit confused, the current issue facing the electricity market is an energy problem not a capacity one and can't simply be tied to the addition of intermittent renewables. Despite the present conditions there is enough capacity in the system to meet the periods of highest demand, even on windless winter evenings. What is becoming increasingly scarce is energy, that is the amount to cover all our requirements over the coming weeks, months etc, of which low lake levels, rising demand and lower gas availability (which oddly wasn't mentioned here) are the main causes, rather than a brief dropout in intermittent generation. In fact, despite a period of lower output recently, the energy we are getting from wind and solar has increased steadily the past few years, there just hasn't been enough of it built.
The article does tend to confuse power and energy somewhat. However, the key point is probably at the very end, about a policy decision looming. Coming so soon after the election, if the present low hydro / high price scenario actually does force a policy rethink then that would be a good thing. Of course, it is probably wishful thinking.
No argument that Onslow may be completely unnecessary. It's entirely possible that another dry year alternative could be found. However, batteries will not there. Dry year buffering requires sustained high power output over months, not the time scale of hours needed to buffer solar. For the 3-5 TWh energy storage needed for a dry year, we are talking battery costs of trillions of dollars and not billions.
Based on the cost of the Ruakaka battery being built in Northland, it is less than $1 million / MWh of storage. So 3-5 TWh of battery storage shouldn't cost more than 3-5 trillion
But LFP cell prices have fallen to around USD 50/kWH in China (suggesting 4 TWh would cost approx. NZD 350 billion for the cells), and a Lake Onslow replacement would only need an output of 1-2 GW, so anything built now or over the next 20 years would likely be a lot cheaper than Ruakaka
Edited: as the maths was off in my original comment
I was just fumbling through orders of magnitude myself to reach the same conclusion.
A million MWh in a TWh, so a million x $1million = 1 trillion per TWh with this battery tech. That's if this tech is even appropriate for seasonal/yearly storage - it is designed for rapid charging and discharging and I have no idea if longer term batteries would be cheaper or more expensive, or if it is possible to design them to do both jobs as Onslow would with daily cycles on top of broader seasonal/yearly trends.
I wonder how much a small-scale pumped hydro would cost compared to the Ruakaka battery.
For instance, a 6m litre water tank (the largest agricultural storage tank I could find in the NZ market) a 100m up a hill would have 1.6MWHr in gravitational potential energy (Potential Energy Calculator).
Surely the cost of the tank plus the pipes, pumps, generators etc this would be significantly cheaper to build than $1.6 million?
I wonder if many farms in NZ could have solar and water storage that in the summer was used for irrigation purposes and in winter sold electricity at peak times (evenings and early mornings)?
It's possible that batteries will overtake pumped hydro for long term energy, but that horizon is so far in the distance that it would be reckless to punt our entire society on that possibility.
To add to the comparisons posted above - replicating Onslow with Tesla Powerwalls would mean installing over 100 batteries in every household in New Zealand. That would get you the same potential storage, but with a much shorter lifespan and I suspect less ability to hold that energy over a period of years. Onslow would lose something like 5-10% per year to evaporation, how much charge do batteries tend to lose per year?
The only realistic alternative is a huge pile of coal with all the bad PR and opportunity cost that involves. Every bit of CO2 we emit from that stack of coal is taken from our cap and trade scheme meaning another part of the economy has to pull back. As the cap falls over the years, Huntly takes up a bigger and bigger proportion.
Wouldn't the better approach be household insulation? Our heating needs are significantly less since double glazing and full insulation. We aren't sucking as much water from the lakes as we were...
Maybe the do nothing approach is the best; once electricity becomes super expensive then triple glazing and better insulation will become affordable in comparison.
Estimating the volumetric enhanced evaporation water loss from an expanded Lake Onslow is actually a little tricky. A starting point is the annual precipitation of about 0.6 metres. We did a water balance study on the basis of using an upper bound lake evaporation value of 0.9 metres per year. Anyone interested can track down our 2022 paper "Estimating Teviot River compensation flow to offset evaporation loss from Lake Onslow pumped storage", from the NZ Hydrological Society web page. Subsequent to that paper, NIWA did direct measurements of Lake Onslow evaporation loss, which came out as 0.7 metres over a year of observation. So our water loss was an over-estimate, as anticipated. In addition, there is the possibility of diverting some Taieri River winter water into Lake Onslow via a short gravity flow tunnel. Incidentally, a further (small) offsetting factor is that the constructed Onslow dam would also have new power generation from releasing water into the Teviot River. If the Onslow scheme happened, that little power station would probably be taken over by Pioneer Energy - who operate the existing power stations down the Teviot River.
I guess it's tricky to do a like-for-like comparison of stored energy loss. I see the deepest part of the proposed full lake Onslow would be about 80 metres, but I'm not sure what the average depth and average lake level would be so the denominator is a little tricky too.
Sounds like a ballpark figure would be in the single digit % of water volume lost per year?
It's easier to do it by energy. We estimated an upper bound to power loss from evaporation as 10 MW, without any water diversion into Lake Onslow. Assuming the energy stored in the lake fluctuates around a value of 4.5 TWh, over the course of a year that represents less than 2% of the energy stored being lost to evaporation per year. The reason it's so small is that there is such a large amount of energy stored. A much bigger energy loss will be from operating inefficiencies - but that's offset by purchasing at low prices and selling at higher, as per usual in pumped storage schemes.
Great stat. Of course you need to factor in some additional generation to the Onslow cost to make it like-for-like, but there seems to be no shortage of companies wanting to build grid-scale solar farms which are no doubt much cheaper than doing it roof-by-roof.
Worth remember that the $50k per house recurs every 25-35 years or so as panels and batteries degrade. Although Onslow will need maintenance, new turbines etc, the expensive bit of doing the earthworks should last a century, hopefully longer.
Not quite apples with apples - Onslow is just a storage buffer.
I have a miniature; micro-hydro with the ability to pump (using wind) to augment. Nearly 20 years now, including dry ones. What happens is that the dry years (when the pelton-wheel spits air for a few days, then ceases) is that it must have been summer and sunny. Those long sunny days are good for PV; the two technologies are nicely symbiotic.
I can tell you that you can do off-grid for orders of magnitude less that your claim. I started on one 50W panel, tilted and rotated, a 12-volt house and 2nd-hand L/A gel batteries. Initial outlay - everything, wiring, switches, everything - was 5k in 2004/5. Now I'd say 10k overall; 4x 100Ah Lifepo4's, 3x300W solar arrays, 2x inverters (house is still 12v) and 50 spare Gentle Annie motors @ $2 ea. Yes, we planted a forest, and do our own firewood. And seriously passive-solar.
But it can be done...
Onslow more like $10K per house Maybe twice that if the build goes wrong. With big running cost.
Solar and Battery more like $20K per house. Minimal running cost. And distributed generation means grid connected. The electricity is first used locally with a quite different need on the national grid. Mostly reduced need.
Has Tiwai actually cut back? i know the cut back has been triggered, but i thought it took them about 45 days to scale down?
wholesale rate in Kaikora actually hit $1500/mWh this morning. Rate have been sitting above $800/mWh since Friday.
Good dashboard here: https://www.emi.ea.govt.nz/Wholesale/Reports/W_P_C?_rsdr=W1&DateFrom=20…
On the plus, looking like a record day for my recent solar install, another 20kwh of power exported and resulting water still in lakes.
Electricity generation, roading, health, education.
All breaking after 40 years of neoliberal economic policy under successive governments. Just a little less investment, and a little more extracted each year.
Definitely no need for a structural rethink in NZ *sarc
"neoliberal economic policy" - it seems to be the government / council run stuff that is breaking more than the privatised. Electricity seems to be pretty reliable where I live compared to 40 years ago. I suspect our dry year of power will be much less fuss than Auckland's dry year of water for example.
Is daily MWHr quantity of electricity used data available for NZ?
One simple way to estimate of the cost to the country of the dry year would be to multiply the difference in price between this 2024 dry year winter versus the average winter electricity price with the quantity of electricity used. This wouldn't calculate all the costs, such as the downstream economic costs for closed down plant, CO2 emissions from increased use of fossil fuel peaker generating plants. But it would give us a starting point for estimating the size of the dry year problem.
For instance, NZ roughly uses 4000 GWHr in a winter month. That is 4,000,000 MWHr.
If say MWHr prices over July, August, and September in 2023 are $300 higher than a typical July, August, and September then the country's energy consumers will be paying 4,000,000 MWHr x 3months x $300 which totals $3.6bn more for electricity this winter,
Doing nothing is an option PDK. Is that your plan for a bad year on your small holding?
As country we could pay higher prices for our basic energy needs every few years that NZ has a dry year, and for those who cannot afford that then their businesses will close, and those households on the wrong side of the affordability margin will manage the best they can through the cold.
Maybe there is a better way...
Prices prices affordability affordability prices...
Nicola Willis is equally fixated, heading to Treasury to ask energy/resource-limit questions. Jones will end up in a blind alley too.
Overlaid on this topic, I'm sorry, is the problem of human overshoot (which I seem to remember you denying, fiercely). Yes, equality is probably the future way of social arrangement - but there is a bottleneck to negotiate first - and a few billion to jettison (nature and competition will see to that).
So, what to do now, for the energy-poor? Janet Stephenson is the go-to there: https://www.otago.ac.nz/centre-sustainability/research/energy-cultures-…
Earl B is right - this is a social, not a 'market' decision. We could nationalise the Bradford failure, into something. I know, let's call it the NZED. Let's then write it's charter - and tax ourselves whatever it takes to deliver whatever amount of energy we decide on, per-head. Remembering that money is only valid if underwritten by energy, and that taxing (jn $$$) therefore might be a short-term arrangement...
Oh, and it's all made easier when you realise you cannot cater for an unlimited human population. So we need to discuss Limits.
I agree PDK that the current market approach is not working for security of electricity supply. But do you have to shoehorn your own views on limitations on growth into every topic?
You just want to turn a reasonable discussion about what to do when hydro doesn't store enough energy into what you are interested in.
The problem we are discussing here is caused by normal patterns of weather variation not the excessive use of resources causing an overshoot problem. If you want to discuss that. Write your own article which you are well capable of doing.
Nope.
What I gasp, is that we are half-way through the fossil pulse. The last half will be both harder to obtain, and more in contention.
The ONLY question is: What can we maintain, on beyond fossil energy. And to date (and, I think, permanently) we have not proven that rebuildables (dams, windmills, PV) can power the building of rebuildables. Meaning the existing fleet of infrastructure will run until it succumbs to the physical form of entropy (entropy is really an energy term, but it gets applied to decay).
I was a champion of PV, 20 years ago, and was an enthusiastic early-adopter, indeed was co-Chair of Solar Action once upon a when.
But if PV cannot build PV, then we are looking at a transition to very different world. And there is only one fossil-energised shot at building whatever it will be. Meaning we need to have a discussion about that. I've traversed to the point where I can see us unable to maintain the existing grid (a POV at odds with the techno-optimists). Short-term, stop-gap, single-focus approaches, at this late stage, run the risk of wasting the remaining buffer (time, energy).
So I make no apologies. Indeed, I challenge all who silo portions of the whole.
The person who wrote this: https://open.umn.edu/opentextbooks/textbooks/980 started out like me. An astro-physicist (and a clever one) who went off-grid, thought it through, and gave Professorship away as a result of that thinking. His blog rewards perusal:
I think you are missing something here PDK. We wil never end up needing to take all the available oil out of the ground. First world countries are going through a population collapse. Without immigration from the developing/3rd world we would all be going backwards in energy demand.
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