An independent solar farm developer says dramatic reform of the electricity sector would risk disrupting a multi-billion dollar pipeline of new energy supply that was already underway.
Far North Solar Farms signed a deal at Parliament on Tuesday, with a Crown-owned green investment bank which will provide it with a $78 million debt facility to fund the connection of five of its solar sites to the national power grid.
The developer has been working on 11 solar farms that will eventually provide 1.4 gigawatts of energy, enough to power the entire city of Wellington daily. It is funded by German private equity firm Aquila Capital and has no connection to New Zealand’s big energy companies.
Richard Homewood, a founder and director of Far North, said gentailers had built most of New Zealand’s generation capacity because they had the balance sheets and expertise to do so.
But it was possible for new entrants to build new generation projects as long as they had plenty of capital and a strong understanding of both the electricity market and construction.
Sky-high wholesale electricity prices have reignited calls for the Government to reform the market structure, which some argue doesn’t incentivise new development.
Energy Minister Simeon Brown has promised a review of the market to ensure it delivers reliable electricity at the lowest cost while remaining efficient and competitive.
Shane Jones, an NZ First MP and associate energy minister, said he was pushing for this review to take a “deep look” at what was getting in the way of competitiveness.
“The gentailers realize their social licence is perilously low, and we'll cross that bridge when we get to it,” he said.
Homewood told Interest.co.nz that the government should avoid introducing dramatic reforms that could disrupt large energy projects already in progress.
“People are making investments on the basis of how the market is structured now, and so I think we just need to be careful about making knee-jerk changes unnecessarily,” he said.
He supported incremental changes, such as permitting electricity lines companies to invest in development, but noted substantial investment was already flowing into the sector to increase supply.
“There's billions of dollars that are about to enter the New Zealand electricity market. I know we want it now but it's coming. We’re gonna see this generation turned on,” he said.
“I would suggest that we stay the course, tough as it is. Find solutions to manage the short term problems, but don’t restructure the whole market right now”.
That said, large-scale electricity projects are complex, which is why New Zealand Green Investment Finance, a Crown-owned investment bank, has been involved in this deal.
It will finance the construction or upgrade of substations necessary to connect the solar farms to the grid. Because these assets are owned by Transpower, it can be hard to secure private finance from an investor or bank as they wouldn’t be able to use it as security.
Jason Patrick, NZGIF’s chief investment officer, said financing connection assets separately from the rest of the development was an new model the investment bank would use again in the future.
LNG imports
NZGIF’s job is to make commercial investments which accelerate decarbonisation and help the country transition to a low carbon future.
The Coalition Government aims to electrify the economy but believes fossil fuels will be necessary for decades. It plans to bolster energy security by helping the sector build an LNG import terminal and permit new oil and gas exploration.
Homewood said natural gas and coal would have some role in the future, but large-scale solar could address much of the issue by preserving hydro lake water as backup energy.
“Right now we use hydro as a baseline power. If we just treated hydro as a big, giant battery, and introduced more intermittents, then we would be a lot more resilient,” he said.
Raewyn Moss, an executive at Transpower, said projects like Far North’s solar farms were vital to ensure there was enough generation capacity to see NZ through dry years.
“Fortunately, at Transpower, we've got a significant pipeline of other generation projects that we want to commit to the national grid, and these include all types of generations: solar, wind and geothermal,” she said.
There were 16 projects already in delivery, 39 in the investigation stage, and another 35 awaiting investigation to start.
69 Comments
Fortunately, at Transpower, we've got a significant pipeline of other generation projects
It is remarkable. There are >40 GW of new generation and expansion applications queued up with Transpower. Many won't see the light of day, but even a-fourth of that prospective capacity coming online will bring significant market change.
I agree and a ~7-year payback should be enough incentive for households to get rooftop solar without the taxpayer offering more sweeteners.
Let's face the real problem here - the average Kiwi would rather get fleeced by oligopolies and complain about it endlessly just because they want to spend every last dime of their paycheck on things they can enjoy today, not 7 years from now.
Tell me about it. We used to dread power price rises, because we would be inundated with people coming to enquire about solar power. But they really just wanted to complain about the power companies, and were quite happy when told the cost of going solar (then) was higher than what they would save on their power bill.
I've been seriously looking at solar. But I havn't pushed go on it for a couple of reasons.
(1) If your not at home during the day most of your power goes back to the grid and while you can get 11c now, who knows what that will be in 2, 5, 7 years. A government mandated rate that would give people certainty and still allow people to switch retailers would be good.
(2) Lets say I want to put that energy into a battery to use on peak rates between 6 and 9pm. Well thats about 15,000 dollars installed. The pay back is terrible. The batteries are too expensive and the installation is too much. It doesnt even pay back in 10 years.
(3) There is little transparency in pricing and quality. I've had terrible experiences with firms like HRV and so actually the risk of people putting this on my roof is a big deal and I dont know anyone who has done it and can recommend someone.
(4) Calculations of payback are really poor. All the companies use your power bill which takes no account of your actual usage times. They should be using a downloaded hour by hour usage information from your meter, applying your rates and modelling it against actual sun. I used Chat GPT to do it and the payback was terrible 8+ years for us, compared to the 5 years the retailers were saying. Creating more certainty for people so that better recommendations on sizing could be given would be great, especially for analytical buyers like myself.
(5) The ecosystem is still really poor. I was staggered that there is no standard solution with an intuitive interface to do EV charging, Moving hot water to the daytime, Solar charging, and monitoring. It might exist but the solar companies are TERRIBLE at marketing it. Fronius can do it but everything is 1.5x the price and the ecosystem solution is shown nowhere. They want 3800 for a EV charger! Chinese companies like Solax are doing it but no one offers their EV charger in NZ and again there isnt one review in the world on it! MyEnergi a small company from the UK is trying but again the solution is half baked probably due to a lack of funding. All this leads me to believe that despite solar being around for years, its not a highly profitable industry for anyone and the industry hasnt matured yet.
If I was a solar manufacturer I would
* Become a thouught leader, giving real honest solutions to end users
* Sell solutions not widgets
* Push the ecosystem message and charge 20% more
* Create an ecosystem with other manufacturers
Regarding 1) - I was able to get 17c from Meridian locked in (together with my prices paid) for 5 years. By then the majority of the cost will have been recovered. Simple no battery system.
I did my own calculations on payback - downloaded a year of usage in half hour bins, got a generation estimate using the NIWA service binned by half hour by month, and ran the calcs on a few different pricing plans. Expected about 7-8 years pay back assuming no change in use patterns, expecting to receive those returns for 25-30 years. Great investment.
7 years is a long time and if they have to borrow to fund the system it will be closer to 9 years. The average kiwi only lives in a house for 7 years and even amongst those who do stay longer than that there is the feeling of being locked in to staying until the system is profitable and loosing the flexibility to move that comes with buying the system.
Perhaps that's possible, if you relegate our hydro network to 'backup' status and massively overbuild everything else. Either we optimise for generation and figure out storage elsewhere, or we optimise for storage and negatively impact on total hydro generation and probably harm the rivers at the same time.
Seems like a much bigger waste of money to me. Hydro is great at what it does, we just need a top up for dry years. Think through the implications of having to keep the hydro lakes full at all times 'just in case'. We need virtually all their current storage capacity to cover a dry year.
Not all the time, we can predict broad weather patterns such as El Niño with substantial advance warning and start conserving hydro in the 9 months leading up to anticipated need. During those 9 months a pre planned cycling up of our coal / gas generation to supplement hydro during the peaks could facilitate the building up of reserves without actually needing to consume the energy doing pumping (ie. much more efficient to use the electricity directly rather than have it pump and then be generated again)
Because per unit residential electricity charges were declining, lowest in 10+ years in real terms. And when measured as a fraction of household income, annual electricity costs are the lowest in living memory, perhaps ever in NZ. Why pay the already wealthy (homeowners) to put in solar and batteries? Home solar will simply displace grid solar that will be built.
There's no net gain for the country from solar subsidies, and a lot of taxpayer cost and equity concerns.
Even if rooftop solar displaces solar farms, there are efficiency gains to be had by having the solar closer to where it is consumed (reduced transmission). In top of this there are grid resilience benefits and a chunk of the cost can be offloaded to private individuals by having them buy the solar system and then maintain it!
Those two sentences don't go together.
Yes, rooftop is often not ideal - roof-maintenance, angle, orientation.
But solar? I've been running right through a southern winter (I'm south of the 45th parallel) without ebven having to tap into my micro-hydro; 300 watts of panel, has been ample. I say 'nuts' to those who claim it's marginal - and I'm 20 years down the track with the house, more if you count boats.
But rooftop is what you are left with, in crowded tract housing. They are not spaced for solar gain - which means they're inappropriate for the future.
That image made me twitch uncomfortably. Where's the (at minimum) hotwire to keep them off the panels? My cattle would be scratching themselves against them with great joy, licking the panels for any salt, and even giving them an experimental chew just in case they were tasty.
I alternate between cropping and grazing, and one of the challenges is that I need a wide open space for the crops, but also a decent amount of shade for stock. I've considered installing a large solar array about 3.6m off the ground in an area of paddock that harvesters can't reach, so the stock can have shelter while the panels can generate income from land that is otherwise uneconomic. The big hurdle is finding the spare funds to get it done.
Yeah I've considered that but I'm currently fighting the council just to put a roof over some existing hardstand, let alone add any new structures. It's ok for developers to channel an ever-increasing amount of storm water from roofs on the hill behind me onto my property without any thought for adverse consequences, but if I dare not let the rain falling on my hardstand soak in exactly where it lands... *council shakes fist*
I'll get there.
They are pretty tough though, actually quite hard to break. I've had a few blow over , glass down onto concrete or gravel, and been OK. Must be why forklift drivers find them a challenge, they regularly damage them in the depots.
Yup cows love chewing on wires, they would be clipped up out of the way, and you'd want 3 metŕs height when the cows are in.
We've already had some rain plus a lot of wind in the last week. Manapouri and Te Anau back above average levels for this time of year, Pūkaki rising quickly with record low weekly generation from the Waitaki scheme, and with more rain in the forecast. Combined with the methenx deal and curtailment from Tiwai average spot prices this week are back to normal.
We get into a mess when we compare 'cheapness', as did Geoff Simmons, Paul Conway and Sul Griffith last night
The Electrification Opportunity Report | Rewiring Aotearoa
But the difference between those GND types (electrify and party-on) and the 3-Clown bunch of dinosaurs currently leading us, is that the dinosaurs are aiming to have us vulnerable to 'overseas others' - whereas the GND-ers at least are aiming for resilience within our borders.
LNG is a stupid as hydrogen, in a resilience sense. Unmaintainable. Rooftop solar - indeed any solar - is useful for the life of the panel, however it gets connected. Or reconnected. Or disconnected.
But they're ALL missing the point. The neat-term-ness of the Limits-to-Growth impacts say that we won't electrify much before all bets come off; and that we won't see new exploration either. Lead-times say we won't see offshore wind, oe a new C/S cable either - the event windows in both cases are closed.
The issue is not now. The issue is what do we do for power in 20yrs. Once the globally increasing mandates for EV adoption across all transport sectors is fully in place the electricity requirements will be huge. This will require significant increases in base load requirements. We need generation capability that is not dependent on the sun, wind and rain with their fickle dependability. Batteries would be great to store sparks during excess production to use in a shortage. But, they are designed to cover for a couple of hours for grid stability and not the days or weeks we may actually need it. The size of batteries required to cover for days or weeks would bankrupt the country for generations to come. The only country that has taken this challenge seriously and garnered support from all political parties for a long term solution is Finland. Yep, the Finnish Green Party are the biggest advocates for Nuclear Energy that you will find. The kicker, they have taken a pragmatic view of what is best for the environment now and into the future. Based on that, modern Nuclear is the winner with no close competitor. Also, Finland has the lowest electricity prices in Europe and will do so for the foreseeable. Nuclear as base load with hydro, wind and bioenergy to top it up is how they do it. We could do exactly the same and secure our energy future for the next 100yrs.
Gas is a now problem. That can be triaged with short term supply arrangements etc. NZ will most likely not use gas in 20yrs. If so, all of those using it will need to have transitioned to sparks. The electricity surge in demand over coming decades requires long term investment in required generation and infrastructure now. Home solar en masse will cripple the existing grid with its inability to absorb excess home generation at large volumes. Using the EV in your garage as a battery for the house is the future. We need a plan of how we get there.
Nuclear is unlikely to make sense in NZ as realistically you want to have at least 3 reactors so you're not turning off 1/2 your baseload every time their is maintenance or a fault. Finland like all of Europe has the advantage they are able to connect grids to their neighbours to export/import where it makes sense. NZ can't do that.
However, we do have an abundant baseload source with low emissions that we already have a lot of expertise in, geothermal. There are already a number of geothermal projects in progress.
The problem with all these baseload sources, is that they are never going to be as cheap to operate as wind and solar which have extremely low opex. With geothermal and nuclear, you don't save that much in your opex if you turn them off, unlike thermal generation. So you want to make sure that you don't build too much, otherwise when there is a lot of wind or sun or full hydro lakes you won't have any return on your investment.
Finland is also investing in pumped hydro. https://www.hydropower-dams.com/news/three-small-pumped-storage-schemes…
One thing that could be looked at here is creating wetlands bordering the hydro lakes, which could be flooded for, say 16 hours a day, but drained for 4 hours or so for morning and evening peaks. It requires a larger surface area, but creates needed wetlands, and actually increases usable water range. Most north island hydro lakes have deep lakes to create head, the actual storage range is very small, governed by consents.
We shoudl step away from things that increase our reliance outside. Invest everything we would put into LNG into finding another gas source.
We shoudl be trying to electrify on clean electricity and move away from imported energy this includes, Coal, Gas and Petrol (for cars). Imaging the balance of trade benefits ongoing. Imagine all that money being put back to NZ generators.
Furthermore imagine the security of not being beholden to Gasoline price spikes, wars, Petrol terminal break downs etc.
Solar + Wind + Hydro + Geothermal + Rooftop Solar
I still think removing baseline demand with every house having 2kw of panels on their roof would be amazing. No consenting required.
You can get by on a lot less than that - and remember that direct solar is more efficient and cheaper than 'via electricity'.
I run a passive-solar house, and solar water-heating (effective during the summer 6 months). Also grow own firewood.
That lets me run a house on 300 watts of solar. You read that right. I have another 300-watt system for my workshed, and a backup 200-watt system for the backup batteries. Total battery storage is 800A/hr. Initial outlay (20 years ago) 5k (everything) total to date maybe 10k. Haven't used the generator in years.
Watts the voltage on your batteries? I.e. how much storage do you have? And how do you run the oven?
Guess u do winter water heating with a wet back?
300w wouldnt power most people's homes even with all major appliances turned off
Thought I was doing well getting base demand down to 150w e.g. overnight after the ebike is charged and before the dishwasher runs.
That amount would not charge the powerchair & operate the breathing machines. But I guess in your eyes other people should be forced to live without the equitable means of having legs and lungs. I dare you to stop breathing for long periods and see how that plays out for you.
I'm currently running a nissian leaf as a commuter, when it gets to the end useful life in terms of range for us, I will be investigating solar + leaf as a solution to reduce our electricity consumption. A lot of people in the US already use them as a source of back up power in black outs etc. It's a pipe dream but I expect these sorts of things to become common in the next decade.
This was looking ok until I saw Richard Homewoods name.
Has a long history of unsatisfactory conduct, it will end in tears
https://comcom.govt.nz/__data/assets/pdf_file/0032/219668/Warning-lette…
https://www.nzherald.co.nz/business/local-focus-solar-company-superchar…
https://www.1news.co.nz/2021/11/22/solar-power-company-leaves-customers…
https://www.1news.co.nz/2022/03/07/solar-power-company-accused-of-robbi…
https://www.facebook.com/watch/?v=466779581894103&vanity=FairGoNZ
https://www.stuff.co.nz/business/103158699/councillors-uneasy-about-sol…
It's unfortunate that the coalition government is so pro fossil fuels. They took great delight in the cancelation of the electric car subsidy which was due for revaluation as we have reached the target of 2% or 80,000 cars.
We have an oil import bill of $12 billion a year and should be working to eliminate that and replace it with home grown electricity.
So interesting to hear from cattle farmers. As of 32 yrs of same, I know cows as herbivores will suck, slober (vehicle windoes and mirrors) and chew anything that looks remotely vegetable-like. Sheep are much politer, and used locally in our adjacent vineyards to clean up intervine grass, neat job. 3.6m high angled panels doubling as cattle shelter seems a good solution. I was staggered to see recent figures showing how much geothermal in now contibuting to base load. Despite all the naysayers I believe Onslow like storage could be viable and grow trout for we fisherfolk as well. Great debate generated when we have these winter power shortage windows.
"Far North Solar Farms signed a deal at Parliament on Tuesday, with a Crown-owned green investment bank which will provide it with a $78 million debt facility to fund the connection of five of its solar sites to the national power grid."
I've no doubt someone in govt (EA?) have looked at the numbers both technical and financial so this must be a a goer on both counts.
With many commentators on interest supporting wind and solar keep in mind they not called unreliables for nothing.
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