Its exciting times in the energy sector, which is buzzing as New Zealand seeks to decarbonise by 2050.
Projects are rolling out at pace and its clear there will be not be one, but many options.
New Zealand has long had a head-start on clean energy, with 81 per cent of the electricity sector stemming from hydro and geothermal.
But other energy sources have also been gaining traction. With the Government putting the clamps on oil exploration, the natural gas industry has reinvented itself, announcing it will use hydrogen to replace fossil fuel natural gas over the next 30 years.
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In this new world, your car is almost certainly going to be electric by 2050, and hydrogen will probably be playing a key role in heavy transport.
Aircraft and ships will eventually be driven by biofuels, derived potentially from wood from our own forests.
Petrol and diesel will be around for some time, but not necessarily as you know it.
But the most fundamental issue as New Zealand moves away from its coal-fired electricity plants is what to do when our lakes are low, Greg Sise of consultancy Energy Link says.
There’s a lot that’s going to stay the same. Wind farms are still going to be built, there will be a lot more solar. But the real key changes are going to be in how we manage those dry years.
Added to that is a huge projected jump in electricity use. By 2050, Sise says demand could be two-and-a-half times higher as electric transport and hydrogen production kicks in.
Rich in renewable electricity, New Zealand must still find a way of weaning itself off coal when lakes get low.
That’s a real challenge in itself. How do you build plants fast enough?
The electricity challenge
The Government has set an ambitious goal of fully renewable electricity by 2030.
But getting the right balance of supply is notoriously tough in the electricity industry, which spikes hour to hour and is vulnerable to low lake levels.
Lake Onslow in central Otago could become a gigantic battery by pumping water into storage for later use.
One radical idea to solve the dry year dilemma is being proposed by the $30m New Zealand Battery Project, an initiative by the Ministry of Business, Innovation and Employment.
Its flagship idea, using Lake Onslow in central Otago as effectively a giant storage battery, is a big concept which left the industry gasping.
Unlike most hydro dams, the lake would pump water to an uphill storage pond, ready to flow back and generate power when needed.
Manapouri power station currently supplies power to Southlands Tiwai aluminium smelter but for how long?
Another idea for getting around dry years is to build a hydrogen plant in Southland which would soak up surplus electricity if and when the Tiwai aluminium smelter shuts. Electricity companies Meridian and Contact are busy investigating this.
It could provide a large amount of New Zealands dry year reserve at a fraction of the cost of building new power stations, Meridian chief executive Neal Barclay has said.
Having a large amount of demand with the flexibility to turn it down, or turn off, during a dry year could add a huge benefit to New Zealand in managing the security of our energy supply, Barclay said.
Hydrogen the saviour?
According to the World Energy Council, the beauty of hydrogen is its potential to decarbonise sectors that are difficult or impossible to electrify, such as the steel, ammonia, and glass industries big polluters.
Its also particularly well suited to direct heat needs of certain industries and for gas cookers.
Hiringa Energy chief executive Andrew Clennett is using his oil and gas industry experience to decarbonise trucking.
Hydrogen seems to have found a natural home in Taranaki, where energy contributes about a quarter of the local economy.
One of the most advanced projects is from Hiringa Energy, which is deliberately targetting the long-distance trucking industry for maximum impact.
The plan is three-fold: build a wind-powered green hydrogen plant, import trucks adapted to hydrogen and install a network of refuelling stations.
The plant is well on its way in partnership with fertiliser company Ballance at its south Taranaki factory.
For the rest, chief executive Andrew Clennett, a former oil and gas industry executive, is working with transport companies like TIL Logistics, and fuel retailer Waitomo. They hope to have a network of 100 refuelling sites by 2030.
Logistics company TIL and fuel retailer Waitomo are among the partners teaming up with Hiringa Energy to kickstart the trucking industry’s switch to hydrogen.
Clennett says its been easier to connect the supply chain dots for a hydrogen industry in New Zealand than bigger countries.
One of the reasons for our success has been the way this country works. The integration between business, the community, the regions, the central government. I do think theres a very shared vision in this country.
We will argue around the peripheral but the general direction and compass heading is pretty clear.
Things could be speeded up if the Government follows through on its signalled mandate for blending biofuels into fuel.
Our biggest challenge is diesels so cheap, Clennett says of hydrogen.
Its still a challenge, I cant say today it’s cheaper than diesel, which Id love to hear, but were coming up with ways to make it affordable and in not too long it will be cheaper than diesel, you watch it go.
Hiringa Energys Hyzon hydrogen trucks can each save the equivalent of 150 cars worth of emissions.
TIL chief executive Alan Pearson says hydrogen wont be the only tool to convert the trucking fleet but it has several advantages over electric batteries for truckers.
Quicker to refuel, hydrogen trucks are lighter and travel further. And crucially, the fuel cells dont have to be shifted out of the way of the axles (New Zealand trucks need a higher number of axles).
On the downside, hydrogen trucks are still very expensive and Pearson believes the trucking fleet will take a long time to overcome its barriers.
Well probably be exporting hydrogen around the world before were fully able to do all the trucks and meet our requirements, Pearson says.
Another hydrogen hotspot is Taupo, where iwi group Tuaropaki Trust is also building a small hydrogen plant attached to its thermal power station.
It is working in partnership with Japanese construction firm Obayashi Corp.The trust declined to talk about its work, but said an announcement was imminent.
Hydrogen is not just for trucks, but trains, buses, cars, coastal shipping and aircraft. Ports of Auckland has an electrolyser on site, and is working with Auckland Transport and KiwiRail as a fuel supplier.
Experts say the energy it takes to make hydrogen means it does not make much sense to use it when electricity may do.
But as a stored energy, it could definitely play a part, such as when wind turbines cant operate or solar panels lose too much sun.
A plentiful supply makes wood offcuts a potential source of biofuels – but it wont be cheap.
Liquid wood
While petrol and diesel are expected to be around for some time, oil companies are mobilising. Z Energy in particular sees biofuels, electricity and potentially hydrogen in its future.
We cant say with certainty how many petrol or diesel vehicles will still be in the mix by 2050, chief executive Mike Bennetts says.
However, it may be that this will be the ongoing role of biodiesel or ethanol in the supply chain at that time, to support the remaining internal combustion vehicles that need liquid fuel.
Although Z has built a biofuel factory using tallow (currently mothballed), and Air New Zealand has dabbled in jet fuel made with algae, the focus is increasingly turning to making biofuels from wood.
Z Energy chief executive Mike Bennetts expects conventional fuel blended with biofuel will be around for some time to come.
This makes sense: the log industry only uses about 50 to 60 per cent of the tree, providing a plentiful source of material currently used for heating boilers and packaging.
And work is already underway, with Scion, the former Forest Research Institute, making biodiesel, marine and jet fuel.
However, biofuels are expensive to make, and a wood industry transformation plan due out later this year is seeking to quantify whether it can be cost effective and attract investment.
The question people ultimately ask about biofuels is are they going to be cost competitive against fossil fuels and the answer is no, says Jason Wilson, who is heading the industry transformation project for Te Uru Rkau - Forestry New Zealand.
‘There’s 100 years or more worth of technology that’s gone into becoming very efficient at dragging oil out of the ground and making it into fuel.
However, one bonus is that the same technology that allows biofuels is a gateway to bioplastics, high value products which might help struggling mills.
There is also the danger that biofuels would eat into other wood markets, he says.
Jason Wilson says biofuels and bioplastics could be the added value wood processors have been waiting for.
”One of the key challenges we face as we do this is, how can we have our cake and eat it too? How can we have a pulp and paper industry and a biofuels industry?
Scion clean tech leader Dr Paul Bennett, who also chairs the International Energy Agencys biofuels committee, says there has been a noticeable acceleration of interest in biofuels in the last year or so.
Biofuels are going to be ‘really important’ for long haul aviation and shipping, he says, which is why Scion has been working closely with the likes of Z Energy and Air New Zealand.
However, commercialisation will take time.
When could we see something like this happening in New Zealand? We have some internal targets … by 2030. Construction of a plant that might be producing 100 million litres or 200 million litres will take quite a long time. Just the construction could take two years alone.
Despite some of the new technologies coming online and I do think they will all have a role, we have quite an old legacy fleet here in New Zealand so liquid fuel will still be required for a long time to come.
Paul Bennett of Scion says biofuels will be important for the marine and aviation industries.
Winds of change
Both geothermal and wind energy are expected to pick up the pace over the next few years. Out of the two, however, geothermal can be overtaxed, while wind is fickle but plentiful.
Sise says individual wind farm projects have not always thrived because they need to be able to sell their power to one of the four big power generators Meridian, Mercury, Contact and Genesis who prefer to build their own farms.
However, he says there are now signs that at least one company, Genesis, is talking to independents.
”For a country like New Zealand, wind was always going to be a big part of the renewable energy mix, if not the largest part after hydro,” he says.
Of the other energies, solar is still a small part of the energy mix and relies on individuals not being put off by cost.
Expect wind farms to pick up pace. This $277m Waipipi wind farm being built by Tilt in south Taranaki will produce enough clean energy to power 65,000 homes a year.
And though it’s an outlier, don’t count out wave energy, as a technology. New Zealand is particularly suited, surrounded by ocean, the Cook Strait, French Pass and Foveaux Strait.
So far marine energy hasn’t amounted to much. However, Awatea, the Aotearoa Wave and Tidal Energy Association, says some work is underway and should be made public soon. Watch this space.
