How good are we really?
New Zealand is very much the ‘lucky’ country as regards the availability of renewable energy resources which are abundant and varied with hydropower, geothermal power and increasingly wind energy, the major sources used. Currently 82% of energy for electricity generation is from renewable sources making New Zealand one of the lowest carbon dioxide emitting countries in terms of electricity generation. This in stark contrast to the USA where some 46% of power is still produced from non- renewable fossil fuels.
Is New Zealand doing a good job at harnessing these abundant natural resources that are the envy of most of the world?
Are enough questions being asked regarding the efficient exploitation and utilisation of these resources, and is the cost that the average domestic consumer pays for power as low is it properly should be?
The answer to these questions is, I believe, no.
There are abundant statistics available that indicate the cost that the consumer pays for power in New Zealand is much higher than it needs to be.
Why is this?
There are many factors but basically New Zealand:
- Has been slow to adopt the cheaper forms of renewable energy power generation (wind and solar)
- Has a fragmented and outdated power delivery system that is needlessly bureaucratic
- Recently (past 15 years) under-invested in the sector and with a lack of new innovation investment
- Too many inefficient players in an industry with an outdated and complex power grid system.
Cheaper forms of renewable energy
There has been a tendency in NZ to rely on hydro and geothermal power generation, both of which are far more costly than wind or solar and require heavy and high maintenance infrastructures. Currently only around 5% of power generation is from wind power, this from a country with an abundant availability of wind. Almost unbelievably only 2% of New Zealand power generation is solar, which is acknowledged as the least costly form of power generation. The inattention of the five major power generators to producing cheap solar power is perhaps best illustrated by the revelation that the largest commercial solar generation farm in NZ is at a winery in Marlborough. This solar farm produces only enough power to provide for some 45 homes. This is a testament to the tardiness of the both the NZ government and its generating companies to the delivery of the best in cheap renewable green energy to consumers.
Today it is China and India that are dominating the solar space with vast solar farms being developed that are fast to build and easy to maintain. The Marlborough installation is laughable by any comparison to the one million home installation in Morocco or the 10-gigawatt photovoltaic farm set to be spread across the equivalent of 20,000 football fields in the Australian outback. It is expected that ultimately the power generated in the outback will be redirected to serve countries in Asia.
It is inarguable that solar power is cheaper to produce than other forms of green energy and should already be forming a significant segment of the New Zealand power spectrum. That it is not, is probably one of the main reasons why kiwi’s pay too much for their electricity. With domestic power demand increasing by some 2.3% p.a. at minimum, at least some of this growth should be met by cheap solar power.
The cost of domestic power
The overall cost of domestic power is higher than it should be in New Zealand for the reasons mentioned above. Also, there is a substantial disparity in the cost that the consumer pays for power throughout the country. In Dunedin the consumer pays approximately NZ$ 0.27 cents kWh, while in Kerikeri consumers pay around NZ$0.43 per kWh, the average income expectation and power use is largely static between the locations. in a well-regulated power supply system significant cost disparities would not exist. Possibly it is the existence of the 30 electricity wholesalers (lines companies) who enjoy a virtual monopoly of supply to consumers within their geographical area that causes unfair pricing structures throughout the country. These companies do not generate the power, 95% of which is produced by five government invested generation companies that carve up the market between them based on a largely geographical criterion.
Lack of investment and forward thinking
The availability of such a fundamental need as affordable electrical power is a basic necessity. While New Zealand is indeed the lucky country as regards the availability of green energy resources to be utilised, it has arguably failed to get the most out of these resources. The lack of resource utilisation in New Zealand prevents consumer savings and a reduction in environmental impact. Something is very wrong when many of the world’s developed economies have few of the natural advantages that NZ enjoys and are developing their renewable energy footprints at a faster pace than NZ is and delivering green energy at pricing considerably lower than here. The cost of domestic green energy is too high and when over 45% of domestic power consumed is needed to heat and light domestic homes, it is vital that it is delivered at the cheapest possible cost.
Article by Christopher Woodward, Founder of Serene Industries Limited.