Energy Minister Megan Woods has bemoaned the lack of substantive climate policy from the National Party, after it promised to scrap the Government’s multi-billion-dollar electricity storage policy but offered no replacement.
In an interview with Newsroom on Thursday afternoon, after the $15.7 billion price tag of a pumped hydro scheme was revealed, Woods said the response from National’s energy spokesperson Stuart Smith didn’t even mention the problem the scheme is supposed to solve.
“One of the things that I was really concerned and disappointed about with the response from National is that they don’t even mention the dry year. The fundamental question that the Climate Commission has pointed to, that any party that seeks to be a government has a responsibility to take seriously,” she said.
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“This isn’t just a matter of cheap, quick politics, this is long-term strategic thinking that has to be done for the country. Their response today gave me no faith that they do understand the complexity of the problem.”
Woods said she was happy to make officials available for briefings to the Transport and Infrastructure Select Committee, which mostly glossed over the announcement during its meeting on Thursday.
The New Zealand Battery Project was launched by the coalition government in 2020 to find a solution for the dry year problem. In years with low precipitation, the lakes, which provide about 80 percent of New Zealand’s electricity run dry, threatening supply at times of peak demand.
Currently, we burn coal during dry years to plug that gap, but the Government has set a 100 percent renewable electricity target. Coal will also be increasingly expensive, with dry year cover costing $1.6 billion in 2035 rising to $2.2 billion by 2050, Woods said.
Pumped hydro is one renewable option. It uses two basins to create a hydroelectric station that isn’t reliant on precipitation and which therefore still works in a dry year.
Renewables like wind and solar are too variable to use without building way more than are needed to deal with average demand.
Other options include non-intermittent renewables, like flexible geothermal and green hydrogen, or burning biomass.
Thursday’s announcement revealed that two options will progress to the next stage of a detailed business case, due in 2024. The first is a massive pumped hydro scheme at Lake Onslow – that’s the $15.7 billion one. The second is a “portfolio approach”, which includes a smaller pumped hydro scheme on the Moawhango River as well as the other technologies outlined above. This has a price tag of $13.5 billion, but would have operating costs six times higher than Onslow, according to Woods.
She said benefit-to-cost ratios (BCRs) for Onslow were marginally better than for the portfolio, but both were worth progressing. The ratios were produced for three different scenarios – a base case, one where the Tiwai Point aluminium smelter remains open and a third option where the smelter stays and a 2 percent discount rate is used instead of the standard 6 percent.
Lake Onslow ranged from 0.42 to 1.12 and the portfolio from 0.4 to 0.73. For comparison, the minister said, the Transmission Gully roading project in Wellington had a BCR of 0.37.
The portfolio option is sort of a pick ‘n’ mix, allowing the Government to reap the benefits from each technology but balance out the downsides.
“We did look at individual technologies as well. The whole point of the portfolio is you can get some balance,” Woods said.
Moawhango, however, has a non-technical potential roadblock: iwi agreement.
“At the moment, we’re seeing whether or not we can get enough of an agreement to do any of that further work. We’re not even planning geotechnical at this stage, at the moment we’re still talking to iwi about whether it’s even something that is going to be possible,” she said.
“They’re an iwi that has got a long history of being part of a hydro scheme. It’s a complicated history and it hasn’t always been a good experience. We’re taking our time to do it properly.”
National’s statement on Thursday didn’t mention the portfolio option at all and deputy leader Nicola Willis left it out of her comments to Newsroom as well. Instead, the party took aim at Lake Onslow and said they would promote renewables if elected.
“It is short-sighted, shows a lack of vision and a lack of strategic thinking and doesn’t get us any closer to solving the almighty riddle of what National is going to do to meet our emissions savings targets.”
– Megan Woods, Energy Minister
“Lake Onslow is a gigantic, hugely expensive white elephant boondoggle that Labour should consign to the dustbin of history,” Stuart Smith said. “Labour should focus on encouraging more renewable electricity investment, instead of vast legacy projects like Onslow.”
When Newsroom asked Willis about National’s approach to the dry year, she also referenced wind energy.
“We think that New Zealand’s energy companies are willing to invest in significantly more renewable electricity generation. Many of them have reported to us that one of the things holding them back has been the spectre of the Government intervening in Lake Onslow,” she said.
After further pressing, she pointed to fossil gas and then new renewable tech.
“I would prefer to see gas being used as a transition fuel, rather than coal. I think that gas as a backup has a role to play, as does geothermal, as do other emerging technologies,” she said.
Woods said this was a disappointing response, as the cost of gas was “not insignificant”. In 2035, dry year cover with gas would cost $1 billion, rising to $1.3 billion in 2050.
“Gas has a place in our transition, but transition actually means you’re moving through something. Transition is not an endpoint. You’ve got to have a plan for what comes after that. That response shows me that National really does not have a plan for what they’re going to do around decarbonisation or providing the security that we need for our energy system,” she said.
“It is short-sighted, shows a lack of vision and a lack of strategic thinking and doesn’t get us any closer to solving the almighty riddle of what National is going to do to meet our emissions savings targets.”
