As the Government ponders future electricity-generation options, National nixes a pumped-hydro plan that could be the country’s one-stop energy shop.
It will be too late to prevent the lights going out – possibly permanently for some businesses – if the country banks on the massive Lake Onslow pumped-hydro project to solve energy shortages, says National Party energy spokesperson Stuart Smith.
National reiterated this week that if elected it would not go ahead with the Central Otago scheme.
A Cabinet decision on whether it will be included in future feasibility studies on energy options is imminent.
Just over $20 million has been spent so far investigating the Onslow option as part of the Government’s wider NZ Battery Project study.
The five terawatt storage capacity of Onslow would solve the country’s energy-storage issues for the long-term, smooth out consumer power prices and allow fossil fuel-generated power to become a thing of the past, according to the first stage of the feasibility studies.
The problem, Smith says, is we can’t afford to build it and it will take too long.
Present projections are based on a cost estimate of $15.7 billion and construction completion by late 2037, both of which Smith says are probably unrealistic.
He believes the chances of a budget blowout are high based on a University of Oxford study of 274 hydro-electric projects in 75 countries on six continents.
The study, published in 2014, found more than three-quarters of the projects had cost overruns averaging 96 percent and four-fifths overran their build schedules.
It cited optimism and political bias as the main cause for decision-makers accepting budget estimates that were too low.
“If these large civil projects are not managed extremely well, the costs can blow out, and that tends to be if they’re run by governments,” Smith says.
“With a major entity like that, costs have a greater likelihood of blowing out than if it’s run by the private sector.”
Smith says that doesn’t mean pumped hydro doesn’t have a place, but from National’s perspective any such project would have to proceed subject to the same market rules as other generation schemes.
He fears consumers and taxpayers would be saddled with an Onslow bill of more than $20 billion with the government trying to recover costs as both “poacher and gamekeeper”.
There are already signs of industrial and domestic users making use of battery storage to be more efficient in their energy use and avoid high peak charges, he says.
National advocates making consenting and reconsenting easier to encourage cheaper and quicker development of geothermal, solar and wind capacity.
Smith says technology isn’t yet available to enable the Labour Government’s goal of 100 percent renewable generation by 2030 to be cost-effectively met.
“We have net-zero [emissions] by 2050 legislation. That’s not net-zero by 2030.
“Trying to get there and reduce emissions ahead of the pace we can economically sustain is a recipe for disaster.
“We cannot afford to lose industries from New Zealand nor can we afford to make them less competitive.”
Early days
The Ministry of Business, Innovation and Employment (MBIE) says the $15.7 billion figure given for building the Onslow project “remains an estimate”.
NZ Battery Project acting manager Susan Hall says it’s based on an industry standard that gives 50 percent confidence of the final cost being equal to or less than the estimate.
She told Newsroom both budget and schedule estimates have been independently reviewed.
“We are confident of the robustness of the work and process that has gone in to developing them.”
Referring to Smith’s concerns, she says without knowing the basis on which budget and time estimates were made for the Oxford-study projects, it’s hard to discuss them.
Cabinet had been scheduled to discuss the latest findings of the NZ Battery Project this month to determine which option or options of three would continue to a detailed business-case stage.
These include the Onslow pumped-hydro project, pumped hydro in the Upper Moawhango area near Waiouru in the North Island and a portfolio approach that draws on a range of technologies.
Hall says that discussion is “on track” to take place soon.
The project’s next phase could cost $69 million and would involve preparation of detailed designs and analysis plus work on potential operating models for the chosen options.
The total allocation for the programme is just over $100 million.
Dealing with demand
A senior University of Otago climate and energy researcher, Jen Purdie, reckons the country can keep the lights on while waiting for Onslow to be built.
But it might require retention of gas-fired generation for peak loads as recommended in a 2019 report by the Interim Climate Change Committee.
Purdie is wary, however, of the cost of the Onslow project and sits on the fence on whether it's needed.
“It would certainly be the one-stop-shop to fix a multitude of problems in the electricity system, but it is an expensive solution.
“I think we could probably get to 2050 without it if we put a whole load of things in place like a demand-response market where, for example, big industry may be paid to shut down over the evening peak in winter to lower demand and therefore lower the need for generation.”
In addition, some “overbuild” of renewable sources could be added where, for example, wind turbines sat idle some of the time then picked up over the evening peak in winter when most power was needed.
Grid-scale batteries could smooth out hour-to-hour and day-to-day variability in wind and solar, and the use of vehicle-to-grid batteries and gas-fired generation could probably satisfy demand.
All of these measures, Purdie says, would “probably” add up to New Zealand not needing Onslow.
“It will be interesting to see if the NZ Battery Project thinks this too when its modelling is complete.
“What we want is to move towards 100 percent renewable while keeping the energy trilemma in balance – that is, keeping costs down, lowering emissions and keeping the lights on.”
Made with the support of the Public Interest Journalism Fund
