As the highest emitting region in the country, with high levels of emissions intensity relative to our population and GDP, the imperative for the Waikato to prioritise decarbonisation is clear. This presents both challenge and opportunity for our region, as we look to new technologies, processes, and industries to drive sustainable growth.
Having attended the New Zealand Wind Energy Summit 2023, Te Waka’s General Manager Economic Development, Rosie Spragg says we need bold leadership to drive the structural change that will enable Aotearoa New Zealand to both fulfil the demand for clean energy generation that our climate goals and projected demand growth require, and to maximise the opportunities that the energy transition presents.
In this first of two articles on the Summit, Rosie shares her reflections on the opportunity for wind energy to underpin transformation of our economy, and the need for structural changes to enable this. In part two we will share her reflections on key challenges we are likely to face in establishing an offshore wind industry, and the need for bold leadership and innovative partnerships to overcome these barriers.
Read Part 1 of Rosie’s reflections below and consider having your say in the government’s consultation on advancing Aotearoa New Zealand’s energy transition.
The scale opportunity of wind energy, especially offshore, is significant.
Almost every speaker at the Summit spoke to the scale of investment in energy generation that is needed to meet both climate goals and expected demand growth in Aotearoa New Zealand. While there were different views on the specific forecasts and metrics, there is clear consensus that a significant step-change in generation capacity is needed, requiring investment at a scale and pace not previously achieved. With 70% electricity demand growth forecast to 2050, the NZ Wind Energy Association spoke to the need for at least 220MW of additional wind capacity every year for the next 27 years, an almost six-fold increase on current wind capacity.
The potential for offshore wind to deliver renewable energy generation at scale was a major topic at the Summit and the primary focus for the second day of the event. Aotearoa New Zealand has world-class wind resources, onshore and offshore, that could generate significant electricity and would add to the diversity and security of our energy supply. Several investors are actively investigating the opportunity to invest in offshore wind farms off the west coasts of the North and South islands, including the Waikato region.
New research from the University of Otago presented at the Summit analysed historic wind data for the west coasts of South Auckland/Waikato, South Taranaki, and Southland. This research identified that offshore wind could match well with demand patterns, support dry-year challenges, and reduce generation variability through geographic diversity. This highlights the potential for offshore wind to play a major role in meeting Aotearoa New Zealand’s need for significantly higher levels of renewable energy generation.
This raises the question of how we might leverage this high level of renewable energy generation to create new opportunities for our country and the Waikato.
The opportunity is to embed clean energy in high-value exports
On the second day of the Summit, we heard from speakers about how electricity generated through offshore wind could be consumed by end users to embed clean energy into high-value products and services, both for local consumption and (perhaps more importantly) for export.
Opportunities spoken about in detail included:
- Hydrogen – for applications where there is no viable alternative green fuel option
- Ammonia – currently imported for fertiliser and becoming relevant for shipping
- Aluminium – opportunity to support Tiwai Point Smelter
- Sustainable aviation fuels
- Fertiliser – opportunity to support Ballance’s urea production
- Methanol – opportunity to support Methanex
- Steel – supporting electric arc furnaces for NZ Steel
- Dairy processing – supporting the transition away from coal
- Data centres – meeting requirements for large reliable green energy supply
In the words of Summit presenter James Kilty, Chief Executive of PowerCo, “Shrinking to zero is easy. Growing to zero gives us opportunities”. If we can generate clean energy cost-effectively and at scale, we have the growth opportunity to diversify and add value to our exports by embedding clean energy into production across multiple industries.
Offshore wind, along with other forms of renewable energy generation such as solar and onshore wind, can unlock this growth opportunity. However, as referenced by many speakers at the Summit, there are structural and regulatory changes that are needed to remove barriers to investment in generation capacity.
We need to plan for structural changes now to enable future investment
Our current energy market structures are not fit-for-purpose, with ‘chicken and egg’ problems affecting investment in both transmission and distribution. It is very difficult for electricity network providers to invest in building capacity to support increased electricity generation in advance of that generation capacity being built. It is equally difficult for those looking to invest in new generation to commit to investment without confidence that our transmission and distribution networks will be able to support it, or without confidence on offtake.
This is not a criticism of our electricity network providers but rather an acknowledgement of the challenges within our current regulations and how this can lead to undesirable outcomes in the overall development of our energy sector. These challenges are recognised by government, and they are considering a suite of potential changes to electricity market measures in response, including Renewable Energy Zone frameworks. These are complex policy decisions that will have long-term implications for our energy industry and therefore will need careful consideration.
These detailed policy decisions need to be guided by a long-term strategy for our energy industry. The absence of an energy strategy for the country was highlighted by several speakers during the Summit as a key issue needing priority focus. A national energy strategy is currently under development, however there is concern from some in the industry that detailed policy settings are being developed in the absence of an overarching strategy and plan to develop our energy sector, which should be guiding decisions on regulatory frameworks.
The energy transition is out for consultation
There is a suite of energy policy documents currently out for consultation that speak to a wide range of important decisions that we need to make in the short term that will influence long-term outcomes for our energy sector.
The consultations, open until 2 November, include:
- Consideration of market measures aimed at ensuring electricity is affordable, reliable and resilient long term
- Proposed regulations to enable offshore renewable energy development, focussed on offshore wind
- Proposals to manage the gas industry’s transition to a low-emissions future
- An interim Hydrogen Roadmap
Read Part 2 of Rosie’s reflections here.
You can learn more about the government’s consultation on advancing New Zealand’s energy transition here. To learn more about Te Waka’s advocacy in support of the energy transition, reach out to our General Manager Economic Development Rosie Spragg.