By Martina Moroney, Researcher, Infrastructure New Zealand

A confluence of below average rainfall, low hydro lake storage levels and less wind has resulted in New Zealand using more coal for electricity generation in the quarter to March 2021 than in any other quarter since 2012. Hydro generation was down by 9%, and gas faced supply issues, experiencing an 18% decrease over the past year, resulting in a turn to coal as a back-up generation source. Compared to the quarter immediately preceding it, the amount of coal burned for electricity production more than doubled, to nearly 430,000 tonnes.

At Huntly, our least renewable energy production source, these challenges have meant that their third Rankine unit was brought online during this period of increased coal-demand. And the share of renewable energy decreased to 79% from 82% compared to the same period last year. This forced reliance on coal demonstrates the difficult and expensive battle the government faces in closing the gap between our current capacity and its goal of 100% renewable energy by 2035.

Addressing the issue will depend on increasing hydro energy storage capacity and the productive resilience of renewable sources. The Ministry of Business, Innovation and Employment’s NZ Battery project seeks to address the dry-year problem by funding the establishment of further hydro-storage to the tune of $30 million for the feasibility study alone, and billions more if construction is undertaken. Against a background of limited capital available for climate change adaptation and mitigation, the technically difficult task of building storage capacity to enable the achievement of those last few percentage points of renewable energy generation is going to be equally as economically challenging as it is technically difficult.

Further, as we transition away from fossil fuels and increasingly seek to rely on renewable energy sources under the government’s decarbonisation agenda, the issue of limited supply is only likely to worsen and compound the existing challenges. What is now a dry-year problem, is likely to become a dry, cloudy, and/or calm issue as we also rely on wind and solar, which will in turn be worsened by rising electricity demand.

In recognition of the size of the challenge presented by work to ensure the consistency of renewable energy provision, the Climate Change Commission itself discusses a more realistic assessment of the 100% decarbonisation goal and recommends that the government avoid prioritising a huge pay out for a few percentage points, and instead focus on decarbonising other sectors and address other challenges in the electricity generation space.