Should Project Aqua be revived?

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JessieB

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#277321 7-Oct-2020 20:14

Project Aqua was a plan to build a series of power stations on the lower Waitaki River generating 500MW, that was abandoned in 2004, mainly because it was not economic compared with coal and gas and wind generation. But what now? Especially if coal and gas generation is to be stopped? What if through declaring a climate-change emergency, this project could be expediated? It seems hypocritical to have local environmental objections to such a project at the expense of the global environment. Using the same argument, should the lake level restrictions on existing hydro lakes not be relaxed somewhat so that less coal is burnt during dry years? How much real storage is there in our lakes?

There was an interesting discussion on the pumped hydro idea in this forum earlier in the year, and it was apparent that there are a number of very knowledgable people on this site who might be able to give a little insight.

k1w1k1d

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#2580894 7-Oct-2020 20:27

Probably don't need more power stations with Manapouri coming online when Tiwai Point closes?

Need power generation in the north where the population is.

larknz

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#2580900 7-Oct-2020 20:41

Transpower is fast tracking the upgrade of the line from Manapouri

Scott3

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#2580949 7-Oct-2020 22:21

Few points:

Electricity demand in NZ has been relatively flat over the last decade. I.e. any increased consumption from population growth has been offset by efficiency improvements (Light bulbs swapped to fluro's and LED's, Heat pump replacing resistance heaters), and declines in medium to heavy industry (i.e. industrialist plants pulling out of NZ in favor of becoming distribution centers for imported products).
Whenever the Smelter is closed (sounds like the scheduled closure will be delayed) it will free up cira 570MW of power for use elsewhere.
There are heaps of proposed projects that may be more desirable schemes than project aqua: https://en.wikipedia.org/wiki/List_of_power_stations_in_New_Zealand#Proposed_power_stations
Project aqua has major issues with consenting under the current RMA.
History of protests etc may scare the politicians away from project aqua.

So in short, in absence of the moving to 100% renewable power, we don't actually need more generation, and if we did there are other projects that could be considered.

With regards to demand the big questions are if (and how quickly) we do the following:

Move industrial process heat from coal / gas to electric.
Move residential & commercial gas use (partially hot water & central heating systems) to electric.
Move our transport fleet from petrol/diesel to electric.

The first bullet point is the big one. For example Fontera's largest site (Clandeboye) has 203.4MW of coal fired boilers.

With regards to moving to 100% renewable power, our current electricity market would need completly re-worked in order to handle this.

But yes, if we want to massively reduce our countries emissions, we will need to build more renewable power plants, and move to using more electricity rather than direct combustion of fossel fuels.

Don't rule out any plants based on location. We can transmit power long distances relatively efficiently and cheaply. It is just a cost in the equation. If the cost of a remote power plant + transmission is cheaper than building a local power plant, then it is obvious to do the former.

Wellingtondave

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#2580977 7-Oct-2020 23:22

Too many native snails and lizards would be drowned.

ShinyChrome

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#2581041 8-Oct-2020 08:35

Scott3:

https://en.wikipedia.org/wiki/List_of_power_stations_in_New_Zealand#Proposed_power_stations

Some good points there; the NZ electricity market has many layers (probably too many tbh) that don't make it straightforward (or in some cases, even desirable) to be 100% renewable.

That's an interesting list of projects above and it's good to see there is quite a lot of diverse projects in the wings, even if most are planned in name only. While I'm guessing Castle Hill's 858MW is a theoretical-perfect-conditions-peak number, it must be massive in scale.

Lias

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#2581060 8-Oct-2020 09:29

It will be interesting to see what impact (if any) the possible changes to the Resource Management Act will have on things like this.

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antonknee

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#2581093 8-Oct-2020 10:15

Scott3:

With regards to moving to 100% renewable power, our current electricity market would need completly re-worked in order to handle this.

I'm curious to understand why this would be? I know next to nothing about the electricity market or how it functions, but I can't quite figure out why the change in generation would have a big impact on the market - is it something to do with renewables not necessarily being able to spool up quickly to meet demand at a given moment?

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tripper1000

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#2581266 8-Oct-2020 12:12

Short answer: Yes. Our population is growing fast an we are at the limit of compensating for this through efficiency improvements.

Longer answer: you'd first need to find a way of stopping pseudo-environmentalists from obstructing it.

If you care about the (global) environment we should be building green energy and encouraging industrial users to stay/come to our shores. Making aluminium from coal power in another country is not environmentally nor economically sensible.

Scott3

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#2581680 8-Oct-2020 23:48

antonknee:

I'm curious to understand why this would be? I know next to nothing about the electricity market or how it functions, but I can't quite figure out why the change in generation would have a big impact on the market - is it something to do with renewables not necessarily being able to spool up quickly to meet demand at a given moment?

Prior to 1987 reforms, there was no wholesale electricity market, and the New Zealand Electricity Department (a government department) operated and controlled almost all generation & transmission.

There were some failings with the above system (mostly to do with political influence), and it was decided that as a country we could make what was one of the most (the most?) efficient electricity producers in the world even more efficient by breaking up the sector and privatizing a good chunk of it. History tells us this was a dismal failure, but is is basically infeasible to undo.

In 1996 the NZ wholesale electricity market stared operating. It is a entirely created market, and main reason for existence is to decide how to share money around. In simple terms:

Every 30 minutes there is a block of power which goes to auction. Generators bid in their capacity. For stuff that starts and stops quickly, and with no storage, it is pritty easy, they bid their marginal cost of operation.

For example a windfarm might bid 1MW capacity at $5/MWh, a gas peaker might bid 1MW at $100/MWh, and a diesel peaker might bid 1MW $200/MWh.

If demand is 2MW, then the Windfarm and Gas Peaker would get dispatched, and would run. They get paid the clearing bid, regardless of what their own bid is. In this case $100/MWh. The windfarm is getting paid way more than it's marginal cost of operations, so is earning money to cover its fixed cost, pay back capital, make profit etc. The Gas peaker is only covering the cost of it's fuel & maintenance, not making any money or paying back the cost of it's construction. The diesel peaked doesn't get dispatched, so gets paid nothing.

Essentially the price is set by the most expensive bit of generation getting dispatched, and every generator hopes that something with a way higher bid than their's get's dispatched. The only hope the most expensive to run generator on the market has of making any money is knowing they are the last unit, and bidding supper high (there is a $3000/MWh cap in the NZ market I think), so if it gets dispatched every generator makes lots of money including itself.

Hydro plants with storage can opt to bid high, allowing them to hold water back in anticipation of higher power prices in the further. But ones the dam is full they need to generate or spill, so they might as well bid in at their marginal cost of generation (similar to the windfarm in the above example)

In short, if you overbuild renewable, The plants with no storage will bid at their low marginal cost of operation, and the plants with storage will bid a little higher, holding water back hoping for higher further power prices. Once they are full they will start bidding at their low marginal cost of generation too. The market will then start clearing at just a few $ /MWh. Generators will be able to cover their marginal costs of operation, but not fixed costs, profits etc. Eventually they will go broke, or decide to drop fixed costs by mothballing plants & firing workers etc.

There is more to the market than this. For example generators get paid for bidding in "reserves" that can come online in a hurry if another plant trips offline, or for offering valuable services to the grid like frequency keeping.

Also there is a lot of off market hedging that goes on. Power company 1 may pay $x per year to power company 2 in order for them pay them the sport price less $200 for 1MW of power for any time where the spot price exceed $250 for more than 1 hour. If company 2 has the the diesel peaker listed above in their possession, they can enter this deal with minimal risk, and simply fire up their asset if the criteria is triggered, hence taking the safe annual income rather than the risky market income.

Clearly providing the last unit of generation capacity used only for say a 1:100 year event is unattractive for any generator (especially with less customers than generation capacity who cannot arrange a hedge deal). It will see a lot of fixed costs, and barley run at all. Tools can be build into the market for this kind of reserve capacity, but the owner of Huntly has argued it is insufficient, and subsequently shut down 2 of the 4 coal capable units. They are inefficient, but exist in a good location, and would have been quite nice to keep on standby along with pile of coal big enough to support 3 months operation for an extended period for rare events such as a dam failure, earthquake taking out Haywards substation, or 1:100 dry year event.

In closing:

There is no engineering reason we couldn't have 100% renewable generation. We will have enough hydro to cover fast stooping & starting requirements etc. Some innovation may be required like adding the ability to run spinning reserves to wind turbines (currently they get dispatched pretty much any time there is wind).
We could either re-nationalize our generators, or rework the electricity market. The obvious way to do the latter would be to move to pay renewable generators for the capacity they have available regardless of not if it is dispatched.
Economically it is very expensive to get to 100%. We will hit the law of diminishing returns very soon. Renewable plants are expensive to build and cheap to operate. We get good value of of them if we run them a lot. But the last one we build to get from 99.9 to 100% renewable electricity will still be just as expensive to build as other power plants, but will hardly run. Would be much cheaper and still have a low emissions profile to keep say Huntley coal on standby for a 1:100 or 1:1000 year event.

All comes down to how much money we want to throw at this as a country. Carbon abatement cost of the lake Onslow project is roughly $250/Tonne, over 10 times what we currently use.

Also it is important to keep power prices low. The last thing we want these days is people getting LPG gas hot water setups because their power is costing 35c/kWh.