Suppose Hawke’s Bay wished to declare ‘Energy Independence’ for the region. That is, 100% of our region’s electricity and transport fuel requirements produced locally and/or from renewable sources. Is such a goal ridiculous, pollyannish? How might we even start to contemplate such an aspiration? And what would its benefits be? Consider the possibilities.

The first steps

Last October, Mayor Lawrence Yule convened an oil and gas forum, keynoted by the Parliamentary Commissioner for the Environment, which presented a spectrum of opinion on the desirability and safety of oil/gas development in Hawke’s Bay. The centre of attention of that forum was fracking, although the broader risks and benefits of oil/gas development were tabled.

Unison CEO Ken Sutherland expects electric cars to be viable within a decade.

Last December, the Hastings and Napier Councils jointly announced a small-scale ‘gas to energy’ project at the jointly owned Omarunui landfill. Here, methane gas created from waste would be used to drive a 1 MW power generator. Private firm Pioneer Generation Limited will fund the plant, with the councils expecting to earn about $70,000 from sale of the landfill’s methane gas.

In the same week, the Hastings District Council voted to explore a new-technology ‘waste to energy’ process (gasification/pyrolysis) and facility instead of further developing the Omarunui landfill.

Also in December, the Government awarded oil and gas exploration permits for tracts within Hawke’s Bay. This is certain to reignite heated debate and opposition regarding the prospect of fracking in our region.

And for its part, the Hawke’s Bay Regional Council, charged with protecting the environment, decided it would launch a public engagement process in 2014 to consider the region’s potential oil and gas and renewable energy options. The scope of this exercise will be determined in March.

It would appear that our councils are prepared to bring fresh energy to energy. Where might all of this lead?

Current energy profile

Unfortunately, energy usage statistics in New Zealand are not easily ascertained on a regional basis. What we do know are some very basics about the two forms of energy we consume – electricity and petrol.

According to Unison, Hawke’s Bay businesses and households – 62,502 connected customers in all – consume 971 gigawatt hours of electricity per annum.

Nation-wide, electricity consumption by sector is nearly equally divided by industrial (36%) and residential (35%) users, followed by commercial (24%) and agriculture (5%, including forestry and fisheries). As a rural province, we might expect a greater agricultural usage.

And for the typical residential consumer, electricity is consumed for water heating (30%), space heating (29%), electronics (12%), refrigeration (11%), lighting (8%), cooking (7%), other appliances (3%). This all adds up to the average NZ household using about 8,000 kilowatt hours per year.

Electricity generated from Omarunui landfill methane expected to earn $70,000/year for Hastings and Napier Councils.

As for fuel, nation-wide we sold roughly 114 petajoules of petrol in 2009 (most recent figures) plus 112 PJs of diesel (1 PJ diesel = 26,000,000 litres!).

Here in Hawke’s Bay, each year we import in excess of 250,000 tonnes of fuel through Napier Port, accounting for virtually all of the region’s petrol and diesel consumption.

In Napier, for example, nearly 100,000 cars and trucks, and 1,200 tractors are powered from those imports; one might at least double that number to get the region-wide picture. Less than 10% of Hawke’s Bay households have no access to a car; 15% have access to three cars or more.

The average NZ household uses 1,231 litres of petrol and 170 litres of diesel per annum. With 54,618 households in Hawke’s Bay, that would translate to 67.2 million litres of petrol and 9.3 million litres of diesel.

Of interest given our region’s significant rural economy, according to MAF, in one year the average sheep/beef farm uses 8 litres/hectare of fuel (55% diesel), the average dairy farm uses 64 litres/hectare (75% diesel), and the average orchard uses 324 litres/hectare.

Where does HB energy come from?

As noted, our liquid fuel is imported, virtually all through Napier Port. Not a good start for ‘energy independence’. While NZ produces oil, it is high quality and virtually all exported; for our own consumption we then import less expensive fuel.

However, the picture is brighter with respect to electricity. In fact, Hawke’s Bay can already claim to be 100% renewable with respect to its normal electricity sourcing. Says Unison: “Under normal operating conditions, Hawke’s Bay is supplied by renewable generation. A portion of this renewable generation can be substituted by thermal generation from Whirinaki (up to 155 MW) if there are security of supply issues being experienced on the National Grid.”

Seeking ‘energy independence’

As a new regional councillor, I am particularly interested in our region’s energy future. Along with councillors Rick Barker and Rex Graham, I am advocating that the energy study to be undertaken by HBRC be ambitious and aspirational, encouraging sustainable economic development.

In the first instance, HBRC’s planned public engagement is driven by the Government’s determination to expand oil and gas exploration and development in New Zealand, including our region. The Regional Council submitted during the Crown’s recent consultation on potential exploration permits in Hawke’s Bay, indicating clear opposition to any development that might endanger our groundwater supplies, including the Ruataniwha and Heretaunga aquifers.

Consequently, the HBRC energy review will certainly examine the merits or otherwise of oil/gas development in the region. Many will view this simply as a question of whether or not we should exploit Hawke’s Bay’s oil and gas resources as an export commodity, a la Taranaki. I, for one, however will advocate that we examine whether and exactly how (if the resource is commercially viable and safely recoverable – a giant ‘if’) our region would benefit from development, including meeting our own regional energy needs.

Of course, new jobs are always promised, and have indeed been generated in Taranaki. But these days even industry advocates portray oil and gas exploitation as ‘transitional’ as we move inevitably and necessarily toward a carbon-less energy future. Whether they do so simply as smart manipulative public relations, or out of pragmatic expectation of eventually conclusive (in another generation or two) political resistance, or genuine moral conviction about local and global environmental impacts, remains to be seen.

The gap between solar power costs and economic viability is steadily closing.

But in any case, the issue is before us in Hawke’s Bay. And while there’s clearly money to be made by oil companies and the Crown if development proceeds, it is not at all clear how any significant part of that rich revenue stream might find its way into Hawke’s Bay pockets. This must be part of the inquiry conducted by HBRC.

If oil/gas development becomes a reality, then we must focus, first, on health and safety (individual, community, environment) and, second, on fair reward. Hawke’s Bay should take no risk, build no infrastructure for which we are not fully compensated … and then some.

Indeed, if we think imaginatively, how might we ‘barter’ our supply to meet our demand for fuel? And how might we tap into the income stream to secure investable funds to meet our region’s ‘public good’ needs … including when the resource is gone in 50 or so years?

So, the HBRC energy review must look broadly at regional oil and gas development. But it must go further still. Also within its purview will be an examination of renewable energy options for Hawke’s Bay. Such options could yield these benefits:

  • Produce energy that is environmentally benign;
  • Generate new revenue streams within the region;
  • Reduce dependence upon electricity/fuel purchased outside Hawke’s Bay;
  • Reduce outflow of payments for electricity/fuel purchased outside Hawke’s Bay, keeping more wealth and spendable income within the region (e.g., $0.36 of the residential consumer’s electricity dollar goes to a generator elsewhere in NZ, plus $0.08 to carry it to HB); and/or,
  • Enhance the environmental reputation of Hawke’s Bay.

In August 2008 the Energy Efficiency & Conservation Authority (EECA) presented its Hawke’s Bay Regional Renewable Energy Assessment (prepared by Auckland consulting firm Sinclair Knight Merz), which exhaustively canvassed the region’s renewable energy opportunities. The report has gathered dust since then. It offers an excellent starting point for re-examining our situation in light of changing pricing and other underlying assumptions, as well as more aspirational economic development goals for the region.

Four other regions – Bay of Plenty, Northland, Southland and Waikato – have completed comprehensive ‘energy strategies’ charting their energy challenges and opportunities. We should look at their plans as well for guidance as to the scope of the HBRC review.

Renewable options

The Government’s energy policy aims for 90% of energy generation from renewables by 2025; we’re currently at 77%. With respect to renewables, two possibilities in particular deserve attention for Hawke’s Bay.

The first is ‘waste to energy’.

When the Omarunui methane-to-electricity project was announced, Mayor Bill Dalton said: “This initiative will improve the security of the electricity supply to Hawke’s Bay while the ratepayers of both cities benefit as the sale of the gas creates a long-term, secure income stream for the landfill. Converting the gas to energy will also help offset the requirement for non-renewable resources, such as coal and oil to be used for power generation.”

This is a small-scale project with notable benefits. What if we think much bigger about Hawke’s Bay’s energy future?
That’s where the prospect of a biomass plant, under consideration by the Hastings District Council as noted earlier, becomes especially intriguing. While HDC is motivated primarily by the need to re-think waste disposal and its associated costs, such a project could deliver numerous benefits, including emissions control, security of electricity supply, liquid fuel, and revenue from energy production and other by-products (such as roading material from the slag residue).

And whereas earlier waste burning systems generated harmful emissions, the latest technology, effectively vaporizing waste at very high temperatures, eliminates that downside. The latest technology can also utilise waste inputs of all kinds, from wood waste to plastic to tires (a nasty waste product).

Says Mayor Yule, “We need to think of waste as a resource. Why should we waste this resource – out of sight, out of mind – when we could convert it to energy? I can’t think of any single reason why you wouldn’t do this.”

In the U.S., with the technology being trialed by the Defense Department (America’s biggest energy consumer!) to generate power for military bases, in four hours one ton (imperial) of waste creates enough gas to produce 1,580 kilowatt-hours of electricity, which would power an average home in the U.S. for about a month and a half – at one-third the emissions of coal – and 42 gallons of renewably sourced fuel. That’s with a 12-ton-a-day gasifier; existing blast furnaces converted to the technology can handle as much as 2,000 tons a day.

The system HDC is considering would generate 8 MW per day, against Unison’s existing peak capacity of 186 MW. Such systems are modular and can readily be increased in scale.

Scion, a Crown Research Institute, has looked into the nation-wide energy potential of wood-based biomass energy. They concluded:

“Technologies currently exist for producing synthetic natural gas and second-generation liquid biofuels from woody biomass. There is significant scope for the biomass feedstocks for these processes to come from existing plantation forest resources. For example, excluding sawlogs, the “surplus” wood (residues, chip, pulpwood, MDF and log exports) available from the current harvest in 2010 could be 9.5-14.8 million m3, which equates to 12-23% of national liquid-fuel demand, or 33-52% of national heat demand.”

Closer to home, we asked Unison for an opinion – would locally sourced biomass generation be more economic than remote generation? Their reply:

“If there were a way of managing waste that reduced investment in waste management, and the by-product of energy production came at a net cost that was less than buying remote generation, then yes, it could be economical for Hawke’s Bay.”

The key factors affecting viability, according to Unison, are:

  • The costs of existing waste management that can be avoided;
  • The waste feedstock volume, characteristics and consistency;
  • The costs of carbon emissions that are avoided by combusting greenhouse gases;
  • The electricity quantities that can be produced and the average price for it; and,
  • The capital cost of plant and equipment.

It should be noted that the new combustion technology also produces revenue-earning synthetic gas as well as a slag that can be used for roading material.

Offering considerable advantages, ‘waste to energy’ clearly should be looked at as a piece of Hawke’s Bay’s energy future.

Solar power

Also on the list should be solar generation.

The EECA renewable energy assessment for Hawke’s Bay noted, remarkably: “The solar energy available from the total exposed rooftop areas of New Zealand, if captured, would equate to about twice the total national energy use.”

However, today less than 1% of NZ’s electricity is generated by solar. EECA estimated that by 2010 the installed solar thermal capacity of NZ would be upwards of 100 gigawatt hours per annum.

For the typical residential consumer, the investment just doesn’t add up. A $9,000-$12,000 PV system (suitable size for a household) will produce about 4,000 kilowatt hours per year – about one-half of the average household’s consumption.

At best, even with the consumer selling unused electricity back to retailers, the payback period would be 10-15 years; but is more likely to be 20 years or more. Currently, no government programs exist to financially incentivize solar installations.

But the times are a’changin! Unison reported 60 applications for PV connections for 2013 as of mid-December, compared to 20 in 2012.

With respect to Hawke’s Bay, the EECA report calculated the theoretical solar energy potential, then simply noted that because of the region’s ample exposure to solar radiation, “there is a potential for substantial increase in the uptake of solar thermal use.”

Two trends should accelerate PV installations – PV panels are becoming much more efficient (panels in development have topped at 44% efficiency; high-end commercially-available panels at present are about 20%). And the prices of panels, conversion and storage batteries are declining, and are likely to make home solar generation viable in the coming decade, according to Unison CEO Ken Sutherland.

Plus Hawke’s Bay has another advantage. Because the region is in the top 10% for sunshine hours, energy output for the same panels would be 10-30% better than in other areas. So appealing is HB’s sunshine that Dezhou, China’s ‘Solar City’, has proposed a sister-city relationship with Hastings to demonstrate the possibilities.

Unison, which is strictly a transporter of electricity, is agnostic as to its source. However, Unison watches the solar space carefully, as quality hook-ups conforming to connection standards are needed to protect the safety and integrity of the overall distribution system. The company is involved in trial installations to test technologies and gauge consumer preferences. At some point, say Unison, “we may develop and offer services that assist customers to optimize their new ‘own plus grid-supplied electricity’ systems.”

Ken Sutherland notes that electricity demand in New Zealand, which until recently had been forecast to grow at 1.5% a year through 2050, is now expected to be level until 2020. So, in fact, at the moment there is no pressing need for additional electricity supply.

However, he anticipates another bump in electricity consumption in a decade … from electric cars, which Unison has also been trialing. It’s estimated that the typical electric car would consume as much electricity as a typical household.

The average New Zealand household uses 1,231 litres of petrol and 170 litres of diesel per annum.

And for electric cars to become viable, the ‘holy grail’ is improving storage battery performance and cost (both of which are occurring), then ensuring ample plug-in, recharge capabilities – including, especially, at home. The typical daily commute in the district is 32 kilometres, and the current electric cars can travel typically 130 kilometres. The key psychological barrier to overcome in a rural province is ‘distance anxiety’ – fear of ‘running out of power’ as it were.

Conversion from carbon-burning cars to electric vehicles is our major pathway to lessening our dependence on fuel imports.

Wind power

While the EECA study in 2008 identified a number of wind farm opportunities, a combination of consenting issues and the flat projections for energy demand have placed wind farm generation in limbo at present. Meridian Energy, which acquired development rights for two potential sites in Hawke’s Bay, and operates 356 MW of capacity via four wind farms in NZ, has said: “Like other generators, we recognize that the demand outlook for the next five years is probably flat to slightly declining.”

Whether it’s biomass, solar or wind, Ken Sutherland notes that any new source of local generation must contend with the very low current marginal costs of generating New Zealand’s electricity remotely, primarily from hydro and geothermal.

“But certainly,” he adds, “if the choice between remote generation and local was cost neutral, you’d look to go local.”

What next?

As Sutherland commented regarding the region’s energy use, “There’s no one in Hawke’s Bay managing this.” Hopefully, the Regional Council energy strategy review will get underway promptly in 2014 and be robust. As a councillor, I will certainly be advocating that. And surely, that review should identify energy conservation opportunities as well as energy generation.

As part of that review, the region will need to sort out its requirements for any oil and gas development that might occur. First, do we wish it to proceed at all? Second, how do we ensure the health and safety of our communities and environment (not the least of which, water security)? And third, if it proceeds, how do we optimize the economic and social benefits to Hawke’s Bay.

Meantime, the HDC ‘waste to energy’ investigation will hopefully lead to a decision to embrace that technology and bring it on-line within 3-4 years, helping to meet regional needs for both electricity and liquid fuel, while more favourable pricing nudges solar development forward.

With a greater commitment to generating power from biomass and solar, Hawke’s Bay can not only secure its ‘independence’ from the national electricity grid, but indeed over the next decade become a net exporter of electricity, to our region’s financial benefit.

Bring on the electric cars!

Sources:
Unison, SCION, Electricity Authority, Energy Efficiency & Conservation Authority, NZ Stats, NZ Transport Authority,
Port of Napier

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