New Zealand (NZ) aims to build a pumped hydro storage plant for aiding 100% renewable electricity grids. The project stands at a proposed multibillion-dollar, but expensive new infrastructure may not be the best way to achieve this.
NZ’s electricity generation is around 80% renewable, with nearly half of that provided by hydropower. The government is now aiding NZ$30 million towards investigating pumped hydro storage. The process uses cheap electricity to pump river or lake water into an artificial reservoir so that it can be released to generate electricity when needed. The response to the announcement has been enthusiastic, but whether it is the best solution that needs to be assessed. With many realisable changes to electricity demand, NZ should look at potentially cheaper options to deliver electricity.
Electricity stands poised to a key role in achieving NZ’s new zero carbon emissions target by 2050. To support the plan, and to accelerate the electrification of the transport and industrial heating sectors, electricity generation will need to grow from renewable sources by 70% by 2050.
NZ’s analysis focuses on Lake Onslow, which would be the biggest infrastructure project since the 1980s. But analysts are weighing the estimated costs of NZ$4 billion, which is massive vis-à-vis the likely opposition to the project on ecological grounds. With the closure of the Tiwai Point aluminium smelter, it would free up around 13% of renewable electricity supply for flexible use. The development raises the question of whether pumped storage development is necessary.
In 2019, the Interim Climate Change Commission concluded New Zealand could get to 93% renewable energy generation by 2035 under current market conditions. It suggested the most cost-effective solution would be to retain some fossil-fuelled generation for occasions when demand overshoots supply. It also recommended an investigation into pumped storage as a potential solution for dry years.
Furthermore, there are new patterns of demand with the collective consumption of businesses, organisations, and households. With more dependency on wind, sun, and water – electricity supply is expected to become more variable. Moreover, the patterns of demand are expected to become more complex.
The current solutions would centre on increasing the security of supply, with a fossil-powered generation or pumped hydro storage. NZ should consider options on the demand side. The cheaper options include matching European standards where new buildings and retrofits are required to meet near-zero energy building standards. Efficient lighting is another solution, which could reduce the winter evening peak demand (6 pm to 8 pm) by at least 9% by 2029. Such potential solutions could be much cheaper than a single think-big project, and they come with added benefits for health.