Friday, September 09, 2005

Energy: another wind farm

Genesis Energy has won its appeal in the Environment Court over its Awithu wind farm project. It's a small project - only 19 MW - but hopefully its just the start of developments around Auckland.

This also brings the amount of wind-farms consented this year to almost 400 MW - two and a half times our annual demand growth. Meanwhile, we have a group of "concerned engineers" worrying that no new power stations are being built; it seems that if it doesn't follow the one big dirty egg model, then it doesn't exist as far as they're concerned.


I wouldn't be quiet so quick to poor scorn on those engineers. If the John Noble involved is who I think he is then I you are way off.

Posted by Anonymous : 9/09/2005 10:56:00 AM

To be fair: the "concerned engineers" main concerns are transmission capabilities into Auckland and Chch, and lack of over-capacity to cope with variability of supply.

They're not complaining about a lack of normal eletricity generation capacity per se.

For safety you want the electricity system to have an over-supply electricity so that you've got spare capacity in case of problems. But the suppliers make money by keeping supply at "just enough" and then charging a mint for electricity (think of how a supply and demand curve works: over-supply lowers prices).

These guys are pointing out that a free market isn't the right answer for providing sufficient spare capacity. They're also claiming that the current (artificial, controlled by regulation, but kinda free) electricity market isn't quite doing the job either. It's hard to argue with them on that.

I'm not engineer but I can get technical about markets: a perfect free market would take care of these variability of supply issues via a robust electricity futures market. But you need something that works like a theoretical perfect market: and to get that you need a very big market with lots and lots of trading and lots of players (a 'highly liquid no-arbitrage' market). The NZ electricity market isn't like that. I'm not sure if the electricity market anywhere is like that - certainly California in 2002 showed that the US electricity market is too small to work well as an unregulated free market.]

Posted by Icehawk : 9/09/2005 11:06:00 AM

Sock Thief: I think they're right on some of the problems - but at the same time they seem utterly blind to a substantial chunk of generation that is being built, and this substantially undermines their position wrt overall security of supply.

The output of windfarms consented just this year exceeds that of the E3P development at Huntly they view as New Zealand's last power station. It's twice as much as comes out of Whirinaki. There are windfarms in the consents process which are bigger than many of our existing hydro developments- but to these people, stuck in the big dirty egg thinking of the 70's, none of this exists. We are more than meeting our annual demand growth - the problem is getting the power to the right places (and incentivising the market to provide a surplus rather than a perpetual, highly profitable shortage) - not that we won't have enough electricity to go round.

Posted by Idiot/Savant : 9/09/2005 11:14:00 AM

Icehawk: yes. But where they express concerns about a lack of over-capacity, they talk solely in terms of E3P (the only "old-style" generator currently under construction), and seem to pretend nothing else is being built. And that is simply blindness.

I think they're entirely right on the problems with the market, BTW.

Posted by Idiot/Savant : 9/09/2005 11:36:00 AM


We agree that I/S is wrong, but you're being unfair to him. He's tackling their ideas, not personally attacking them.

The only ad hominem I see is your claim that if John Noble is involved in the other side of the debate then Idiot must be wrong. That's not a piece of logic that sways me.

Posted by Icehawk : 9/09/2005 12:52:00 PM

And now to both agree and disagree with Sockie:

The problem is that wind supplies are variable. So if you get paid for each kilowatt you generate they're great: but if you want a system under which producers to get sufficient incentives (ie get paid) to guarantee supply then a single wind farm is not so good.

But risk is about probability. There's a logical leap these 'concerned engieers' are making from "each plant has variable supply" to "so wind power doesn't help guarantee supply". While you do get the odd windless day at the spots they're building the turbines, you're incredibly unlikely to get a windless day across the whole country. To get a true picture of your certainty of supply you'd need to do some fancy modelling looking at correlations in variability across the different generation sites and technologies.

So I think they're overly pessimistic about wind.

OTOH the free market isn't going to do that sort of risk modelling either, unless you had an electricity market much more sophisticated than the one we actually have. So you need some central authority worrying about this.

Posted by Icehawk : 9/09/2005 01:06:00 PM

Icehawk: more importantly, while there's day-to-day variability in the wind, New Zealand is quite lucky to have relative stability - to the extent that our windfarms run at almost the same capacity (actual / potential GWh) as our hydro plants.

There is a problem with short-term variability; the output from a windfarm fluctuates with the wind, and this can be in terms of minutes. But there's already some protection in the grid against this, and longer-term some of it is likely to be solved with microforecasting, which would allow other capacity to be switched in to plug short-term gaps.

Posted by Idiot/Savant : 9/09/2005 01:34:00 PM

energy production needs to grow faster than energy consumption - for one thing, amongst others, we are suposed to be displacing carbon fuel consumption.
More wind farms, more hydro plants (especially huge ones) and so forth all sound good. It is good for our BOP anyway.

Posted by Genius : 9/09/2005 06:48:00 PM