The new fad for hydrogen as a renewable energy in New Zealand may be some time off being economic, according to a major energy company.
The website Sharechat said Genesis Energy Ltd (NZX & ASX: GNE) told politicians yesterday that hydrogen may be the ideal fuel to provide dry-winter power supplies but it may not be economic before 2030.
Genesis Energy plans to stop using coal at its dual gas and coal-fired Huntly plant in all but emergency situations by 2025, and altogether by 2030.
Sharechat, utilising the BusinessDesk reporting service quoted Genesis chief executive Marc England as saying the Huntly coal stockpile is currently the only means the country has of meeting a potential 3,000 gigawatt-hour generation shortfall each winter if hydro lakes are low.
Hydrogen is a potential replacement, given it is relatively cheap to store, and particularly if it can made through renewable processes, he said. Unfortunately, it is uneconomic right now.
“That’s the one fuel that could provide that 3,000 GWh of seasonal backup in New Zealand in the longer-term,” England told Parliament’s transport and infrastructure select committee.
“It may not be as soon as 2030.”
Sharechat said meeting winter power demand – particularly in a dry-year – is the single biggest challenge to the Government’s calls for a 100% renewable generation system by 2035.
Some in the Labour-led coalition have reportedly also promoted a ban on further gas-fired generation, despite the sector being more than 80% renewable now and contributing only about 5% of the country’s emissions.
Several hydrogen pilots are getting underway in different parts of the country and NZ Resources last week quoted the initiative of Ports of Auckland to create a hydrogen plant.
Genesis is NZ’s biggest thermal generator and also operates three hydro schemes. It has a small wind farm in Wairarapa and has partnered with Tilt Renewables to develop a 100 MW wind farm at Waverley on the southern Taranaki coast.
But, said Sharechat, it is the firm’s ability to burn either coal or gas in the ageing Rankine turbines at Huntly that makes its operation central to security of national power supplies.
The coal stockpile provides ample flexibility to generate when lakes are low, when gas supplies are interrupted, or during other system emergencies.
The two 250 MW units have been running hard on imported coal the past two months due to the recent shutdown of part of the Pohokura gas field.
The parliamentary committee heard that in the year through June, more than 80% of that flexible supply was sold to other power retailers and major users.
“Everyone depends on Huntly, not just the Genesis customers,” England said.
The company is not acting recklessly and declared its intention to stop using coal early so that the industry has a whole could respond.
“Right now we don’t have a solution. At the moment there is no alternative to that coal stockpile, but we believe as an industry and a country we’ve got 12 years to work it out.”
In response to questions, England said New Zealand has plenty of wind and geothermal generation options to meet demand if electrification of transport and industry takes off.
But, he said, NZ needs to look at all its options if it is to decarbonise its generation industry.
He said over-building renewable supplies to reduce dry-year risk would put more cost onto customers.
Gas also remains important, and the Government’s recent ban on new offshore exploration will probably flow into higher gas and electricity prices as local supplies dwindle.
Prices would then tend to rise toward parity with imported gas. While the timing of that is hard to pick, England said that price pressure could become evident in the mid-2020s.
Sources: sharechat.co.nz; businessdesk.co.nz