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Energy in New Zealand 2015

Each year, the MBIE publishes a report called Energy in New Zealand.* Energy is a crucial input in all parts of our lives, powering our transport and our cities. MBIE’s report starts with an infographic showing various energy facts and figures:

EiNZ infographic

To pick up on one fact in this infographic, solar PV (photovoltaic, i.e. solar panels) generation in New Zealand is now equivalent to the demand for all the households in the Kaikoura District. This might be impressive, if not for the fact that Kaikoura only has around 1,500 households, about 1% of the nationwide total (and a much smaller share of our total electricity demand, which also includes demand from business, industry etc).

Electricity

As we’ve covered many times, New Zealand is great at making electricity – and one of the top countries for renewable electricity generation. This is driven by our strong hydro resources, with geothermal and wind playing growing roles.

EiNZ electricity CORRECTED

GWh = gigawatt-hours, a unit of energy. The graph in the report was labelled wrongly – I’ve fixed this up with the Excel data.

2014 was a good year for renewable generation – which varies from year to year depending on rainfall and wind – and almost 80% of all electricity came from renewable sources, the best result since 1996. These results were inevitably trumpeted by the Minister, who has actually done very little to influence those figures. Such is politics, but the government should be doing more to encourage renewables.

The other interesting trend from this graph is that total generation has been very flat for almost a decade. That’s partly because we’re using power more efficiently, and partly due to economic factors – industrial users (e.g. the smelter in Tiwai Point) and businesses are big power users, so changes in their activity can make a big difference to demand.

Electricity prices have also continued to rise, as I’m sure we’ve all noticed – up 3.8% for the year to March 2015, despite flat demand and very little inflation in the wider economy. However, these prices are still pretty reasonable to what people pay across the OECD – there’s a lot of variation between countries, but we’re just slightly above the OECD average on a ‘purchasing power parity’ basis.

Transport

There’s actually not much written on transport in the Energy in New Zealand report. However, consumption of oil products like petrol and diesel is mostly due to transport demand, so let’s take a look at that.

EiNZ oil gas

Petrol demand is still down on where it was in the mid-2000s, while diesel demand (mainly from commercial vehicles – trucks, vans and so on) has risen. As a quick factoid, the report estimates that buses use 4% of NZ’s transport diesel, and trains use 3% – those stats are for 2013, and will presumably drop now that Auckland’s passenger trains have been electrified.

The graph below shows ‘real’ (i.e. adjusted for inflation) prices for petrol and diesel over the last 40 years, showing that prices have fallen somewhat in the last year, and are lower than they were during the early 1980s.

EiNZ petrol diesel prices

There’s another graph in the report which shows that NZ has fairly cheap petrol prices by OECD standards – only Australia, the US, Canada, Luxembourg and Switzerland are cheaper. We’ve got cheap diesel, too, but that’s largely because diesel vehicles pay Road User Charges rather than being taxed at the pump.

“Energy Intensity”

Some quick thoughts on “energy intensity”, since it’s a topic close to Patrick’s heart. This is a measure of the energy used to create each unit of gross domestic product (GDP) – essentially, how much energy is needed to create a dollar’s worth of economic value.

According to the MBIE, “the overall energy intensity of the economy has improved in real terms by an average rate of 1.1% per annum” between 1990 and 2014, and now sits at 2.7 megajoules per dollar. This is ‘real’ improvement, i.e. adjusted for inflation.

This sounds good, but as the MBIE continues, “the most significant factor in this… has been the rapid growth of the commercial sector (low energy intensity) relative to the industrial sector (high energy intensity)”. That is, much of the improvement is just because our economy now looks different to 25 years ago, with less industry and more services.

EiNZ intensity

Some people have pointed out that by switching to more “commercial”, service-based industries and importing manufactured goods instead, we’re simply outsourcing our energy use (or greenhouse gas emissions) to other countries. That’s true, but not a question with an easy answer. We can talk about ‘decoupling’ our economy from expensive and environmentally damaging energy use, but we haven’t actually gotten very far on it yet.

Where we can get a lot more efficient with our energy use is in transport. We can encourage public and active transport, and more efficient cars, and eventually electric vehicles. We shouldn’t do this just for the sake of it, and it’s not about the energy itself. Saving energy is a means to an end – reducing greenhouse gas emissions, or saving costs (e.g. of importing or producing the energy). So the thing to do is find cost-effective ways of achieving these goals.

* Follow the link for the report itself, as well as Excel tables if you want to see more of the stats in the report.

34 comments to Energy in New Zealand 2015

  • John Polkinghorne

    Forgot to mention it in the post, but another thing I always find fascinating is that the average Kiwi household uses less electricity than it did in the 70s, even though we now use a lot more appliances, more electric heating (and heat pumps), have larger houses, etc. There will have been some big efficiency gains in that time.

  • Ari

    I’ve always thought that if we switched to locally sourced biofuels then it would have a huge benefit of keeping our money in the country instead of sending it overseas. And the CO2 absorption/emission would mostly balance out thus reducing our current emissions. We could use hemp, algae, grasses, other industrial waste products that we are already using etc. But I think fossil fuel is too cheap. Combine this with investment into PT and electric cars and could make better use of NZ’s unique energy situation.

    • wsomc

      Biofuel is tricky because of the sheer amount of land needed. In many places they are cutting down forests to produce biofuel, which actually makes us worse off, because the CO₂ savings are offset by the loss of forest. And then there’s also the entire feed people vs. feed cars debate.

      • Ari

        I agree. It would only work for NZ with lots of marginal land, temperate conditions and low population. Not many countries like that. Also it needs to be profitable without subsidies otherwise it won’t be worth it.

    • Jacques

      Biofuels work well when they help recycle a waste stream, usually from intensive pork or cattle farms.

  • Bruce

    As I suspected the margin the petrol companies are making on premium fuel is at an all time high compared to the price of regular petrol.
    Most European Cars and about half of new Japanese cars need premium rather than regular petrol (due to engines having higher compression ratios to get more power and better fuel economy for each unit of fuel).
    The petrol companies get away with this as they no longer advertise the price of premium on their main board (I would like to see it legislated that both grades of petrol along with diesel be shown on the main board). They know that a lot of people driving these vehicles tend to be wealthier so they can fleece them for more $$.
    This of course negatively impacts on the type of vehicle people purchase if they take into account the additional costs of premium petrol (currently about 20c per litre than regular….traditionally it has been between 5-10c per litre more) and so we have less cars on the road of the economical variety.

  • Ted F

    I really appreciate this information!
    Is there a case for a legislated feed in tariff from small home based generation?

  • Jacques

    One interesting outtake from this is that this shows how green our electricity generation system is, with a very low emission intensity of ~130gCO2/kWh. That is, it is a lot greener than solar power systems (grid-connected or not) when they (solar panels + batteries) are made in China. The economical argument is another thing, but solar power is not a green option in NZ, it’s worse for the environment than using power off the grid.

    • Nathanael

      Not correct. Because solar is replacing natural gas and coal power.

      Even during a time period when all the gas and coal plants are turned off, and solar is replacing hydro, this means the hydro reservoirs stay full and can produce power at night, displacing natural gas and coal.

      You have to look at the *marginal* unit of energy generation, not the *average* one. Solar is valuable because it’s displacing the remaining coal and natural gas. Once you get rid of all of that, then you wouldn’t want to put in more solar, yes.

      • Jacques

        I don’t agree with that: solar doesn’t only displace thermal generation. it displaces a variable mixture of renewables and thermal and the periods where it only displaces thermal energy are likely to be very short (of the order of value of the durations when peaker plants are run). It’s worth exploring in a bit of detail, but I doubt there is any chance that solar would be greener than the current grid at the moment. Also, looking at emissions, solar power actually emits just under half of what a recent gas peaker plant does per unit of energy produced, when accounting for the carbon cost of producing the panels+batteries, when grid-connected. one complexity there is that the battery capacity and technology is a variable that has a big impact on the emissions profile of the system. One thing is for sure though: if solar panels and batteries could be fully made here (are there any?), the emissions profile would drop and it’d be a very clean way of producing energy.

  • Lloyd c

    With the Otahuhu gas fired station being shutdown the gas consumption should drop even further, I’m also starting to see alot more of the little Prius C’s around too now that $2+ per litre petrol prices are here to stay.

  • Bryan Sellars

    I can’t see any alternative to public transport and a move back to rail, any quick look at the worlds energy supply makes me realize how vulnerable we are, we’ve seen a population explosion in the oil producing countries and now with their oil fields starting to deplete. less oil is available to export, probable part of the problem in Syria and definitely a problem in Egypt.
    I don’t see electric vehicles as the answer unless it’s along the lines of something akin to a velomobile, the infrastructure for roads is to demanding on energy, unless they come up with some wonderful materiel that can replace tarmac, then there’s the amount of oil the world would need to convert the car fleet to electric, if the sample of electric cars are on the lines of some of the ridiculous options I have seen displayed, they go from gas guzzlers to energy hungry electric cars with monster batteries, we need to curb our pollution, not add to it if we want a world for our kids.

    • Nathanael

      Walking, public transportation, bicycles, are all clearly better than electric cars. *However*, electric cars are still a huge improvement over petrol or diesel cars, and here’s way.

      Electric motors are roughly 98% efficient. The batteries are roughly 80% efficient (“round trip” charging and discharging). Distribution & transmission of electricity is about 95% efficient.

      The *best* internal combustion engines are only *20%* efficient. Gasoline cars are wasting well over 80% of their fuel — turning it into heat. And this is before we consider the substantial losses in refining (<80% efficient) and distribution (petrol delivery trucks etc).

      Just by *not wasting energy*, we save a vast amount of energy with electric cars. (Even if the electricity was generated by *oil*, we'd be saving energy, because big oil-powered electrical generators are 50% efficient.)

      The Tesla Model S ("85" variant) goes 265 miles (426 km) on a full charge. A full charge has energy equivalent to 2.5 gallons (9.5 liters) of gasoline. What's the last time you saw someone drive 426 km on 9.5 liters of gasoline? Never?

      I should also point out that the benefits are even greater for buses. Electric buses don’t need to idle, and they regain energy when slowing down. So they are much much *much* more efficient than diesel buses.

      • RB

        Quality electric cars (Tesla is currently the best) and solar tied to storage (Tesla Powrerwall coming) seem the best bet for the future. Europe and areas of the states (Hawaii etc) are right into this. It is the future and largely self manageable once you have bought initial gear and vehicle

  • Anthony McBride

    Would be even better if the NIMT Line gets entirely electrified and more progress towards insulation regulations enforcing landlords and homeowners to fix up their shoddy houses.

  • Local resident

    NZ may be blessed with lots of Hydro potential, but if we were to switch the transport fleet from fossil fuels to electric, we would not have enough sustainable power generation to cope with demand. This is a problem for all countries and the reason why EV’s as they are today, are just a side show in the long term transport fuels future. Eventually Hydrogen will power road transport, either as a liquid fuel for ICE, or as a power supply for second generation EV’s.
    For the foreseeable future (and I mean all of our lives), conventional and tight oil will power NZ and the global transport fleet. Oil is cheap – really cheap – and there is plenty of it. NZ is not at risk of being unable to source energy, we are at risk of the US dollar appreciating against the Kiwi dollar, as pretty much all energy is traded in USD.
    The obvious answer to NZ’s energy security is to encourage more local drilling for conventional oil and Fracking for tight oil.

    • Jacques

      There is still quite a bit of untapped geothermal potential in the central north island, with 2 projects currently in early stage of development (TAOM – http://www.teahiomaui.co.nz/ in Kawerau and Ngawha expansion near Kaikohe). There are also some good geothermal projects that are just waiting for the demand to rise to make the developments economical. These projects are greener and more sustainable than using oil and should be prioritised.

      Bryan Sellar’s comment above is very relevant: whatever the energy source, our transport system needs to become much more energy efficient to become sustainable. That means using bikes, electric bikes, busses, trams, trains or electric busses instead of cars or electric cars. The energy spent per (person commuting*km) or per (kg of payload*km) should be a criterion that guides policy.

    • Nathanael

      This is a common error people make, because they don’t know how incredibly inefficient the internal combustion engine is (the *best* ones are 20% efficient at *best* — an average efficiency is less than 10%). Most of the petrol and diesel is converted to heat.

      If you switch the transportation system to electric, you eliminate the vast majority of the energy usage. Even if you switch it to electric generated by *oil*, you save over half of the energy, because big oil-powered generators are 50% efficient (rather than 10-20% efficient).

      This means that the challenege of generating electricity for the electric cars is much, much smaller than it appears to be. You can fuel the entire electric fleet with less than a quarter of the “primary energy” currently used for the internal-combustion-engine fleet.

      Electric vehicles are definitely going to take over, simply because they are avoiding waste. It’s only a question of bringing down the upfront price of the batteries, which is happening already.

      Hydrogen, unfortunately, is no good; there are comprehensive debunkings of it online. The best theoretical efficiency for renewable generation of hydrogen and use of hydrogen is worse than the batteries we have today, *and* it’s much more expensive.

      • Exactly. It’s coming, and it’s going to be very rapid after the tipping point. ICE is so last century, and hydrogen is not the future. EVs and renewables are going to kill a lot of currently established businesses. Gas stations are already dead; they are the photo-labs of this decade. NZ is perfectly placed to lead this at the energy supply end but we are technology takers on the demand side. We have to wait for EV supply chain to reach us, and it’s not here yet.

    • RB

      Oil, hybrids, hydrogen are all halfway points. Full electric cars and solar panels across entire roofs coupled with lithium storage is the future for motorized transport and housing needs.

      • Bryan Sellars

        I can’t see electric cars being a solution, CO2 would still be a problem for the climate, electric cars need oil to manufacture and the power they use is made from materiel’s that needs oil to manufacture and install whether it’s hydro or wind, if you look at the products we extract from the earth and convert to usable materiel’s oil is the one thing that makes it all possible, you can’t run an electric world without fossil fuel and that’s not a future that’s sustainable.

        • Ricardo

          Bryan, you need to catch up. Don’t want to be rude, but solar will not only power your home but also charge your car. It’s being done right now here and right around the world . No need for oil at all (other than in the plastic components to build the cars which is common across all types of vehicles). When the Tesla Powerwall gets sold here ($3500USD in the US for 10kw storage) complete systems will be so cheap with very short payback periods. Simple maths based on what is currently available in NZ – 20kw systems solar and powerwall (when it gets here) will be around 25kNZD (and will keep getting cheaper). That will power everything you need and you will be totally off the grid. Power companies are already concerned. Our current bill of 400 to 500 a month means payback in less than 5 years. Batteries were always the stumbling block and that is now all changing with Tesla using the same batteries (Li) as in their cars, no voltage drop until close to full discharge. And remember power companies will only keep increasing prices. No brainer for us, will be converting as soon as powerwalls can be imported.

          • Bryan Sellars

            In theory it looks good but you need full sun and room for the panels, we have a 5kw system with 20 panels and it takes up most of the roof, we live near Nelson with full sun all day and some of the highest sunshine hours in the country and our total power out put for last year was 7200kWh, in winter it would take over a week to charge a Tesla battery with nothing left for any thing else, I know the Tesla is going to the extreme but feel cars, what ever they use to power them as wasting energy.
            I did a comparison on mileage between the peddle assist bikes we have and the Tesla 85kWh battery 426km against 7000km no pedaling with a bit of peddling it would be double. I see battery powered buses that can run all day on a charge as a better option.

  • JeffT

    I wish we were’t using up our depleting natural gas resource for energy production. Couldn’t it be better stretched out for household or industrial use?

  • Ted F

    I feel we should encourage the use of local energy production whether it be by Solar Panels, Pelton wheel, or smaller backyard Dynamo’s and wind by setting realistic feed in tariffs based on the cost of producing that energy in the energy farms that the Electricity Companies are talking about building. it will all add to the common pool and increase resilience.

  • Ted F

    What are the grid losses for electricity transfer and are the benefits for roof powered soalr for the s

  • Ted F

    Are benefits of roof powered solar able to offset some of the air conditioners that are installed in most of our new buildings? (The air conditioners seem to be used a lot during summer for new buildings which match peaks for solar and would reduce transmission losses).

    • Bryan Sellars

      We have a 5kw solar system fitted and it easily keeps the house cool in summer when we use the heat pump on cooling.
      In the middle of summer we get 37kw per day so easily runs the heat pump with plenty to spare.

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