Yes, true and disturbing that the massive power schemes that NZ is utterly reliant on today are, effectively, impossible to replicate under the current fragmented, commercialised model. Development at scale carried out by the old, can-do government combo of NZED and MOW are beyond the outer limits of plausability with the current mare's nest of equity stakeholders, bean counters, and genuflecting protocols around transparency, accountability, resilience and 'best practice'.
Gone are the innocent days when MOW Ceasars could go in and set up purpose-built camps and towns, marshall a thousand bulldozers and create an energy surplus El Dorado for future kiwis. Think Upper and Lower Waitaki (8 power stations, Twizel etc, supremos Roland Packwood and Max Smith), Tongariro scheme (Turangi, Warren Gibson, Dekker, Natusch), Huntly Thermal (Hugh Robertson), Clyde high dam (new Cromwell, Terry Storey). Can you imagine schemes at scale underwriting our energy future like that today? Beyond preposterous.
Hi Tony, yes there is so much organizational and societal complexity there is no way we could dream of these projects today. Yet somehow, we consider this progress. When I was writing this piece it struck me how fast things were from concept to commissioning in the NZED / MOW days. Today we barely get to the RMA hearings stage in the same timeframes. When looking for solutions to our energy problems it is relatively easy to identify technical solutions it is much harder to identify regulatory solutions.
Thse Ceasars also built international standard rowing facilities on the side to the consternation of the politicians. Hence of course, our superiority in rowing
I remembered the name Phil Blakeley, the time when NZ was run by engineers; along with the Commissioner of the Works. The hydro power stations built by these guys have an energy return EROI well over 100 and growing with time.
Then Lange/Douglas, followed by Bradford decided we didn't need Engineers anymore. Same with Local Bodies who got rid of the technical experts on the 3 waters, clean, sewage and surface water.
The money men run the system now into the ground; the gravy train deep state run by useless politicians, the bureaucrats, the NGOs. Similar overseas except for Trump who is stopping it.
Hi Don, yes hence my comments on Cobb Douglas and Leontief economic models and energy blindness. The myth that the market can overcome physics is prevalent in our current political thinking.
Two physicists debunk the Renewables BS. Mark P Mills and Kathryn Porter, check their podcasts. I've never heard a NZ physicists teacher debunk the Renewables, despite they are unaffordable (adding more debt), and produce insecurity and instability on the Grid as seen in Spain and Portugal.
Yet to see any Energy Gentailer or Transpower understand the urgent need for new gas turbines powered by imported Natural Gas or Kerosene.
Gas turbines were brought in mid 1970s, because New Plymouth power station construction was delayed. There was a blackout in 1973 or 1974. The purchase was supported by Kirk or Rowling. The chief of NZED was Phil something..
In 1973 I was a power supply authority chair. In those years Kapuni was considered nigh limitless. My Council approved the Port Hills LPG pipeline. My Council challenged Muldoon putting the price of electricity up 60% overnight to pay for the pension Albatross that has made NZ a borrower not a lender.
The first thing this government did was kill the decision to send Comalco home and paid them (ConZinc RioTinto) $100k as a carbon credit incentive. Take Comalco out and NZ has an hydro electricity surplus
NZ may yet be dragged kicking and screaming into the nuclear age. Another secret from my personal history. There is a nuclear reactor of sorts buried in the hill next to the DSIR campus in Petone. Is it still called DSIR? The tech who looks after it, (it's actually a particle accelerator used to create radioactive isotopes for medical uses), was a member of the Ham club I belonged to 21 years ago.
Psst. Canadian here. Meet me in the alley out back and I’ll sell you natural gas way cheaper. And for no extra cost I’ll include Aboriginal buy-in and partnerships. Just throw in a nice bottle of Sauvignon blanc, ok?
I agree with most of what you say but disagree with the root cause. Wanting generation at $50:Mwh when it hasnt cost that to build and produce in decades is crazy. The think big hydros will never pay for themselves with a 15-21c/kWh LRMC (50 year life) let alone allow a 5cent energy price.
A tweak to the market could have dealt with the "just in time" Problem though I never felt it was a problem as we all knew that energy would be delivered, even if not so soon it would collapse the price and push people out of profitability.
The big issue from my perspective is the climate change myth. It's business suicide for any of the generators to build the cheapest type of generation - being coal (and previously gas). The captains call just finished it. Can you imagine the labour PR machine if say Mercury decided to build a 1000 MW coal station. It could be the cleanest in the world but they would lose half their customers in no time.
Apologies, the $50/MW wholesale electricity price needs more explanation. For a start this is very much aspirational. However, this is where we would need to be to offer our industries rates that are competitive with much of North America for example. The reason I use this is that the industries that have suffered the most are forestry products that this is their main competitor market. To do more than just bulk log exports we need similarly priced electricity and gas to be competitive given our distance from the market. Getting data for BC is hard but Ontario for example is ~$29, PJM $30-40, MISO $25-35.
There is a lot of things built into our market pricing that need to be challenged. ETS and $180M for reconsenting the Waitaki hydro schemes come to mind as immediate examples.
I agree with you on coal. There are really only a few options that scale well, integrate with existing transmission infrastructure without adding complexity, and are reliable and dispatchable. These are gas, coal, hydro, nuclear and geothermal. NZ in the short term only has coal and geothermal options unless we can get more gas out of the ground. Geothermal is somewhat of an enigma to me. Much is made of its potential and with market conditions such as they currently are why are there not half a dozen rigs poking holes in the central plateau? A topic for another post.
I struggle with your requirement that solutions must “integrate with existing transmission without adding complexity, and are reliable & despatchable”. Yes, this is a requirement for grid scale demand so how about we cut off a significant chunk of demand via distributed generation doesn’t that open up a whole new range of solutions?
Hi Stephen good comment, yes that is another way to approach the problem and potentially a good one for certain applications. I assume you are meaning small networks within networks or off grid residential self supplied systems?
My comment was that grid scale intermittent sources add complexity to the grid which can result in the grid upgrades being as expensive as the generation essentially doubling the costs.
My reasoning being that the inaction by the Gentailers & politicians means that they are abrogating their responsibilities to provide ‘the people’ with access to cheap & reliable energy. The first to go will be cheap closely followed by reliable. This could be avoided with a little honesty (as in the Bradford reforms screwed you over, the lack of gas means no easy out and our climate commitments restrain everyone further) followed by some assistance to go it alone. Solar panel subsidies like most countries. Home battery support aka Aust or Community Battery support aka Aust. Make half the homes (& small businesses) in NZ largely self generating and it buys time to solve the questions you are pondering.
I wonder if anyone has modelled how much of the inflows into the southern lakes over recent years has been due to glacier retreat in the face of global warming as opposed to current year snow melt. Even if only a small %age it risk over estimating the mean.
Another plug for Small Modular nuclear Reactors :) They are so safe that can be literally in neighborhoods, or at least within a kilometer of the subdivisions they serve. Think, buried in a hill at the side of the Hutt Valley, serving the Valley, Wellington, and Porirua. Almost no new distribution other than a couple of short trunks to the existing substations.
Come on! I know loads of people who would switch power companies if their company built a coal power station. And the greens/labour would run a campaign to help people do it.
Very true diagnosis. Why is energy (escalating price and diminishing availability) never mentioned in discussion of New Zealand’s poor and deteriorating productivity? Fixing energy reliability and affordability would contribute to improved productivity by the analysis you are presenting. But productivity experts just trot out cases for greater R&D, subsidisation of venture capital, etc
Hi Mac I think about this a lot. My conclusion is that productivity experts are general from an economics background.
To illustrate this let's have a look at the CDPF (Cobb Douglas Production Function) work done by Steve Keen which I only stumbled across recently and really highlights this for me.
Note that this will be within the formatting limitations of this dialogue box so the formula will not be technically correct, but it is close enough for the purpose of what I'm trying to express.
GDP (Y) is a product of the total factor productivity (A) labour (L) and capital (K) which are all functions of time (t). The approximated formula looks like this:
Y(t) = A(t) x L(t) x K(t)
Nowhere in that does energy appear. When energy is added as the master resource it looks much different.
Y = (EL x eL) x (EK x eK) x (L x K)
Here the total productivity factor is replaced by the energy used by labour EL x the energy efficiency eL and the energy used by capital EK x the energy efficiency eK.
Obviously, labour is constrained to about a maximum of 600KWh / day (the max the average person can output in an 8 hour day) by the amount of energy you can put into a machine is huge (EK).
So, the answer to NZ productivity is have an abundance of cheap energy which will attract capital in the form of machines to do work.
Good stuff. One point which i am not convinced about is that reverting to pre mid 1990’s structure (ie pre “Bradford reforms”) would address the core problem. My childhood memories of the Ministry of Works and NZED rolling out the Waitaki dams apparently efficiently; returning to New Zealand after 10 years in the late 1980’s, they were held responsible for the Clyde project seen as a fiasco at the time with repeated cost escalation and delays. Our generators have invested a lot in new facilities to be fair, especially geothermal and wind. The retirement of energy efficient gas combined cycle base load power plants may be partly due to depleting gas supply but also government policies and pressure from financiers, on power companies and also their fuel suppliers, all wanting to be seen buying in to decarbonisation. With more pragmatic political and market sentiment might the generators (and upstream suppliers) take more effective paths?
Thanks Mac yes I would not want the Government to run a consolidated entity. An O&M arrangement would be better with a set of KPI's. The key objective of this would be to create an entity that can investment at scale be it geothermal and potentially a pathway to nuclear.
I think the concerns over the availability of gas is the key driver. Nova were planning a gas plant at Otorohanga but sited low gas as a decision not to proceed after they got the consent.
Nothing like starvation to focus the mind, but sad that it is coming to that. I grew up in the "Kiwis can do anything" era and still live that way, albeit in the US. My uncle surveyed the bypass tunnel for Benmore. I almost landed a job developing instrumentation for the MOW to monitor Manipouri which had some issues with the ground stability/strength that were only discovered after the dam was built.
Societal complexity. I think a lot about the Lotka's wheel model. Its not just a thermodynamic model but also adequately models government, both central and local, replace energy with money, waste with bureaucracy and surplus translates to more government. This is why we can no longer build anything of significance.
Thanks for that. It was a fun multidimensional rabbithole. I had not heard of Lotka's wheels before, or about the woman who compiled the data - essentially the Chief Statistician at the US Census Bureau, but women could not be given leadership titles back then.
Yeah, was probably Clyde that had the substrate stability problems reading all of this. It was 40 years ago, and my memory isn't always the best nowadays.
Not happening. Insects don't taste as good, and it's is easy to absolutely destroy the rationale for claiming ruminants are destroying the climate. The grass they eat was atmospheric CO2 only 6 weeks ago. Methane does not actually persist for long in the atmosphere since it is highly reactive. Boom!
Yes, true and disturbing that the massive power schemes that NZ is utterly reliant on today are, effectively, impossible to replicate under the current fragmented, commercialised model. Development at scale carried out by the old, can-do government combo of NZED and MOW are beyond the outer limits of plausability with the current mare's nest of equity stakeholders, bean counters, and genuflecting protocols around transparency, accountability, resilience and 'best practice'.
Gone are the innocent days when MOW Ceasars could go in and set up purpose-built camps and towns, marshall a thousand bulldozers and create an energy surplus El Dorado for future kiwis. Think Upper and Lower Waitaki (8 power stations, Twizel etc, supremos Roland Packwood and Max Smith), Tongariro scheme (Turangi, Warren Gibson, Dekker, Natusch), Huntly Thermal (Hugh Robertson), Clyde high dam (new Cromwell, Terry Storey). Can you imagine schemes at scale underwriting our energy future like that today? Beyond preposterous.
Hi Tony, yes there is so much organizational and societal complexity there is no way we could dream of these projects today. Yet somehow, we consider this progress. When I was writing this piece it struck me how fast things were from concept to commissioning in the NZED / MOW days. Today we barely get to the RMA hearings stage in the same timeframes. When looking for solutions to our energy problems it is relatively easy to identify technical solutions it is much harder to identify regulatory solutions.
Thse Ceasars also built international standard rowing facilities on the side to the consternation of the politicians. Hence of course, our superiority in rowing
I remembered the name Phil Blakeley, the time when NZ was run by engineers; along with the Commissioner of the Works. The hydro power stations built by these guys have an energy return EROI well over 100 and growing with time.
Then Lange/Douglas, followed by Bradford decided we didn't need Engineers anymore. Same with Local Bodies who got rid of the technical experts on the 3 waters, clean, sewage and surface water.
The money men run the system now into the ground; the gravy train deep state run by useless politicians, the bureaucrats, the NGOs. Similar overseas except for Trump who is stopping it.
Hi Don, yes hence my comments on Cobb Douglas and Leontief economic models and energy blindness. The myth that the market can overcome physics is prevalent in our current political thinking.
Not the market. The fantasies of the elitists. They are not elite, they just fancy themselves.
Two physicists debunk the Renewables BS. Mark P Mills and Kathryn Porter, check their podcasts. I've never heard a NZ physicists teacher debunk the Renewables, despite they are unaffordable (adding more debt), and produce insecurity and instability on the Grid as seen in Spain and Portugal.
Yet to see any Energy Gentailer or Transpower understand the urgent need for new gas turbines powered by imported Natural Gas or Kerosene.
Gas turbines were brought in mid 1970s, because New Plymouth power station construction was delayed. There was a blackout in 1973 or 1974. The purchase was supported by Kirk or Rowling. The chief of NZED was Phil something..
In 1973 I was a power supply authority chair. In those years Kapuni was considered nigh limitless. My Council approved the Port Hills LPG pipeline. My Council challenged Muldoon putting the price of electricity up 60% overnight to pay for the pension Albatross that has made NZ a borrower not a lender.
The first thing this government did was kill the decision to send Comalco home and paid them (ConZinc RioTinto) $100k as a carbon credit incentive. Take Comalco out and NZ has an hydro electricity surplus
NZ may yet be dragged kicking and screaming into the nuclear age. Another secret from my personal history. There is a nuclear reactor of sorts buried in the hill next to the DSIR campus in Petone. Is it still called DSIR? The tech who looks after it, (it's actually a particle accelerator used to create radioactive isotopes for medical uses), was a member of the Ham club I belonged to 21 years ago.
Thats a great little nugget of history thanks Evan!
Talk to The Donald and get a shipment of Natural Gas imported into New Plymouth.
Psst. Canadian here. Meet me in the alley out back and I’ll sell you natural gas way cheaper. And for no extra cost I’ll include Aboriginal buy-in and partnerships. Just throw in a nice bottle of Sauvignon blanc, ok?
I agree with most of what you say but disagree with the root cause. Wanting generation at $50:Mwh when it hasnt cost that to build and produce in decades is crazy. The think big hydros will never pay for themselves with a 15-21c/kWh LRMC (50 year life) let alone allow a 5cent energy price.
A tweak to the market could have dealt with the "just in time" Problem though I never felt it was a problem as we all knew that energy would be delivered, even if not so soon it would collapse the price and push people out of profitability.
The big issue from my perspective is the climate change myth. It's business suicide for any of the generators to build the cheapest type of generation - being coal (and previously gas). The captains call just finished it. Can you imagine the labour PR machine if say Mercury decided to build a 1000 MW coal station. It could be the cleanest in the world but they would lose half their customers in no time.
Hi Louise, great comment thanks!
Apologies, the $50/MW wholesale electricity price needs more explanation. For a start this is very much aspirational. However, this is where we would need to be to offer our industries rates that are competitive with much of North America for example. The reason I use this is that the industries that have suffered the most are forestry products that this is their main competitor market. To do more than just bulk log exports we need similarly priced electricity and gas to be competitive given our distance from the market. Getting data for BC is hard but Ontario for example is ~$29, PJM $30-40, MISO $25-35.
There is a lot of things built into our market pricing that need to be challenged. ETS and $180M for reconsenting the Waitaki hydro schemes come to mind as immediate examples.
I agree with you on coal. There are really only a few options that scale well, integrate with existing transmission infrastructure without adding complexity, and are reliable and dispatchable. These are gas, coal, hydro, nuclear and geothermal. NZ in the short term only has coal and geothermal options unless we can get more gas out of the ground. Geothermal is somewhat of an enigma to me. Much is made of its potential and with market conditions such as they currently are why are there not half a dozen rigs poking holes in the central plateau? A topic for another post.
I struggle with your requirement that solutions must “integrate with existing transmission without adding complexity, and are reliable & despatchable”. Yes, this is a requirement for grid scale demand so how about we cut off a significant chunk of demand via distributed generation doesn’t that open up a whole new range of solutions?
Hi Stephen good comment, yes that is another way to approach the problem and potentially a good one for certain applications. I assume you are meaning small networks within networks or off grid residential self supplied systems?
My comment was that grid scale intermittent sources add complexity to the grid which can result in the grid upgrades being as expensive as the generation essentially doubling the costs.
My reasoning being that the inaction by the Gentailers & politicians means that they are abrogating their responsibilities to provide ‘the people’ with access to cheap & reliable energy. The first to go will be cheap closely followed by reliable. This could be avoided with a little honesty (as in the Bradford reforms screwed you over, the lack of gas means no easy out and our climate commitments restrain everyone further) followed by some assistance to go it alone. Solar panel subsidies like most countries. Home battery support aka Aust or Community Battery support aka Aust. Make half the homes (& small businesses) in NZ largely self generating and it buys time to solve the questions you are pondering.
I agree and that may be a necessity if we don’t start getting some rain in the hydro lake catchments.
I wonder if anyone has modelled how much of the inflows into the southern lakes over recent years has been due to glacier retreat in the face of global warming as opposed to current year snow melt. Even if only a small %age it risk over estimating the mean.
Another plug for Small Modular nuclear Reactors :) They are so safe that can be literally in neighborhoods, or at least within a kilometer of the subdivisions they serve. Think, buried in a hill at the side of the Hutt Valley, serving the Valley, Wellington, and Porirua. Almost no new distribution other than a couple of short trunks to the existing substations.
Geothermal is a lot harder than it looks. Much fantasy surrounds the alternative energy thinking on geothermal. Corrosion is a big deal.
Yes H2S and CO2 a metallurgical nightmare do make.
Maybe. People change their minds quickly when no power some of the time becomes a real option. Roger Pielke has an iron law of energy to that effect.
I doubt they would lose any customers, most people just want cheap reliable power. But agree there would howls of anguish
Come on! I know loads of people who would switch power companies if their company built a coal power station. And the greens/labour would run a campaign to help people do it.
Very true diagnosis. Why is energy (escalating price and diminishing availability) never mentioned in discussion of New Zealand’s poor and deteriorating productivity? Fixing energy reliability and affordability would contribute to improved productivity by the analysis you are presenting. But productivity experts just trot out cases for greater R&D, subsidisation of venture capital, etc
Hi Mac I think about this a lot. My conclusion is that productivity experts are general from an economics background.
To illustrate this let's have a look at the CDPF (Cobb Douglas Production Function) work done by Steve Keen which I only stumbled across recently and really highlights this for me.
Note that this will be within the formatting limitations of this dialogue box so the formula will not be technically correct, but it is close enough for the purpose of what I'm trying to express.
GDP (Y) is a product of the total factor productivity (A) labour (L) and capital (K) which are all functions of time (t). The approximated formula looks like this:
Y(t) = A(t) x L(t) x K(t)
Nowhere in that does energy appear. When energy is added as the master resource it looks much different.
Y = (EL x eL) x (EK x eK) x (L x K)
Here the total productivity factor is replaced by the energy used by labour EL x the energy efficiency eL and the energy used by capital EK x the energy efficiency eK.
Obviously, labour is constrained to about a maximum of 600KWh / day (the max the average person can output in an 8 hour day) by the amount of energy you can put into a machine is huge (EK).
So, the answer to NZ productivity is have an abundance of cheap energy which will attract capital in the form of machines to do work.
Which is where I was going when I wrote this. https://newzealandenergy.substack.com/p/field-of-dreams?r=ubsbu
Good stuff. One point which i am not convinced about is that reverting to pre mid 1990’s structure (ie pre “Bradford reforms”) would address the core problem. My childhood memories of the Ministry of Works and NZED rolling out the Waitaki dams apparently efficiently; returning to New Zealand after 10 years in the late 1980’s, they were held responsible for the Clyde project seen as a fiasco at the time with repeated cost escalation and delays. Our generators have invested a lot in new facilities to be fair, especially geothermal and wind. The retirement of energy efficient gas combined cycle base load power plants may be partly due to depleting gas supply but also government policies and pressure from financiers, on power companies and also their fuel suppliers, all wanting to be seen buying in to decarbonisation. With more pragmatic political and market sentiment might the generators (and upstream suppliers) take more effective paths?
Thanks Mac yes I would not want the Government to run a consolidated entity. An O&M arrangement would be better with a set of KPI's. The key objective of this would be to create an entity that can investment at scale be it geothermal and potentially a pathway to nuclear.
I think the concerns over the availability of gas is the key driver. Nova were planning a gas plant at Otorohanga but sited low gas as a decision not to proceed after they got the consent.
Sober reading Larry seems like the only industry that will expand is coal mining as it mainly runs on deseil
Nothing like starvation to focus the mind, but sad that it is coming to that. I grew up in the "Kiwis can do anything" era and still live that way, albeit in the US. My uncle surveyed the bypass tunnel for Benmore. I almost landed a job developing instrumentation for the MOW to monitor Manipouri which had some issues with the ground stability/strength that were only discovered after the dam was built.
Societal complexity. I think a lot about the Lotka's wheel model. Its not just a thermodynamic model but also adequately models government, both central and local, replace energy with money, waste with bureaucracy and surplus translates to more government. This is why we can no longer build anything of significance.
Thanks for that. It was a fun multidimensional rabbithole. I had not heard of Lotka's wheels before, or about the woman who compiled the data - essentially the Chief Statistician at the US Census Bureau, but women could not be given leadership titles back then.
Yeah, was probably Clyde that had the substrate stability problems reading all of this. It was 40 years ago, and my memory isn't always the best nowadays.
And when cattle and sheep are replaced by insects you will have nothing to even trade with except memories
Not happening. Insects don't taste as good, and it's is easy to absolutely destroy the rationale for claiming ruminants are destroying the climate. The grass they eat was atmospheric CO2 only 6 weeks ago. Methane does not actually persist for long in the atmosphere since it is highly reactive. Boom!
Yes indeed, and if the cows did not eat the grass it would die off in winter and give off CZo2 and CH4