Hydro peaking?

Should we bias towards wind and solar, using hydro as a hydo-peaker?

The comment sections of various articles regarding energy in New Zealand often offer some well thought out arguments and add much food for thought.

There are a number of people with knowledge and experience in the energy sector who are sensing that we have a problem and are following the issue more closely.

In a recent Newsroom article about the resignation of Nova’s Chief Executive had one particular comment that caught my attention.

The commenter has responded to Nova’s Chief Executive’s Babu Bahirathan call for another gas peaker plant with the following.

“NZ needs another gas peaker”. I beg to differ.

NZ has a huge hydro power resource which can be adjusted or modified to serve more of a peaker function and less of a base load function. This will accommodate a much greater development of wind and solar resources without endangering supply reliability. It will also help toward a reduced reliance on coal.

Note - a peaker is a power plant that can be dispatched to add electricity generation capacity to the grid quickly when there is a shortfall or a sudden increase in demand. For example, when the wind drops off, or all New Zealand’s dairy farmers start up their cow sheds in the morning. Typically, peakers in New Zealand have been gas fired turbines.

Simply put, what is being proposed by the commenter is that we should prioritise wind and solar, while keeping hydro in reserve as peaking capacity, for when the wind is not blowing and the sun isn’t shining.

For the purpose of this discussion let’s refer to this concept as “the hydro-peaker”.

This would be in contrast to wind and solar competing head-to-head with hydro in an open market.

This opinion is quite prevalent in New Zealand and frankly it makes a lot of sense from a security of supply perspective, particularly in a dry year.

Few people however realise that to a large extent this is already happening, particularly with wind generation.

The big three hydro generators New Zealand have been quite active in buying up NZ’s wind developments, for example Mercury purchased the Waipipi wind farm of Tilt Renewables shortly after it was built in 2021. Nearly all of NZ wind farms are now operated by the big three generators with hydro schemes in their portfolios.

They will typically use their wind generation to service some of the contractual supply commitments, holding back a portion of hydro capacity as firming/peaking for these contracts.

So why not adopt the hydro-peaker approach more widely?

In short, it’s not optimal, here’s why.

System aggregate EROI (energy return on energy invested).

To set the scene, I’d like to refer to a recent piece I wrote:

The main component of any good or service is energy. The energy to extract materials, the energy to process materials, the energy to manufacture, the energy to distribute, the energy required to provide a service.

Ultimately the economy is a surplus energy equation. As surplus has increased with the addition of ever higher energy density fuel sources, which provide increasing amounts of energy for each unit of energy invested, or surplus, the economy has grown.

The increasing surplus these sources provided allowed the economy to do more work, which manifests in increasing economic productivity and financial returns on investments.

This is exactly the point where the idea of the hydro-peaker runs into problems.

The economy is an open thermodynamic system. It is continuously exchanging energy and matter with the environment. Within this context, energy return on investment (EROI) is a critical metric, not just for energy production efficiency, but for the very sustainability and complexity of the economic system itself.

The hydro-peaker prioritises lower EROI wind and solar over higher EROI hydro. This has the effect of lowering the overall aggregate generation system EROI, or in other worlds our system is less productive and provides less surplus.

It lowers the utilisation of our cheapest and most productive form of generation, which is hydro. It would be even worse in a wet year when we have strong hydro-lake inflows.

The amount of surplus produced by our overall energy system determines the amount of work that can be done by the productive economy. A low EROI energy system produces less surplus as a larger proportion of the energy produced is required to maintain the energy system itself, leaving less energy available to the wider society and productive economy.

The implications of lowering our overall energy system EROI are profound:

• 1) Less energy surplus = reduced public and private sector capacity.

• 2) Greater system entropy = more energy needs to be allocated to maintaining the energy infrastructure leaving less available to maintain societal infrastructure.

• 3) Loss of Conveniences = What we consider as simplicity, ordering a item from the comfort of our homes and receiving it at our door the next day. Is in fact a function of societal complexity. Lower EROI can’t support complexity which means decreasing convenience and services.

• 4) Inflation - lower energy efficiency raises the cost of all goods and services.

• 5) Debt - less energy is available to service public and private debt leading to debt instability.

In short, our energy system needs to become increasingly productive, creating ever greater surplus, if it is to maintain our standard of living and support growth in the face of relentlessly increasing entropy/disorder.

The hydro-peaker system will reduce the overall energy system productivity and our ability to have nice things.

Have a great easter everyone, and as always thanks for readying.

Please hit the like button and share far and wide if you’re also concerned about our energy future.

Larry