The fact that, at a planetary scale, we are exceeding at least 6 of 9 fundamental biophysical planetary thresholds points to the need for developed countries to reduce their energy and material throughput = redefine what a high standard of living is compared to the consumerist model there we currently have. Your analysis logically follows from an assumption that it is desirable of retaining the consumerist standard of living. Change the desired societal outcome/vision and the analysis could give a different answer?
Hi Andrew, that’s a really great statement and gets to the heart of the issue. Will we be like a locust storm crashing to an unavoidable collapse or is there a softer landing that we can only have if we have more time to prepare. Thanks, I have wanted to tackle the topic of de-growth for a while now, but I haven’t managed to get my head around how it could work without tragedy and violence. I’ll keep thinking on it, watch this space.
“Any government that has sufficient monetary sovereignty can mobilize public production directly, simply by issuing public finance to do it.” - what could possibly go 😑
Charles Hugh Smith from Of Two Minds has written about this. His premise is that you can still have a high standard of living by simply managing your energy consumption!
Hi Mike, this is possible to a point. If I'm correct you are making the efficiency argument. There is little doubt we can do things more efficiently. As individuals we can be more efficient quite easily but this has limits.
The first challenge is Jevon's paradox that states that increasing efficiency in resource use can lead to an overall increase in resource consumption, rather than a decrease. Light bulbs are a good example as they have become more efficient we have just installed more and more of them. Or, when we get a more efficient car we have more disposable income that would have previously been spent on fuel is now allocated to something else.
The second challenge and the one that I was trying to convey in this piece was to highlight that the economy is an open thermodynamic system. As such it needs to grow or it collapses. This is primarily because entropy increases in the system in the form of increased complexity, more dissipative pathways and things as simple as maintaining the built world. Reductions in growth or recessions as we know them increase in velocity if we can't add more energy to the system. This I fear will be our biggest challenge in the coming years as all our energy systems produce less surplus.
Thanks for the reference and the great comment, I will take a look into Charles Hugh Smith's work for some more insights.
I just came back to this, and the thing that almost everyone misses is that it’s not just an energy thing. It’s also financial.
Our current system requires more and more debt to pay off the debt we have already acquired.
This will lead to an inevitable collapse of the economic model and financial system and the energy infrastructure along with it.
Right now it’s late here (1:37 am Manila time) and I may write more on this when I am more compos mentis.
That said, I think we are in a phase of history where things will change drastically. The efficiency, or otherwise, of energy systems will not be the most important thing on the agenda. Putting food on the table will!
Hi Mike, this is why I say that the EROI of the system as a whole needs to increase. Primarily due to thermodynamics but also due to debt. The big question related to food is how do you feed 8 billion people without today’s energy systems. The last time we were living within the daily energy flows there less than 1 billion people on the planet.
Hi Larry, I’m a fan of a Hydro Peaker / Battery Peaker model because I firmly believe we must stop burning carbon. I also agree with your EROI arguments so we must work out a way to reconcile all of this. I think part of the answer is in smarter co-ordination of energy demand and despatch with mechanisms other than our current blunt wholesale pricing model. At both ends a bunch of users are insulated from this model. Big users due their negotiating power and consumers are legislated out. I don’t know what the answer is though pleased that you a putting yourself out there and building conversations.
I keep coming back to the market model over and over again when trying to develop a solution to these problems. Ideally we would bias heavily towards the most efficient and productive form of generation at all times. The problem is that the last electron on the grid sets the wholesale price.
I think we made a grave mistake withe the Braford reforms and this severely hampers our optionality when it comes to determining the mix on any given day. A also think we missed a get opportunity in the 70s by not building the Kaipara nuclear plant. Coupling this with hydro would be the perfect mix of two high EROI sources with baseload in the right geographical location. It would also tick the low carbon box.
The key point I was trying to make here is that we are moving to less productive systems at a time when public and private debt has never been higher. The systems of old are not immune to this problem either. The EROI of oil and coal in particular are falling as it gets harder to extract.
Thanks for reading Stephen and for the thoughtful comments. Its a pleasure to have you aboard.
These comments by an "insider" from the electricity supply world on another forum I posted this column
1. The hydros already provide peaking. They have significant embedded real option value. The effective energy storage in NZ hydro lakes is small relative to their annual production. As a result they have high "stock turn".
Waikato system approx. 4,000GWh per annum but only 400GWh of storage in Taupo for example. Due to the low storage relative to production the actual production from hydro has quite a lot of volatility from day to day or month to month. The volatility is basically a function of the inflow volatility, adjusted for starting storage or remaining storage potential to be more accurate. As storage rises to max, the value of the water stored falls towards zero and vica versa. As storage falls the hydros shift to more and more peak production (relative to reduced total production) and subject to minimum flow obligations.
As storage is small, the stored water can only be "carried forward" for a relatively short period. Taupo say 6 to 8 weeks. There are consent limits at the max and the min so the lake/production management is very dynamic. Once released from Taupo the water moved through the dams very quickly as the intermediate lakes are actually very small. Equally the size of the plants is all different so the dynamic management is very complicated.
2. Ok - So NZ's hydro production ranges from approx 20,000GWh to 26,000GWh per annum. Total storage is approx 4,500GWh. So on average across all of the lakes (noting they vary in size massively) storage is turned over 4 to 5 times per year.
So we have about 5000MW of installed hydro capacity. If it could run baseload it would produce approx 44,000GWh per annum. So the effective load factor of hydro is between 45% and 59%. So way off baseload.
So outside of minimum flows, hydros in NZ seek to produce the most power when the price (and usually demand) is highest i.e. morning and evening. As storage in any given lake approaches maximum, production from the hydro trends towards "baseload".
The Waikato hydro system can move between low production of say 50MW to maximum of approx 1050MW in a matter of minutes. Its ability to sustain this is limited due to intermediate lake sizes station sizes.
Thank you very much Alan that's a great insight that I had not fully considered.
The low relative storage capacity therefore implies that there is less scope than I originally thought for wind to be used to provide seasonal storage. It also implies that if we have good lake inflows in a wet year that the bias should definitely be towards the hydro.
Same source subsequently posted this about Lake Manapouri
"Manapouri is about 470GWh of storage it has installed capacity of 800MW.
It has crazy inflows given where it is. It produces around 4,800GWh per year. So it turns the lake over 10 times."
Looking at NZ's power generation as a single entity (disregarding actual ownership), about the only source you can make assumptions for consistent output are the geothermal generators, all others are subject to variables, primarily weather driven, with inter-dependencies to plug shortfalls by using primarily gas and coal generation. Trying to model this for decision making for future investment and even operational planning would be challenging to say the least.
Yes agree this is a challenge. Adding to the complexity is location of demand and generation also.
Gas is also getting more fragile too as older depleted wells do not respond well to changes in pressures and flows. They like a slow and steady draw down to avoid flow assurance issues.
That leaves coal and geothermal as the only really dependable sources.
Geothermal expansion has been quite slow for some reason that I have yet to establish. If ever there were market conditions for a large growth in geothermal it’s now but we are not really seeing that eventuate.
The owner of our LPG network is experimenting in Otaki as we speak with mixing in a small amount of hydrogen to improve LPG's conductivity. Be wonderful if NZ could regain control of its electricity assets and ditch the imported solar and wind stuff altogether . Gas can be stored and injected when the hydro lakes are low
Hi Moreton, yes Claris/First Gas have been working on this for a while. Its all gone a bit quiet so I'm not sure how its going. In theory its feasible. I think the big questions is where to get enough hydrogen at a reasonable price, which is what you are driving at with Manapouri. Watch this space I guess.
Thanks for that understanding. There is no doubt in .my mind that the government is doing a huge disservice (traitors even) to the people of NZ by gifting of our hydro electricity surplus to a multinational polluter for the sake of lobbyist Bill English.
I have little doubt that as we become more energy constrained there will inevitably be a discussion on the merits of resource allocation. Methanex is already experiencing this with even the Green Party wanting to reallocate their contracted gas, Tiwai will no doubt get drawn into this too. Thanks for your comments, always good to expand the discussion.
I may well be getting the wrong end of the stick here. But.
Isn’t there a distinction to be made between EROI and the absolute amount of energy available, at all. I mean a larger investment may not pay off as well in an ROI sense than a small and wonderful one, but the larger investment actually delivers more.
In our case we are buying wind and solar powered water-savers for our dams. When the wind doesn’t blow and the sun doesn’t shine, we are limited to the capacity of the water turbines. But they will be more likely to have the water to put through, in a more confidently profligate manner.
If we could figure out how to usefully use the additional energy available from wind and solar beyond keeping the lakes topped up, and not required for base load, it looks like that energy would be free at the margin. I wonder what sort of productive capacity would marry up with that sort of supply.
Yes EROI and absolute power are different things. EROI basically is just a metric for the energy invested to produce energy, so its a ratio. Wind has a lowish EROI due to short asset lives and a low energy density intermittent fuel source. It also needs to be backed up which lowers the EROI the most.
I think you're driving at "power to X" which is typically hydrogen. That said there has not really been a lot of progress in this space as there isn't really any infrastructure to support it. Even with essentially free energy there would be challenges. I touched on the concept briefly here as a prerequisite to synthetic methane in the link below.
We make capital plant. Customers care about ROI. We can take a situation and design a solution that cuts the eyes out of the opportunity, and say deliver $1M savings p.a. for a capex of $1M. A one year payback. Fabulous.
But we could also sell them a $4M solution that gives them $2M p.a. savings. We are now a two year payback, still exceptional, but not as good an ROI. Double the annual savings though in absolute terms.
So I can understand us going for larger total infrastructure, more cost, less EROI, but just flat out more energy. Choosing the system that has less of an EROI can make sense - because it is bigger. It produces more.
Now if we had undeveloped dam sites lying around, well these would make more sense. But if we don’t, then there is nothing wrong with systems with EROIs inferior to those of dams, because there are none of those left available. We need the extra absolute generating capacity.
On this reading I saw the renewables as water-savers only, because you have to have backup to support the load when there is no wind and no sun. If we build thermal backup, well then why do we add insult to injury and install parallel renewables so as not to run our new thermal plants. I mean those renewables are super not-cheap.
Energy supply has to be reliable. Renewables then really means renewables-plus-backup.
We have renewables installed in NZ, and I can see their value as saving water and coal for our sunk cost plants. I was being facetious when I wondered what they could do at the margin - what industry might there be that could use cheap power that is erratic? Probably not make hydrogen, but recharging short term flow batteries? Heat up rocks etc?
But it really needs to be something like a manufactured product that doesn’t need continuity of power supply. Not temporary storage, because otherwise what we are really talking about is storage across seasons for winters like what the Europeans had a little while back. And if hydrogen doesn’t cut it commercially, I’m pretty sure multi-year storage is not going to.
I can imagine an automated plant slowing to a crawl on dull windless days, and then cranking when the sun comes out and the wind gets up. Chipping logs or breaking rocks or something.
Hi John, thanks, much to consider there. I think were I inevitably get to on this topic is that there is a perfect correlation between delta GDP and delta net primary energy. This means that if we want to have modest GDP growth in the future which is compounding we will have a near doubling of our energy requirements in about 30 years.
Historically this has been achieved by adding ever more energy dense sources of energy. For the first time we are adding sources that are less productive and produce lass surplus. To accommodate them we are compromising the sources that have underpinned historical growth.
I like the idea that intermittent over supply could be coupled to some form of intermittent production activity. I dislike the idea of energy conversions as there are just too many loses (2nd lawe of thermodynamics). Some of the lifestyle block advocates have grabbed onto this idea with machines directly coupled to solar panels. They only work when the sun is shining, so they coordinate their work around the sun. Its a cool idea and I think at a small scale its a way to avoid storage issues and associated loses. Can it scale? Maybe and that is definitely something to think more on.
Thanks, I originally started writing this blog because I wanted to be wrong about these things and expected someone more erudite than myself to comment and set me straight, so I could live a life of blissful ignorance. Alas that has not happened, until today.
The SRMC of a hydro plant (aside from the run of river) is actually the gas price ( opportunity cost ) - During a draught, in a system with low cost solar and wind, hydro is the most expensive form of generation. Having a CCGT as an insurance is actually a great idea, not run it most of the time but its there when theres not enough hydro to supplement wind / solar. The trick is to size all the technologies correctly.
Thanks, that's a feature of the market. It may be that the "market" as a concept is actually the problem.
Ultimately the marginal cost of hydro will be the cheapest in NZ in the absence of a market that sets the price to that of the most expensive source in the mix. This is because it has the best EROI and thats why if we want to generate the greatest productivity we would bias for the highest EROI sources.
You're correct that the scarcity we have at the moment is creating all sorts of unusual situations like the CCGT running all the time and not peaking.
I think at the heart of the issue is that we just haven't added enough generation infrastructure in the past few decades and new we are particularly vulnerable to seasonal variations. What concerns me is adding generation that has a low EROI which in turn lowers the overall system EROI.
Yes, thats possible but its also the smallest molecule and as such quite hard to work with. Power to X (which is essentially what this is was very popular with the last government).
Thanks for the interesting post. Some different perspectives:
i. Not all investment is of equal benefit to a country- for example, renewables investments tend to create more in-country jobs that building (say) a gas peaking plant, where most of the investment is actually buying gas from out of NZ
ii. There are flow-on effects from creating jobs in-country. People learn skills that are then useful for other industries- there's virtuous cycle (and the more you get skilled people, the more likely that some of those people will have great ideas for startups that then create more jobs)
iii. You didn't talk about the trajectory of different technologies. There is a high chance we've got as good as we're going to get at burning fossil fuels, but we're still early in the innovation curve for renewables (especially batteries), so a forward-looking strategy might take this into account.
iv. EROI should also take into account the energy needed to mitigate the externalities (the polluting effects of the technology). We're always giving fossil fuels a pass on this- we shouldn't.
i) I agree with the sentiment here and also the implications for the balance of trade. With the exception of some bottled gas for the South Island all of our natural gas has been domestically produced out of Taranaki. I fear those days are over.
ii) Yes and also of a domestic supply as a hedge against geopolitical tensions. This post however was more directed at the challenges we will face with lowering EROI.
iii) Yes I agree this is going to be a factor. I think solar has hit its basement price and is likely to increase over the coming years. The price decreases are largely driven by oversupply out of China and there are current huge warehouses of uninstalled panels. Batteries is one to watch, which I am doing with caution. I also have to reiterate that no mater how good they are there will be loses and they just add more infrastructure and complexity to what was once much simpler (dispatchable generation).
iv) Yes I agree. The key point of difference here is that the externalities of renewables are exported and we don't see them as much. They are still very much there. Everything requires resource extraction and renewables have yet to build renewables.
Great additions to the conversation Craig, thanks. Its the nuanced conversations that are important to generate awareness. We can not go on living "energy blind" to quote Nate Hagens, we have to be more aware of biophysical realities. Your contribution to this discussion is a step in this direction. Have a great Easter.
The fact that, at a planetary scale, we are exceeding at least 6 of 9 fundamental biophysical planetary thresholds points to the need for developed countries to reduce their energy and material throughput = redefine what a high standard of living is compared to the consumerist model there we currently have. Your analysis logically follows from an assumption that it is desirable of retaining the consumerist standard of living. Change the desired societal outcome/vision and the analysis could give a different answer?
Hi Andrew, that’s a really great statement and gets to the heart of the issue. Will we be like a locust storm crashing to an unavoidable collapse or is there a softer landing that we can only have if we have more time to prepare. Thanks, I have wanted to tackle the topic of de-growth for a while now, but I haven’t managed to get my head around how it could work without tragedy and violence. I’ll keep thinking on it, watch this space.
Jason Hickel has some accessible interesting perspectives on de-growth https://www.jasonhickel.org/blog/2023/3/18/universal-public-services
Thanks Andrew I'll take a look at that.
“Any government that has sufficient monetary sovereignty can mobilize public production directly, simply by issuing public finance to do it.” - what could possibly go 😑
Charles Hugh Smith from Of Two Minds has written about this. His premise is that you can still have a high standard of living by simply managing your energy consumption!
Hi Mike, this is possible to a point. If I'm correct you are making the efficiency argument. There is little doubt we can do things more efficiently. As individuals we can be more efficient quite easily but this has limits.
The first challenge is Jevon's paradox that states that increasing efficiency in resource use can lead to an overall increase in resource consumption, rather than a decrease. Light bulbs are a good example as they have become more efficient we have just installed more and more of them. Or, when we get a more efficient car we have more disposable income that would have previously been spent on fuel is now allocated to something else.
The second challenge and the one that I was trying to convey in this piece was to highlight that the economy is an open thermodynamic system. As such it needs to grow or it collapses. This is primarily because entropy increases in the system in the form of increased complexity, more dissipative pathways and things as simple as maintaining the built world. Reductions in growth or recessions as we know them increase in velocity if we can't add more energy to the system. This I fear will be our biggest challenge in the coming years as all our energy systems produce less surplus.
Thanks for the reference and the great comment, I will take a look into Charles Hugh Smith's work for some more insights.
Hi
I just came back to this, and the thing that almost everyone misses is that it’s not just an energy thing. It’s also financial.
Our current system requires more and more debt to pay off the debt we have already acquired.
This will lead to an inevitable collapse of the economic model and financial system and the energy infrastructure along with it.
Right now it’s late here (1:37 am Manila time) and I may write more on this when I am more compos mentis.
That said, I think we are in a phase of history where things will change drastically. The efficiency, or otherwise, of energy systems will not be the most important thing on the agenda. Putting food on the table will!
Hi Mike, this is why I say that the EROI of the system as a whole needs to increase. Primarily due to thermodynamics but also due to debt. The big question related to food is how do you feed 8 billion people without today’s energy systems. The last time we were living within the daily energy flows there less than 1 billion people on the planet.
Hi Larry, I’m a fan of a Hydro Peaker / Battery Peaker model because I firmly believe we must stop burning carbon. I also agree with your EROI arguments so we must work out a way to reconcile all of this. I think part of the answer is in smarter co-ordination of energy demand and despatch with mechanisms other than our current blunt wholesale pricing model. At both ends a bunch of users are insulated from this model. Big users due their negotiating power and consumers are legislated out. I don’t know what the answer is though pleased that you a putting yourself out there and building conversations.
Hi Stephen, thanks for your great comment.
I keep coming back to the market model over and over again when trying to develop a solution to these problems. Ideally we would bias heavily towards the most efficient and productive form of generation at all times. The problem is that the last electron on the grid sets the wholesale price.
I think we made a grave mistake withe the Braford reforms and this severely hampers our optionality when it comes to determining the mix on any given day. A also think we missed a get opportunity in the 70s by not building the Kaipara nuclear plant. Coupling this with hydro would be the perfect mix of two high EROI sources with baseload in the right geographical location. It would also tick the low carbon box.
The key point I was trying to make here is that we are moving to less productive systems at a time when public and private debt has never been higher. The systems of old are not immune to this problem either. The EROI of oil and coal in particular are falling as it gets harder to extract.
Thanks for reading Stephen and for the thoughtful comments. Its a pleasure to have you aboard.
These comments by an "insider" from the electricity supply world on another forum I posted this column
1. The hydros already provide peaking. They have significant embedded real option value. The effective energy storage in NZ hydro lakes is small relative to their annual production. As a result they have high "stock turn".
Waikato system approx. 4,000GWh per annum but only 400GWh of storage in Taupo for example. Due to the low storage relative to production the actual production from hydro has quite a lot of volatility from day to day or month to month. The volatility is basically a function of the inflow volatility, adjusted for starting storage or remaining storage potential to be more accurate. As storage rises to max, the value of the water stored falls towards zero and vica versa. As storage falls the hydros shift to more and more peak production (relative to reduced total production) and subject to minimum flow obligations.
As storage is small, the stored water can only be "carried forward" for a relatively short period. Taupo say 6 to 8 weeks. There are consent limits at the max and the min so the lake/production management is very dynamic. Once released from Taupo the water moved through the dams very quickly as the intermediate lakes are actually very small. Equally the size of the plants is all different so the dynamic management is very complicated.
2. Ok - So NZ's hydro production ranges from approx 20,000GWh to 26,000GWh per annum. Total storage is approx 4,500GWh. So on average across all of the lakes (noting they vary in size massively) storage is turned over 4 to 5 times per year.
So we have about 5000MW of installed hydro capacity. If it could run baseload it would produce approx 44,000GWh per annum. So the effective load factor of hydro is between 45% and 59%. So way off baseload.
So outside of minimum flows, hydros in NZ seek to produce the most power when the price (and usually demand) is highest i.e. morning and evening. As storage in any given lake approaches maximum, production from the hydro trends towards "baseload".
The Waikato hydro system can move between low production of say 50MW to maximum of approx 1050MW in a matter of minutes. Its ability to sustain this is limited due to intermediate lake sizes station sizes.
Thank you very much Alan that's a great insight that I had not fully considered.
The low relative storage capacity therefore implies that there is less scope than I originally thought for wind to be used to provide seasonal storage. It also implies that if we have good lake inflows in a wet year that the bias should definitely be towards the hydro.
A great contribution and very much appreciated!
Same source subsequently posted this about Lake Manapouri
"Manapouri is about 470GWh of storage it has installed capacity of 800MW.
It has crazy inflows given where it is. It produces around 4,800GWh per year. So it turns the lake over 10 times."
Looking at NZ's power generation as a single entity (disregarding actual ownership), about the only source you can make assumptions for consistent output are the geothermal generators, all others are subject to variables, primarily weather driven, with inter-dependencies to plug shortfalls by using primarily gas and coal generation. Trying to model this for decision making for future investment and even operational planning would be challenging to say the least.
Yes agree this is a challenge. Adding to the complexity is location of demand and generation also.
Gas is also getting more fragile too as older depleted wells do not respond well to changes in pressures and flows. They like a slow and steady draw down to avoid flow assurance issues.
That leaves coal and geothermal as the only really dependable sources.
Geothermal expansion has been quite slow for some reason that I have yet to establish. If ever there were market conditions for a large growth in geothermal it’s now but we are not really seeing that eventuate.
The owner of our LPG network is experimenting in Otaki as we speak with mixing in a small amount of hydrogen to improve LPG's conductivity. Be wonderful if NZ could regain control of its electricity assets and ditch the imported solar and wind stuff altogether . Gas can be stored and injected when the hydro lakes are low
Hi Moreton, yes Claris/First Gas have been working on this for a while. Its all gone a bit quiet so I'm not sure how its going. In theory its feasible. I think the big questions is where to get enough hydrogen at a reasonable price, which is what you are driving at with Manapouri. Watch this space I guess.
Thanks for that understanding. There is no doubt in .my mind that the government is doing a huge disservice (traitors even) to the people of NZ by gifting of our hydro electricity surplus to a multinational polluter for the sake of lobbyist Bill English.
I have little doubt that as we become more energy constrained there will inevitably be a discussion on the merits of resource allocation. Methanex is already experiencing this with even the Green Party wanting to reallocate their contracted gas, Tiwai will no doubt get drawn into this too. Thanks for your comments, always good to expand the discussion.
Nice observations, as always Larry.
I may well be getting the wrong end of the stick here. But.
Isn’t there a distinction to be made between EROI and the absolute amount of energy available, at all. I mean a larger investment may not pay off as well in an ROI sense than a small and wonderful one, but the larger investment actually delivers more.
In our case we are buying wind and solar powered water-savers for our dams. When the wind doesn’t blow and the sun doesn’t shine, we are limited to the capacity of the water turbines. But they will be more likely to have the water to put through, in a more confidently profligate manner.
If we could figure out how to usefully use the additional energy available from wind and solar beyond keeping the lakes topped up, and not required for base load, it looks like that energy would be free at the margin. I wonder what sort of productive capacity would marry up with that sort of supply.
Thanks John,
Yes EROI and absolute power are different things. EROI basically is just a metric for the energy invested to produce energy, so its a ratio. Wind has a lowish EROI due to short asset lives and a low energy density intermittent fuel source. It also needs to be backed up which lowers the EROI the most.
I think you're driving at "power to X" which is typically hydrogen. That said there has not really been a lot of progress in this space as there isn't really any infrastructure to support it. Even with essentially free energy there would be challenges. I touched on the concept briefly here as a prerequisite to synthetic methane in the link below.
https://newzealandenergy.substack.com/p/hope-is-not-a-strategy?r=ubsbu
Thanks for the great comment and extending the discussion.
I can see my words were sloppy.
We make capital plant. Customers care about ROI. We can take a situation and design a solution that cuts the eyes out of the opportunity, and say deliver $1M savings p.a. for a capex of $1M. A one year payback. Fabulous.
But we could also sell them a $4M solution that gives them $2M p.a. savings. We are now a two year payback, still exceptional, but not as good an ROI. Double the annual savings though in absolute terms.
So I can understand us going for larger total infrastructure, more cost, less EROI, but just flat out more energy. Choosing the system that has less of an EROI can make sense - because it is bigger. It produces more.
Now if we had undeveloped dam sites lying around, well these would make more sense. But if we don’t, then there is nothing wrong with systems with EROIs inferior to those of dams, because there are none of those left available. We need the extra absolute generating capacity.
On this reading I saw the renewables as water-savers only, because you have to have backup to support the load when there is no wind and no sun. If we build thermal backup, well then why do we add insult to injury and install parallel renewables so as not to run our new thermal plants. I mean those renewables are super not-cheap.
Energy supply has to be reliable. Renewables then really means renewables-plus-backup.
We have renewables installed in NZ, and I can see their value as saving water and coal for our sunk cost plants. I was being facetious when I wondered what they could do at the margin - what industry might there be that could use cheap power that is erratic? Probably not make hydrogen, but recharging short term flow batteries? Heat up rocks etc?
But it really needs to be something like a manufactured product that doesn’t need continuity of power supply. Not temporary storage, because otherwise what we are really talking about is storage across seasons for winters like what the Europeans had a little while back. And if hydrogen doesn’t cut it commercially, I’m pretty sure multi-year storage is not going to.
I can imagine an automated plant slowing to a crawl on dull windless days, and then cranking when the sun comes out and the wind gets up. Chipping logs or breaking rocks or something.
Hi John, thanks, much to consider there. I think were I inevitably get to on this topic is that there is a perfect correlation between delta GDP and delta net primary energy. This means that if we want to have modest GDP growth in the future which is compounding we will have a near doubling of our energy requirements in about 30 years.
Historically this has been achieved by adding ever more energy dense sources of energy. For the first time we are adding sources that are less productive and produce lass surplus. To accommodate them we are compromising the sources that have underpinned historical growth.
I like the idea that intermittent over supply could be coupled to some form of intermittent production activity. I dislike the idea of energy conversions as there are just too many loses (2nd lawe of thermodynamics). Some of the lifestyle block advocates have grabbed onto this idea with machines directly coupled to solar panels. They only work when the sun is shining, so they coordinate their work around the sun. Its a cool idea and I think at a small scale its a way to avoid storage issues and associated loses. Can it scale? Maybe and that is definitely something to think more on.
Great contribution to the discussion. Thanks
What a load of rubbish
Thanks, I originally started writing this blog because I wanted to be wrong about these things and expected someone more erudite than myself to comment and set me straight, so I could live a life of blissful ignorance. Alas that has not happened, until today.
The SRMC of a hydro plant (aside from the run of river) is actually the gas price ( opportunity cost ) - During a draught, in a system with low cost solar and wind, hydro is the most expensive form of generation. Having a CCGT as an insurance is actually a great idea, not run it most of the time but its there when theres not enough hydro to supplement wind / solar. The trick is to size all the technologies correctly.
Thanks, that's a feature of the market. It may be that the "market" as a concept is actually the problem.
Ultimately the marginal cost of hydro will be the cheapest in NZ in the absence of a market that sets the price to that of the most expensive source in the mix. This is because it has the best EROI and thats why if we want to generate the greatest productivity we would bias for the highest EROI sources.
You're correct that the scarcity we have at the moment is creating all sorts of unusual situations like the CCGT running all the time and not peaking.
I think at the heart of the issue is that we just haven't added enough generation infrastructure in the past few decades and new we are particularly vulnerable to seasonal variations. What concerns me is adding generation that has a low EROI which in turn lowers the overall system EROI.
Solid in-depth counter argument Dofumiso 👍
More food for thought actually. Hydro peakers would work if our hydro electricity surplus was converted to gas.
Hi Winston, which gas specifically are you thinking of?
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Yes, thats possible but its also the smallest molecule and as such quite hard to work with. Power to X (which is essentially what this is was very popular with the last government).
An interesting perspective, thanks!
Thanks for the interesting post. Some different perspectives:
i. Not all investment is of equal benefit to a country- for example, renewables investments tend to create more in-country jobs that building (say) a gas peaking plant, where most of the investment is actually buying gas from out of NZ
ii. There are flow-on effects from creating jobs in-country. People learn skills that are then useful for other industries- there's virtuous cycle (and the more you get skilled people, the more likely that some of those people will have great ideas for startups that then create more jobs)
iii. You didn't talk about the trajectory of different technologies. There is a high chance we've got as good as we're going to get at burning fossil fuels, but we're still early in the innovation curve for renewables (especially batteries), so a forward-looking strategy might take this into account.
iv. EROI should also take into account the energy needed to mitigate the externalities (the polluting effects of the technology). We're always giving fossil fuels a pass on this- we shouldn't.
Thanks Craig, much appreciated.
i) I agree with the sentiment here and also the implications for the balance of trade. With the exception of some bottled gas for the South Island all of our natural gas has been domestically produced out of Taranaki. I fear those days are over.
ii) Yes and also of a domestic supply as a hedge against geopolitical tensions. This post however was more directed at the challenges we will face with lowering EROI.
iii) Yes I agree this is going to be a factor. I think solar has hit its basement price and is likely to increase over the coming years. The price decreases are largely driven by oversupply out of China and there are current huge warehouses of uninstalled panels. Batteries is one to watch, which I am doing with caution. I also have to reiterate that no mater how good they are there will be loses and they just add more infrastructure and complexity to what was once much simpler (dispatchable generation).
iv) Yes I agree. The key point of difference here is that the externalities of renewables are exported and we don't see them as much. They are still very much there. Everything requires resource extraction and renewables have yet to build renewables.
Great additions to the conversation Craig, thanks. Its the nuanced conversations that are important to generate awareness. We can not go on living "energy blind" to quote Nate Hagens, we have to be more aware of biophysical realities. Your contribution to this discussion is a step in this direction. Have a great Easter.