Castle Hill Wind Farm: Electricity-Related Effects Report Prepared for Genesis Energy July 2011 Concept Consulting Group Limited Level 6, Featherston House 119-121 Featherston St PO Box 10-045, Wellington, NZ www.concept.co.nz Contents 1 Introduction .....................................................................................................................6 1.1 Purpose..................................................................................................................................6 1.2 Information sources ..............................................................................................................6 1.3 Concept Consulting Group.....................................................................................................6 2 The Castle Hill Wind Farm Project....................................................................................7 2.1 Project Outline.......................................................................................................................7 2.2 Key Electrical Parameters for CHWF......................................................................................7 3 Electricity in the New Zealand Economy..........................................................................8 3.1 Electricity and Consumer Energy...........................................................................................8 3.2 Electricity consumption and supply in New Zealand.............................................................9 3.3 Historical Electricity Demand ..............................................................................................10 3.4 Forecast electricity demand growth....................................................................................11 3.5 Retirement of existing plant................................................................................................13 4 Electricity System Overview...........................................................................................15 4.1 Physical electricity supply system........................................................................................15 4.2 Real time system coordination............................................................................................16 4.3 Current electricity generation mix.......................................................................................17 4.4 Hydro and thermal generation............................................................................................17 4.5 Energy and peak capacity constraints .................................................................................18 4.6 Electricity Market Arrangements ........................................................................................19 4.7 Price Effects on Power Stations...........................................................................................21 5 New Generation Development ......................................................................................23 5.1 Key forces shaping generation choices................................................................................23 5.2 Greenhouse gas emissions ..................................................................................................23 5.3 Hydro stations .....................................................................................................................25 5.4 Gas-fired generation............................................................................................................25 5.5 Coal......................................................................................................................................27 5.6 Wind generation..................................................................................................................29 5.7 Geothermal generation .......................................................................................................30 5.8 Non-traditional supply options............................................................................................30 5.9 New generation costs..........................................................................................................31 CHWF ASSESSMENT 1 6 Integrating Wind Farms in the New Zealand System.....................................................34 6.1 Short term flexibility............................................................................................................34 6.2 Seasonal and year-to-year flexibility ...................................................................................35 6.3 Integrating Wind Farms into the New Zealand System.......................................................41 6.4 Integrating Castle Hill Wind Farm........................................................................................42 7 Potential Benefits of Castle Hill Wind Farm ...................................................................46 7.1 Meeting electricity demand growth....................................................................................46 7.2 Meeting Government renewable targets............................................................................46 7.3 Reducing carbon emissions .................................................................................................47 7.4 Diversifying generation supply ............................................................................................48 7.5 Supply and demand within the region ................................................................................49 7.6 Other regional projects........................................................................................................50 Appendix 1. List of Abbreviations and Terms ......................................................................52 Appendix 2. Electricity Market Overview.............................................................................53 Appendix 3. CHWF Simulation Analysis ...............................................................................61 List of Figures: Figure 1: Total consumer Energy in New Zealand 1990 to 2010............................................................................8 Figure 2: Electricity consumption by sector and by region for 2010......................................................................9 Figure 3: New Zealand economic growth and electricity demand.......................................................................10 Figure 4: Change in energy intensity over time....................................................................................................11 Figure 5: Forecasts of electricity demand.............................................................................................................13 Figure 6: New generation capacity required by 2020 to meet demand growth ..................................................14 Figure 7: Electricity industry structure .................................................................................................................15 Figure 8: Currently electricity generation mix......................................................................................................17 Figure 9: Commercial arrangements ...................................................................................................................19 Figure 10: Prices and load during 3 May 2010 .....................................................................................................20 Figure 11: Generation and time weighted prices for various plant (year to March 11).......................................22 Figure 12: Economics of new gas-fired generation ..............................................................................................27 Figure 13: Economics of new coal-fired generation .............................................................................................28 Figure 14: Cost of electricity from new power stations .......................................................................................33 Figure 15: Generation mix in other jurisdictions ..................................................................................................34 Figure 16: Monthly NZ hydro inflows and generation (Jan 2005 to Feb 2010) ....................................................35 CHWF ASSESSMENT 2 Figure 17: Average wind speed vs NZ hydro inflows 1991/2................................................................................36 Figure 18: Weekly GWh equivalent hydro inflows across the seven main New Zealand hydro schemes...........37 Figure 19: Seasonal patterns in synthetic wind generation output......................................................................38 Figure 20: Correlation between national hydro inflows and wind ......................................................................39 Figure 21: Monthly NZ hydro inflows and wind farm supply (Jan 2005 to Feb 2010)..........................................40 Figure 22: Correlation between CHWF and Tararua Wind Farm..........................................................................43 Figure 23: Correlation between CHWF and TeApiti Wind Farm...........................................................................43 Figure 24: New renewable generation capacity required by 2025 to meet renewable target............................47 Figure 25: Load and generation in the Central region..........................................................................................49