Evolving the electricity market to optimise New Zealand’s renewable potential New Zealand could have the greenest grid in the world - that was the view that Kieran Devine, System Operator at Transpower, presented at an NZWEA workshop in October. The aim of the workshop was to consider how the electricity market could be evolved to accommodate the changing profile of electricity generation in New Zealand. The electricity market operates under rules that were established to optimise the use of water and fossil fuels for electricity generation. But since the rules were established, technology has evolved. Wind and geothermal are making a growing contribution to generation, predominantly because they are the cheapest options for new generation. Computing power has improved – meaning the computers behind the electricity system can do more in less time. And we are only beginning to see the potential of demand-side management. The market rules need to evolve to accommodate changes in the market and future trends, so that the grid – and therefore New Zealanders - can get maximum benefit from the technologies that are operating in the electricity system. Currently wind generation is “bolted on” to the electricity market. Wind is offered in at 1 cent and so is a price taker. However, if wind were to operate at the margin, as a price setter, investors may well be able to achieve a better return on their investment in wind farms. At the same time, wind farms could be designed and operated in a way that contributes positively to grid stability. The question is what would this actually look like? Providing ancillary services is one way that wind farms can contribute to grid stability. According to Markus Fischer from German turbine-manufacture Enercon the power electronics in wind turbines have advanced rapidly in the last five years and will continue to do so. Modern wind turbines can now contribute to frequency keeping, reactive power, inertia and reserves. For example, modern wind turbines can provide a faster response for reserve generation than hydro generation can. But the market rules would need to be changed to incentivise wind farm operators to run their wind farms in a way that they can provide reserves. Already the potential is being explored and, to a limited extent, exploited. The System Operator’s view is that a wind farm north of Auckland could act as a static reactive compensator, avoiding the need for Transpower to make a specific investment in such a device. Te Uku wind farm currently contributes to grid stability - even though it is embedded in a local network it contributes to the stability of the Huntly–Taranaki line. The technology is available. We now need to identify a way for wind farm operators to be incentivised to install it. Enabling wind to bid into the market like other forms of generation is one way to create an incentive. But to achieve this, accurate wind forecasting coupled with a rule change to reduce the time between when generators must bid into the market and when they must dispatch that generation (referred to in the industry as ‘gate closure time’) are required. Meridian is achieving some success in its efforts to improve its forecasting for its wind farms. Wind is already operates this way in Spain, the UK and Alberta. Wind is now an integral part of electricity systems around the world, and New Zealand is no exception. As the cost of wind energy continues to reduce its will contribute a growing share of generation. The opportunity over the next year or two is to ensure that the policy and regulatory framework is in place so that New Zealand’s electricity system – and New Zealand – can make the most of what wind, along side other emerging technologies, is capable of delivering. More information Workshop presentations Renewable energy outlooks positive The fourth edition of the Global Wind Energy Outlook, published by the Global Wind Energy Council and Greenpeace, shows that wind power could supply up to 12% of global electricity by 2020. By 2030, wind power could provide more than 20% of the global electricity supply. A core message of the Wind Energy Outlook, which also reflects the New Zealand situation, is that the most important ingredient for the long term success of the wind industry is stable, long term government policy that sends a clear signal to investors about the government's vision for the scope and potential for the technology. GWEC’s message about the potential of wind is reflected in the International Energy Agency's World Energy Outlook, released earlier this month. In its outlook IEA suggests that renewables could become the world’s second-largest source of power generation by 2015 and close in on coal as the primary source by 2035. A steady increase in hydropower and the rapid expansion of wind and solar power has cemented the position of renewables as an indispensable part of the global energy mix, according to the report. While subsidies will be important for the development of renewables, subsidies for fossil fuels still dwarf those for renewables. Fossil fuel subsidies rose by 30 per cent from 2010 to 2011 to more than $520 billion per year. Renewable energy received subsidies of $88 billion worldwide last year. In New Zealand, as is the case overseas, renewables do not receive the same level of government support as fossil fuels. Apart from the Projects to Reduce Emissions scheme, which ended in 2004, the wind industry has received very little direct government support. And with no floor on the price of carbon and with carbon prices currently sitting around $3 per tonne, the Emissions Trading Scheme makes very little difference to renewables. In recent months the government has indicated it will take part in a campaign to promote the benefits of oil and gas exploration, with the aim of changing public perception and also assist councils with fracking applications. NZWEA finds this disappointing as the government has put little effort into implementing one of its key tools for achieving the 90% renewable electricity target, the National Policy Statement for Renewable Electricity Generation. New Zealand’s wind industry does take pride in the fact that it has grown steadily as a result of its own efforts, but none-the-less, stable policy that provides a level playing field for renewables is key to enabling New Zealand to make the most of its abundant renewable energy resources. Read more: Global Wind Energy Outlook http://www.gwec.net/publications/global‐wind‐energy‐outlook/ IEA World Energy Outlook http://www.iea.org/newsroomandevents/pressreleases/2012/november/name,33015,en.html NZ Wind Energy Conference and Exhibition 20‐22 March, 2013 Wellington Town Hall The NZ Wind Energy Conference and Exhibition is the annual event for all of those active or interested in the wind energy industry. Conference programme The programme for the conference is now available. As in previous years, we have an extensive array of speakers who will cover a wide range of topics, including technology developments, wind forecasting, operations and maintenance, health and safety, wind farm design, and consenting issues. This means, no matter what your involvement in the industry is, there will much of interest to you. View the programme Register online Keynote speakers NZWEA is pleased to announce Dolf Gielen and Hugh Outhred will provide keynote addresses at the conference. Dolf Gielen is the director of the International Renewable Energy Agency (IRENA) Innovation and Technology Centre in Bonn. IRENA is an intergovernmental organisation dedicated to renewable energy.In accordance with its Statute, IRENA's objective is to "promote the widespread and increased adoption and the sustainable use of all forms of renewable energy". The Innovation and Technology Centre advises member countries in the area of energy planning, cost and markets and innovation policy frameworks. Dolf will discuss the comprehensive work IRENA recently completed which looks at the costs of renewable energy technology. He will provide valuable insights into the current state of deployment, types of technologies available and their costs and performance. Prior to his current assignment Dolf worked for the International Energy Agency and the United Nations Industrial Development Oranisation. Dolf has a PhD from Delft University of Technology in the Netherlands. Hugh Outhred, Professorial Visiting Fellow at the University of New South Wales, will provide delegates with a case study of how wind energy has developed in South Australia to the point where it now provides over 25% of the state’s electricity. He will discuss how wind fits into the Australian National Electricity Market, the implications for other generation, and the opportunities and challenges for South Australia's wind industry now. Hugh has a wide and varied career in the electricity industry, but of most interest to us is his experience with wind energy integration in Australia. In 2002-2003, Hugh provided advice to the Australian Greenhouse Office and the Electricity Supply Industry Planning Council of South Australia on wind energy integration. From 2005 to 2009, Hugh led a UNSW research project for the Australian Greenhouse Office on facilitating the uptake of wind energy in the Australian electricity industry and in 2010 he lead a project for the Australian Electricity Market Operator to develop a prototype tool to predict large, rapid changes in the aggregated power output of wind farms in the National Electricity Market. View the programme Register online Sponsorship and Exhibition opportunities The conference is ideal place to communicate with all the players in New Zealand's wind energy industry. And taking part is a great way to increase the exposure of your company or brand within New Zealand's wind energy industry.