Case Study on The Development of the wind industry in New Zealand Report for APEC September 2016 Eric Pyle, CEO, NZ Wind Energy Association i Contents Structure of this report ........................................................................................................................... 1 Timeline of the wind industry in New Zealand ....................................................................................... 2 Recommendations: ............................................................................................................................. 4 The New Zealand electricity sector ......................................................................................................... 6 An electrically weak power system ..................................................................................................... 8 The wholesale electricity market ........................................................................................................ 9 The policy and institutional setting ................................................................................................... 11 The 1980s and 1990s .................................................................................................................... 12 The late 1990s onwards ................................................................................................................ 13 Institutional and policy settings summary .................................................................................... 13 Recommendations relating to the overall electricity sector: ....................................................... 14 Getting the industry started ................................................................................................................. 15 1970s and 80s – the early years ........................................................................................................ 15 The key ingredients ........................................................................................................................... 16 Collecting the data – detailed understanding of the wind resource in New Zealand ...................... 17 Recommendations: Starting the industry ........................................................................................ 17 Getting the first few projects underway; successes and some learnings ............................................. 18 The Brooklyn wind turbine - The first commercial scale wind turbine in New Zealand; 1993 ......... 18 Learning from a failure – Baring Head and Te Uku ........................................................................... 20 Haunui – the first multi-turbine windfarm; 1996 ............................................................................. 22 Tararua 1 – the first large wind farm (48 turbines); 1999 ................................................................ 23 Te Apiti – the first wind farm using large turbines; signalling the market-driven switch from hydro to wind .............................................................................................................................................. 24 Gebbies Pass - The Windflow 500 turbine ........................................................................................ 26 Three phases; small, large and medium-scale development ........................................................... 27 A plan for the industry ...................................................................................................................... 27 Helping the industry learn and reducing costs ................................................................................. 27 Recommendations from the first few projects and the evolution of the wind industry in New Zealand .............................................................................................................................................. 28 Grid and market integration ................................................................................................................. 30 Wind and the electricity market – new market rules to accommodate wind generation ............... 31 The tactical wind project................................................................................................................... 32 Wind and system security – the wind grid integration project ........................................................ 32 i Results from WGIP ........................................................................................................................ 36 WGIP – outcomes and next steps ................................................................................................. 41 Recommendations – Market and grid integration ........................................................................... 43 Performance of windfarms ................................................................................................................... 44 Case study: Wind keeps the lights on in New Zealand’s capital city ............................................... 44 Case study: Wind farms strengthening the grid at the distribution level ........................................ 46 Recommendations – strengthening the grid and distribution systems............................................ 46 Operations and maintenance – creating local jobs .............................................................................. 47 Case study: Ashurst Engineering ...................................................................................................... 47 Recommendations: Operations and maintenance .......................................................................... 48 Natural resource management and consenting (environmental planning) ......................................... 49 Noise issues ....................................................................................................................................... 49 Recommendations: Noise ............................................................................................................ 51 Wildlife issues – birds a key issue ..................................................................................................... 51 General principles ......................................................................................................................... 51 Raptors .......................................................................................................................................... 52 Migratory bird species .................................................................................................................. 52 Recommendations: Birds ............................................................................................................. 53 Landscape issues ............................................................................................................................... 53 Recommendations: Landscape .................................................................................................... 54 The New Zealand Wind Energy Association.......................................................................................... 55 Evolution of the association .............................................................................................................. 56 Case Study: The annual wind energy conference ............................................................................ 56 Case study: Health and safety programme .................................................................................. 57 Case Study: A report on the cost of wind energy versus other forms of generation .................. 58 Recommendations ............................................................................................................................ 60 Research ................................................................................................................................................ 61 Summary and conclusion ...................................................................................................................... 62 ii Structure of this report This report outlines the development of the wind industry in New Zealand. The structure of this report is as follows: • A timeline of the development of the wind industry in New Zealand. • An outline of the characteristics of New Zealand’s electricity system. Wind needs to be integrated into an electricity system. When considering how wind developed in New Zealand and the issues that have been addressed it is important to have a broad understanding of the electricity system. • Understanding how wind became recognised as being an effective source of generation in New Zealand. • Grid integration. The issue of integrating wind has been a focus of considerable study in New Zealand because of the electrically weak nature of the power system. • Consenting1 issues, such as managing noise, impacts on wildlife etc. • Operations and maintenance. New Zealand’s wind resource is extreme potentially placing significant stress on turbines. • The important role of the New Zealand Wind Energy Association (NZWEA) in helping the industry develop. 1 The term “consenting” means all aspects of environmental planning for windfarms. 1 Timeline of the wind industry in New Zealand • 1970s: University researchers explore New Zealand’s wind resources, including details such as understanding turbulence. • 1970s: Research programme is established