Lake Onslow Blues

Now we hear from MPI that the Lake Onslow pumped hydro scheme – meant to store enough hydropower for the nation’s electricity shortfall in the event of a “dry year” – is projected to cost 4 times more than initially anticipated – a new price tag of $15.7 billion dollars!  In its 16 March newsletter, MPI says it is investigating alternatives.

This setback to the Lake Onslow project isn’t bad news to the many critics of the scheme.  It would be a massive engineering undertaking, with a fair risk of becoming an expensive drain on the nation’s resources. There is no estimate yet on how much it would cost, year to year, to keep it topped up to offset losses from evaporation and leakage. 

The intent of the scheme is noble; to reduce the need to burn fossil fuels for electrical generation during a dry year.  But, it’s overall premise seems to violate common sense; why build a massive hydroelectric scheme to address a problem caused by a lack of water?  Mother always taught us not to put all our eggs in one basket.  Would it not be more logical to focus on other forms of electrical generation that don’t depend upon a scarce, vital resource like water?  Maybe a Lake Onslow scheme would get the country through a dry year, but what about two?  Or, a dry decade?  Global warming isn’t done surprising us.

So, what are the alternatives MPI is looking at?  Some are seem reasonable, like building a smaller pumped hydro-storage scheme in the central North Island or burning charcoal pellets instead of coal at the Huntly Power Station.  

It is clear they haven’t thought very hard about the other alternatives.  Hydrogen, presumably generated by electrolysis of water and stored underground or as ammonia, still comes up, even though it has dismal efficiency compared to pumped hydro. 

MPI also mentions something called “flexible geothermal energy” which, to someone who spent a career in the geothermal industry, sounds like an oxymoron (like “open secret”).   Due to the thermodynamics of hot water and steam, the operation of geothermal power plants is highly inflexible, otherwise it risks accelerated damage to its most valuable asset – the geothermal wells.

What they don’t consider is accelerated development of renewable power sources, such as wind, solar and tidal power.  An abundance of these affordable, renewable power sources, along with charcoal at Huntly and a few pumped hydro-storage projects around the country, would fit well with an “eggs in different baskets” strategy. 

MPI fears that overbuilding wind and solar would lead to higher market prices for electricity.  How too much electricity leads to higher prices isn’t clear.

Perhaps the problem is actually the power market itself.  I ask you, which would give better bang for buck: $16 billion for a pumped hydro project at Lake Onslow or reforming the New Zealand electricity market to promote an abundance of wind, solar and tidal generation?

The present generation spot market is dominated by a quasi-monopoly of four big, highly profitable companies.  The market incentivises shortages by setting higher prices when electricity supplies are short, which has resulted in retail electricity prices rising faster than inflation.  The 1998 Bradford reforms, which were supposed to deliver cheaper electricity to consumers, has resulted in ever increasing energy bills for residential customers and ever fluctuating power prices for industrial customers.  It has clearly failed to deliver on its promise of cheaper power.  Reform is well overdue.

How about, instead of looking to build giant infrastructure projects like the Lake Onslow scheme, the government focus on reforming the electricity system so that it provides the generation needed to get us through a dry year (or decade).  That reform might also look to provide reasonable and stable power prices to consumers and industry, instead of the escalating prices we are seeing now.

The Interim Climate Change Commission has pointed out that lower retail electricity prices will also act to reduce greenhouse gas emissions, by further incentivising industry to replace fossil fuel in process heat and transport with electricity.  Reportedly, that uncertainty in the future price in electricity is holding many companies back from making the transition. So, low and stable electricity prices will help abate carbon emissions too.
​
And for Kiwis struggling to make ends meet, a lower, more certain electricity bill would be a welcome sight.