The lights had barely come back on in the Waikato last week before the usual suspects were trying to blame the ban on oil and gas exploration.
Judith Collins’ claim that more gas exploration would have prevented last Monday’s outages, or that it is a solution for our future power needs is about as credible as her claim that she got 20 standing ovations at the National Party conference.
The last commercial gas discovery in New Zealand was in 2000. Two decades of exploration, including the Key government’s vision of New Zealand becoming the Saudi Arabia of the South Seas, and nothing else has been found worth drilling. That gas field, Pohokura, took six years to actually produce anything and now, 15 years later, 80 per cent of the gas is gone.
How’s that a long-term solution to Aotearoa’s energy needs? Are we really going to try to find more gas and burn it, releasing tonnes of carbon dioxide even as we’re trying to reduce our impact on the climate? And when it’s gone, then what?
It turns out that the blackouts were probably the result of record demand as cold blanketed the country, some unexpected outages and decisions not to bring plants online, and Transpower overestimating the scale of the problem and hitting the panic button too hard.
But there’s no denying there’s problems with our electricity system.
Since the Bradford reforms in the 1990s, the system has become driven by gentailers trying to maximise their profit. That means keeping expensive fossil-fuel plants in the market to keep the price up and making super profits off cheap hydro and wind power.
Gentailers won’t build so much new generation so that fossil fuel plants aren’t needed, and want to keep the system on the edge of not having enough supply to underpin prices.
More than 3000MW of new renewable power plants are consented, but next to none have been built in the past decade because the gentailers make more money when electricity supply is tight. Running a system on the edge means blackouts are more likely.
The economy is kind of like one giant machine driven by energy. The Bradford reforms make that machine more expensive to run and more liable to break down, which is a drag on the entire economy.
Megan Woods is looking at reforming the electricity sector because of these problems, with a focus on delivering fair and affordable power prices. She’s probably not going to revisit Labour’s complicated NZ Power policy but maybe she could try a Kiwibank-style intervention.
Kiwibank was created to break the comfortable arrangement of the big four Aussie-owned banks and reduce the super profits they were sucking out of the economy.
A new Kiwibank-style power company would be tasked with doing the same thing. It would build plenty of new, cheap renewable power, as well as the dry-year storage at Lake Onslow in pumped hydro, and batteries to spread peak load and avoid blackouts. (Here in Auckland, our lights didn’t go out last week because Vector has batteries ready for just such an emergency, and for spreading out the demand peak on normal days.)
All that would move us to 100 per cent renewable generation and undercut the gentailers’ super profits.
The gentailers would grumble about “over-supply” as if an abundance of cheap, clean energy is a bad thing, but the fact is we are going to need a lot more electricity in the years to come.
If we’re going to tackle climate change, we need to electrify our cars, trucks and industrial plants, all sucking up massive amounts of electricity. The gentailers will always want to build as little as possible and charge as much as they can. That’s just not compatible with our need for a surge in new renewable electricity generation in the years to come.
We need a fix for our broken electricity market. More oil and gas isn’t it. A Kiwibank-style intervention might be.
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