Manapouri the fulcrum for future NZ energy costs

Waihōpai - Anyone would think clean green pure New Zealand has excess supply and an abundance of new opportunities for low cost development of renewable energy in general and electricity in particular.

It will require billions of dollars of investment in new geothermal, solar and wind generation to achieve NZ’s targets to decarbonise ground transportation, low and medium temperature process heat and energy production.

Even so, Aotearoa will need to spend billions more buying emissions units from foreign countries to meet our fair share of emissions reductions under the Paris Agreement.

The pivotal point of renewable power in NZ is the Manapouri power station, which is controlled by the majority Crown owned generator Meridian Energy.

It is a strategic asset than can and must be used to serve the national interest.

New Zealand could be the world’s first large-scale producer of green hydrogen, according to a recent report by consultancy McKinsey & Company, commissioned by Meridian and Contact Energy.

Registrations of interest to develop a hydrogen plant in Southland are also being sought.

Green hydrogen is regarded as the most promising energy source to decarbonise sectors such as heavy transportation and industrial processes that rely on fossil fuels.

Meridian and Contact are investigating the use of renewable energy in Southland to produce green hydrogen at scale, once the supply agreement with New Zealand Aluminium Smelters finishes at the end of 2024.

Southland has the potential to be at the forefront of this growth opportunity, the two energy companies say.

A green hydrogen plant in Southland has the potential to earn hundreds of millions in export revenue and help decarbonise economies both here and overseas, the report says.

Meanwhile, He Pou a Rangi Climate Change Commission has advised government about Manapouri power being offered to all New Zealanders.

Wholesale electricity prices could be $20 a megawatt hour less for the next 10 years than if the power continues to be used by the Tiwai smelter or block sold for export, such as to make hydrogen for Japan.

High electricity prices are needed to reward new investment in generation, incentivise electricity efficiency and, if hydrogen is only made intermittently, stabilise electricity demand to meet intermittent supply from solar and wind.

A mega wind farm in Southland that allowed Manapouri to become part of a national battery network and producing hydrogen only intermittently and not as base load under a long term supply contract,  could serve the national interest and create jobs in Southland.