Countdown to a power crisis 

Snowflakes tumbling along the Old Dunstan Road hint at a long winter to come. Here, 700m up on the northern fringes of Central Otago’s Lammermoor Ranges, is giant state-owned power company Meridian Energy’s latest bid to produce enough electricity to allow South Islanders to enjoy a more secure power supply.

Flurrying snow marks out small eddies but there’s little real wind up here today on the 200sq km site where Meridian plans to spend $1.5 billion and install as many as 176 wind turbines with the potential to generate up to 630 megawatts (MW) of electricity – enough to supply both Christchurch and Dunedin.

The true extent of Project Hayes, which spreads across five private properties, is difficult to gauge as the windfarm site disappears into the snowy mists. It has been controversial, as all proposals to generate more electricity are these days, attracting the ire of high-profile Central Otago landscape-lovers such as former All Black Anton Oliver, painter Grahame Sydney and poet Brian Turner.

Meridian says the area has not been identified as an outstanding natural landscape and has already been modified by farming. It was told by opponents of its West Wind project at Makara, near Wellington, to build its windfarms in the back of beyond and that’s what it’s doing with Hayes, it says.

This autumn, low southern hydro-lake levels and drought-depleted Lake Taupo have joined forces with enormously high spot prices to spook consumers and the Government about a possible winter power crisis and force large industries to cut back production.

Low lake levels seem almost an annual event these days, but this year the country is also without 300MW of power from Contact Energy’s now-mothballed New Plymouth thermal station and there are major constraints on our creaking, ageing transmission network, including the cables across Cook Strait, that will make it hard to send power south if the lakes keep emptying.

Underlying all this is a sudden cold start to May and a spike in demand, and the fact that New Zealanders are on average using two to three per cent more electricity each year. This combination of problems could lead to blackouts and has the industry worried. They’re calling it “The Perfect Storm”.

If Meridian hadn’t stunned the nation by ditching its $1.2b Project Aqua hydro development back in March 2004, the first power from the 540MW scheme would be coming on-stream about now, bolstering the security of the South Island’s power supply and lessening dependence on North Island thermal power fed across Cook Strait when the lakes are low.

Instead, Kurow, on the North Otago bank of the Waitaki River, is still sitting at the end of the hydro chain that in a good year generates one-quarter of the country’s electricity and more than 60% of our hydro power.

Aqua’s canals would have changed the face of the lower Waitaki valley, but in its favour it would have been highly energy efficient, using the same water that had already been through eight power stations upstream. Meridian pulled the plug on Aqua, which would have provided enough electricity for 375,000 homes in a typical year, after spending nearly $100m on feasibility studies, saying a raft of setbacks, including uncertainty about water rights and mounting costs, led to its decision. The shelving of Aqua galvanised the focus of Meridian, which now markets itself as the country’s only energy provider with carbon neutral electricity generated using solely renewable resources.

Meridian’s investment, actual and planned, in wind power is clear, with White Hill in Southland and Te Apiti in the Manawatu already operating, the $430m West Wind project under construction and appeals against consents for Project Hayes due to be heard in the Environment Court in a few weeks’ time.

Meridian is still eyeing up the lower Waitaki. The current $900m North Bank Tunnel Concept would take water from Lake Waitaki, push it through a 14m-diameter tunnel bored below the hills on the northern side of the river and discharge it back into the Waitaki 34km downstream, generating between 200 and 265MW, enough for every household in Christchurch. The first stage of resource consents for the project’s water use have been lodged with Environment Canterbury.

Eddie Stead is a “hydro-child”. The Twizel-based generation hydrologist for Meridian was born in the mid-1960s in Otematata where his parents were living while his father worked on the Aviemore and Benmore schemes.

He spent 15 years outside the Mackenzie Country but came back because he “couldn’t get the place out of my system”. Stead has watched the ceaseless rise and fall of the southern hydro lakes for many years and appears not overly concerned at the low levels of Lake Tekapo and Lake Pukaki this autumn. Lake Pukaki is the “battery bank” of the Waitaki scheme, and while it has a marginally smaller catchment area than Tekapo, it has about twice the amount of storage available for generation when full.

“I grew up here. I love the Waitaki scheme – it has hardly any effect on the environment.

“Often we get calls from people who say they have never seen the lakes this low, very often tourists or from the North Island, who see the level of Lake Taupo.

“A guy standing on gate 16 called from there to say he didn’t like the look of the lake (Pukaki) level and could we make it higher, please,” he says drily.

The 1992 winter crisis was “a close call”, Stead remembers. Emergency measures were passed to allow Pukaki to be drawn down below its usual minimum operating level but in the end rain intervened. And in his view it’s that ability for massive amounts of north-westerly rain to fall in the lake catchments in just a few days that means there’s no need to panic about lake levels for the winter, just yet anyway. “It’s not impossible to have heavy rainfall events in the middle of winter. In 2003 there was one in late June, I think it was. The thing to remember is we are very event-driven. When Niwa (National Institute of Water and Atmospheric Research) says there’s a 40% chance of rainfall being lower than average in the next three months, all we need is one decent rainfall event to blow that out of the water.

“Tekapo has risen by 1m in a day before. It’s not unusual to get 300mm (of rain) in 24 hours. But it has to arrive, that is the thing. It’s not in our interests to run out of water.”

Meridian spokesman Alan Seay says it is important to run water and wind generation in tandem. The wind is often blowing if it isn’t raining. “It’s a perfect mix, a marriage made in heaven.”

Spot prices have been high because Meridian is placing a higher value on its water, as there is less of it than normal, he says.

“We are required to act commercially by the Commerce Act and the State-Owned Enterprises Act. There are opportunities and risks. We’ve got to look after it right now but we sure as hell have to look at tomorrow as well.” The massive Benmore Power Station, further down the line from Tekapo and Pukaki, is the biggest in the Waitaki chain and uses six turbines to thump out 540MW of electricity. Benmore power is sent around the South Island and also through the high-voltage direct-current (HVDC) link to the North Island, which starts here, includes the cables under Cook Strait, and ends at the Haywards substation in the Hutt Valley.

Benmore’s 110m-high and 823m-wide earth dam was the biggest of its kind in the Southern Hemisphere when completed in 1964. Water from the 75sq km artificial Lake Benmore races down six huge concrete penstocks on the Otago side of the dam to the powerhouse turbines before rejoining the Waitaki River.

Starting in August, Benmore will undergo its first major upgrade since commissioning in 1965. The $70m refurbishment of the power station includes electrical and mechanical upgrades, and work on the turbine runners and the transformers. In the depths of Benmore, rubbing shoulders with the turbines and dodging the leaks, the power of the operation is overawing. It’s noisy and uncomfortably warm in the safety overalls supplied; the smell of hot grease and oil is vaguely nauseating. The scale of things, of the amount of energy being produced and of your own insignificance, is overwhelming.

When former Transpower chief executive Ralph Craven announced in October last year that the older of the two HVDC “poles” (which include the three cables under Cook Strait) was being shut down because of age, it threw the industry into a spin. Meridian’s former chief executive Keith Turner was annoyed and forecast the move would have major repercussions for the country if dry weather meant hydro lakes were low.

Mothballing a pole could not be done overnight and he accused the national grid company of having a “cavalier attitude” when originally it had planned to close it in 2010.

Craven reassured consumers there was more than enough capacity in pole two to supply them without causing significant price differences through to 2012, soothing words at odds with the skyrocketing spot prices experienced in the last couple of months. Turner’s predictions have, of course, come true.

The South Island has to some extent been cast adrift and now has a much less secure supply of electricity than it normally would in a year with low lakes.

In past decades, the flow of power across Cook Strait was predominantly south to north, with just the occasional reversal. But in recent years that pattern has changed, with the South Island often heavily dependent on North Island power sent through the HVDC.

Some recent work on pole one means it can be brought into limited action at between half an hour’s to four hours’ notice, depending on who you talk to, but it will be of no use to southerners as it can only take power one way – north.

Pole two can still work both ways but, according to new Transpower chief Patrick Strange, it is constrained southwards by a lack of South Island generation. To ensure there are no sudden blackouts if the HVDC trips, there has to be as much electricity on “spinning reserve” in the South Island, to be generated at an instant’s notice, as there is being sent across Cook Strait, he explains.

And if there isn’t much that can be on stand-by, only small amounts can be transferred on the HVDC. Strange says another significant grid constraint at Bunnythorpe in the Manawatu is also hampering how much North Island thermal-generated electricity can be sent past there to Wellington and then south. This constraint is being blamed by others on years of under-investment in the grid by Craven’s predecessor as head of Transpower, Bob Thomson. Thomson was and still is a big advocate for distributed generation – small-scale electrical generation close to where it will be consumed – but will not comment on those claims. So do these generation and transmission constraints mean power cuts are on the cards this winter? Strange calls the South Island’s situation “exceptional”, but won’t be drawn on the possibility of blackouts. “I don’t know. It is very difficult. We never want to get to that. But we don’t want to be where we are now.”

The Government and Energy Minister David Parker have been keeping a deliberately low profile on this autumn’s problems. Vocal Auckland power consultant Bryan Leyland is among those who believe a power shortage would be highly embarrassing for the Government in an election year, given it has already had to handle three other scares since 2001.

Strange has been appointed industry spokesman on the issues, effectively keeping Parker at arm’s length. Before Meridian’s Turner stepped down in March, he is understood to have pushed for Strange to take the spokesman’s job at a meeting of power company chief executives, saying Strange had spoken well on behalf of the industry in the 2003 winter shortage and, as head of Transpower, was in an ideal position to take an overview of the sector.

A former senior power company employee, who does not want to be named, says Parker is doing the right thing by not micro-managing the situation.

“He is passionate about New Zealand, taking a long view on energy. He should be sitting back and letting the industry sort it out, and make it clear the industry is trying to sort it out.”

Parker has spoken sparingly about the problems, but last week issued a tongue-in-cheek release using questions and answers to set the “power crisis myth” straight. It was greeted with some derision – Leyland calling it “pathetic” – and contained an embarrassing mistake, asking which political party shows signs of disestablishing the Electricity Commission and answering “Labour”.

The kind of opposition drummed up by the likes of Oliver, Turner and Sydney against Meridian’s Project Hayes typifies the conundrum of wanting more electricity, but not if it’s generated in our own backyards. Nobody can deny Central Otago is a beautiful and special place, with its rocky tors, broad valleys and vast uplands, but Meridian says it has chosen its site carefully in a location that is already modified and has not been specially recognised for outstanding landscape characteristics.

On the road from Patearoa to Paerau, heading towards the windfarm site, it’s obvious farming has already completely changed the landscape. Herds of friesian cows are munching through vivid green paddocks transformed from the original Central Otago brown by irrigation. Higher up on the Lammermoors, flocks of sheep huddled against ridges bleat in the cold air and rabbits bound across the road.

The reality for the South Island is that Project Hayes, or a Hayes-sized project, is now urgent. Conserving power is something we should all do as a matter of course, but while more people are installing heat-pumps, using heated towel rails and may, in the future, consider electric cars, those who believe energy conservation can reduce demand are dreaming. It’s a hard set of issues to deal with and many people resist change. But some difficult and unpopular decisions will have to be made while New Zealanders keep consuming power like it’s going out of fashion.

Paul Gorman

The Press

stuff.co.nz

10 May 2008