A policy Analysis by Jack Young, Engineer specialising in industrial energy management and sustainability. For the shorter summary version go here.
On 12th July 2020, the New Zealand Green Party released their Clean Energy Plan:
“The Green Party has always been clear that climate change needs to be tackled now, and we’ve done more in the last three years than the past 30 years of government combined.”
Green Party Policy Announcement – 12 July 2020
They are definitely right about urgent action. They’re also right about the progress in the last term. Their recent success was the Zero Carbon Act, spearheaded by Generation Zero and driven by Green Party co-leader James Shaw, which passed in 2019 with unanimous Parliamentary support. It contains a number of policies shared by Labour and the Green Party. It is a framework to set up stable policy for any future NZ government to reduce net emissions of all greenhouse gases (except biogenic methane) to zero by 2050, and to reduce biogenic methane by 24 percent or more.
The most important part, apart from enshrining the zero-carbon target into law, is the establishment of an Independent Climate Change Commission (ICCC) to advise future governments on targets and pathways, and measure/report on their progress.
The Green Party were also key players in passing other major climate-related policies such as a reform of the previously ineffective Emissions Trading Scheme, and the ban on issuing permits for new oil and gas exploration.
So how does the Clean Energy Plan stack up?
The Green Party’s big-ticket items in the Clean Energy Plan are:
• 100% renewable electricity by 2030
• Equip all public housing with solar PV panels
• Subsidise solar PV panels by 50% for the general public
• Create a $250M fund to support communities and iwi with solar PV
• Training for clean energy careers
• Ban new fossil-fuelled industrial heating systems and boilers
• Increase support for businesses to transition away from fossil fuels
• Stop issuing onshore permits for new fossil fuel extraction
• Update planning rules for new wind farms
The Clean Energy Plan is separate but related to the Green Party’s Energy and Climate Change policy documents.
What have the Green Party done well?
The Clean Energy Plan has some encouraging points – recognising the need for a rapid reduction in carbon emissions – but doesn’t prioritise effective ways to achieve this outcome. While effective measures are discussed in other Green Party policy documents (such as increased funding for energy efficiency, fuel-switching away from fossil fuels, and planning for an overall reduction in energy and fossil fuel use) their Clean Energy Plan seems confused. It has a major focus on funding solar photovoltaics (PV), accelerating the Government’s target for 100% renewable electricity, and some other regulatory and funding improvements.
But aren’t solar PV panels A Good Thing?
Solar PV panels generate electricity from the sun and have good potential to reduce emissions from electricity generation, especially in sunny countries with electricity generation dominated by coal and natural gas power stations. However, in NZ most of our electricity is already renewable; with hydro (~64%), geothermal (~18%), and wind (~5%). Coal and natural gas only make up about 2% and 11% respectively. Because solar PV panels generate electricity during the middle of the day, they will mostly offset renewable electricity generated by hydro, geothermal and wind.
The panels have zero ongoing emissions once installed, but a hugely significant embodied emissions from their manufacture. In Australia, Poland, and the USA for example, power generated by solar PV would largely offset power from coal/gas power stations – with a huge net reduction in carbon emissions over the life of the panels. This would be a very good thing. But this is not the case in NZ.
The Green Party advocates for using Life-Cycle Analysis to evaluate building options in the construction sector. But using this same process to evaluate solar PV panels– considering their embodied energy and emissions – shows that the net emissions benefits of solar PV are very low or non-existent in NZ. It doesn’t make sense to replace our already renewable electricity with solar PV. The embodied emissions of solar PV are estimated to be about 2,500 kg of CO2 per kW of panel rated output2. This is a median value, with some PV panels lower and some higher than this. In NZ it will take a solar PV panel 20+ years to displace the embodied carbon emissions from manufacture, assuming an annual NZ grid average carbon intensity. However, the panels only last for 20-25 years, giving little net benefit over their lifetime. And keep in mind that the emissions to make the panels are released into the atmosphere right now, all at once.
Perversely, if more (already consented) wind is added to the NZ national electricity grid as planned, or if Tīwai Point smelter closes down, this will make NZ electricity even cleaner but make solar in NZ even worse from a carbon emissions perspective. It could likely mean that a solar panel installed in NZ might not ever pay off the carbon debt from its manufacture. While manufacturing improvements mean some of the embodied emissions from solar PV are slowly decreasing, they can’t approach zero because fossil fuels like coal must be burnt as a chemical reductant in the process of refining silicon.
The refining process for silicon to make solar PV panels is complex and emissions intensive:
Here in NZ, mass uptake of solar will provide extra electricity generation when we hardly use it – during the middle of the day – and little or nothing in the evenings when we do. With more solar PV there will be a sharper, faster rise in peak grid power demand in the evenings and the only way to manage this cost-effectively is with fast starting gas-fired ‘peaker’ stations. Widespread uptake of solar panels in NZ is expected to cause more gas peaker stations to be built – backfiring on the goals for a cleaner electricity grid.
Output from solar panels decreases dramatically in NZ’s winter due to shorter days, a weaker sun and more cloud cover. The large amount of distributed generation will also require significant upgrades to Transpower’s national electricity grid, although some of this is needed anyway for future expansions. However, the costs that can be attributed to the impact of residential solar PV do not fall on those installing it, instead falling on the other electricity consumers in the system as a whole. This means that those homes installing (grid-tied) solar PV in NZ are effectively being subsidised to do so already by the rest of NZ’s residential electricity users, who must shoulder the cost of the network upgrades needed to manage the output of solar PV panels.
On a purely dollar cost basis, solar PV panels without a battery may pay themselves off over about 8 – 10 years in NZ. But fossil fuels are cheap too – and cost isn’t the only outcome that’s important.
If batteries are added to (grid-tied) solar PV as the Green Party intends, the systems could time-shift to deliver each day’s solar power when it is actually needed by residential users (in the evenings). But they can’t economically store energy across seasons, which is what we actually need in NZ, since we typically have a surplus of electrical energy available over summer and limited hydro storage to use this energy in winter. This may mean we need more back-up power generation just for winter, which could drive up electricity costs for everyone. And concerningly, accounting for the battery Life Cycle Analysis means nearly doubling the embodied emissions compared to solar PV alone, as well as roughly doubling the upfront cost and increasing the resources and minerals required. Research on the likely emissions impact of batteries in NZ show they will have little overall effect on NZ’s electricity emissions. Surely if we’re going to manufacture countless batteries, it should be to replace petrol and diesel engines instead of replacing (mostly) renewable power?
The Clean Energy Plan estimates that a solar PV system with battery will cost around $20,000 per household. For 63,000 public houses, they estimate a total cost of about $1.3 Billion. This seems like an expensive way to do very little about carbon emissions.
Note; a battery would allow the stored solar power to be used during the evening peak, and could probably give a larger reduction in carbon emissions if calculated against the electricity market’s marginal generator – likely a gas peaker plant. However, this analysis is complex due to the many factors and many players involved, and the improved accuracy of this approach is not clear.
In terms of actual electrical energy generation installed, this focus on solar PV is also a waste. If NZ did manage to install a 4-kW solar PV system onto 63,000 homes this would generate about 302,000 MWh per year of electricity (assuming typical generation of 1,200 kWh per year, per kW of panel capacity). This is equivalent to a Geothermal power station generating 34.5 MW continuously. For roughly the same cost ($1.3 Billion), three new geothermal power stations could be built, each equivalent to Mercury Energy’s Ngā Awa Purua (146 MW), for a total continuous output of about 440 MW and annual generation of 3,800,000 MWh per year. This is 13 times more electricity than the Green Party’s plan for solar PV, and would have a far larger impact on replacing coal and natural gas power stations, if it was possible. For reference, this 3,800,000 MWh per year would be five to ten times as much electricity as coal has generated at Huntly Power Station each year (about 400,000 – 900,000 MWh per year, since 2016).
The best solution for NZ is to reduce how much electricity we actually use in our homes, especially our 63,000 public houses, through upgrading the homes with more efficient lighting and heating systems and best practice insulation. This should be our first and highest priority – we don’t need to build more power stations or solar panels to generate more renewable electricity, just to waste it in cold, poorly insulated homes.
Another area which could have a more effective reduction in emissions than solar PV would be solar hot water systems. These can only partly replace grid electricity for heating domestic hot water, but could reduce overall household electricity consumption by about 20 – 25%. They typically have a much lower initial cost and much lower embodied emissions than solar PV.
No – solar PV panels will not help us much in reducing NZ’s overall emissions, unless you completely ignore the (overseas) emissions from panel manufacture. But we can’t and shouldn’t ignore those – our global atmosphere is not divided by country, so we need to consider global emissions via a tool like Life-Cycle Analysis, as the Green Party rightly recommends for building materials.
Should we rush to target 100% renewable electricity?
NZ is already most of the way there – in 2016 we generated 85% of our electricity from renewable sources and had a very low overall grid emissions factor as a result. The Green Party’s focus on accelerating the 100% renewable target for electricity generation is a distraction. We don’t need 100% renewable electricity; we just need mostly renewable electricity so that our electricity emissions are kept low. Modelling by the ICCC suggests we will be at around 93% renewable electricity by 2035 even without further government intervention. This level would allow natural gas to be used as a stabilising component which could encourage more renewables like wind over the next 10-15 years. But the last few percent of generation to reach 100% renewable electricity will be extremely expensive – driving up the cost of electricity for everyone – which will divert investment money away from effectively reducing emissions6. For example, investment in industrial energy efficiency, electrification of transport and replacing fossil fuels in space/process heating (especially coal/gas) with electricity or biomass will be far more effective at reducing emissions in NZ.
Our electricity grid emissions in NZ, per kWh of electricity generated in 2016 (the latest year for which data is available) were 98 g of CO2 per kWh4. In Australia, which still relies heavily on coal despite large solar uptake on residential buildings, the grid average electricity emissions are about 8 times higher at 800 g CO2 per kWh14. Electricity savings or solar PV in Australia will reduce emissions by 8 times more than in NZ – we’re lucky that our electricity is already relatively clean by comparison. Our focus must be on electrifying activities which are currently burning fossil fuels. Combined with improved efficiency, we can reduce emissions and minimise the burden of constructing new power generation.
So no – a focus on reaching 100% renewables is unfortunately mostly virtue signalling, and isn’t a great way to reduce actual emissions. We have far more effective options outside of the electricity sector.
Other policy
The other regulatory and funding improvements suggested in the Clean Energy policy document include:
• A clean energy industry training plan to train new workers – this is a promising step to address a predicted skills shortage for the energy transition, but vague on any details.
• A swift ban on new fossil-fuelled industrial heating equipment – this is ambitious and will face strong opposition, but could avoid the purchase of new fossil-fuelled equipment which could operate for 20-30 years or more.
• Tripling of government support to help businesses who can switch from fossil fuels to cleaner options like electricity and biomass – this is a great initiative and will be needed to support the previously mentioned ban. It will make a large difference in reducing the emissions from businesses in NZ, with already proven technologies like biomass, direct electric heating and heat pumps. However, businesses are also concerned about ongoing energy costs and will be reluctant to switch away from low-cost fossil fuels, and an up-front subsidy won’t necessarily address this.
• Stop issuing permits for onshore gas extraction – this is a move in the right direction but seems premature by 5-10 years, as natural gas is currently a necessary part of our electricity mix and still widely relied on in NZ industry.
• Updating planning rules to make new wind farms easier to build – this is promising, as wind generation has very low embodied emissions – much lower than solar PV. However, we have significant wind generation already consented in NZ, and so making the consenting process easier won’t necessarily mean any new wind farms actually get built. What could be needed in reality is changes to the regulatory structure of the electricity market, or to the responsibility of the Electricity Authority to make power generators actually build these (already consented) wind farms. It would be great to see the Green Party advocating for the public good in these areas.
• Funding five LED light bulbs for every household in NZ – this is a relatively low-cost policy (~$21 Million total cost) but very effective and will have good benefits with reducing electricity peak demand, electricity costs to families, and emissions. It will help all families reduce their electricity bills, but especially low-income families who might not already have efficient lighting installed. This programme should be bigger and more ambitious, which could deliver more benefits to NZ as a whole and to low-income families especially.
• Modernising poles and wires – this recognises that the current electricity distribution companies are not fully equipped to deal with the expected rapid uptake of electric vehicles, electrification of industry and distributed generation (like solar), which changes the dynamics of their systems. However, nothing is actually suggested here except for supporting discussions with Lines companies, which are already happening in the industry.
• Improved coordination of government agencies – this recognises that various government agencies have somewhat overlapping responsibilities. However, this is already a focus of the new ICCC.
Summary
In summary, the Green Party’s Clean Energy Plan has an unfortunate focus on solar PV as a silver bullet, and on the aspirational target of 100% renewable electricity, both of which risk diverting billions of dollars in funding from other effective options which could actually reduce emissions in NZ. The focus on solar PV will raise the cost of the current transition for everybody, and stall our collective efforts to reduce carbon emissions.
Here in NZ we can’t claim that solar PV is zero emissions, when the panels themselves have significant embodied carbon emissions. As the Green Party recommends in their Housing policy, we need to use a Life-Cycle Analysis approach. And as they recommend in their Energy policy, we need to plan for a world with substantially less fossil fuels and less energy overall, which means a larger focus on things like energy efficiency, passive solar housing design, insulation, retrofitting existing buildings, low-energy transport options and better urban design.
What could they do better?
The Green Party estimates a cost of $1.3 Billion for their solar PV programme, which would be far better spent on their other options to effectively reduce emissions, reduce overall energy consumption, and more effectively help low-income families.
For example, the Green Party’s Housing policy includes a statement to “support and expand programmes to make existing buildings more energy and water efficient.” This could mean upgrading state housing to need far less electricity in the first place – with more LED lighting (expanding their excellent five LED lightbulb policy), more efficient heating systems and hot water systems, better insulation (roof, underfloor, slab perimeter and walls) and new windows/doors or secondary glazing to stop drafts and reduce heat loss. This would also have significant benefits to the health and wellbeing of the occupants, with a warmer and drier home, and create skilled local jobs in the building sector to expand this work to the rest of our housing stock. Another option which could be complementary to this is a focus on building more public housing, to very high energy standards.
There’s no sense in putting expensive solar PV panels and batteries ($20,000 per house) onto houses, just to use this electricity inefficiently – we’re smarter than that. Because investing in warmer, drier homes has a benefit-to-cost ratio of more than four to one, the Green Party could and should argue for more funding to this area.
In addition, there would be excellent reductions in NZ carbon emissions if the $1.3 Billion was partially put towards improving public transit, or encouraging electric vehicles, per the Green Party’s Transport policy to “support private car owners to switch to electric cars and lead by example by transitioning the government car fleet”. This could be a general subsidy for electric vehicles, or perhaps even targeted options for low-income families. This would have the significant benefit of lower transport costs for those Kiwi families, since electricity is much cheaper than petrol, helping them reduce their weekly expenses. It would also help reduce our reliance and spend on overseas oil, helping to keep Kiwi money in NZ.
Electric vehicles do have more embodied energy and embodied carbon emissions than conventional vehicles, but this carbon debt is paid off in NZ after about 2 years of driving. In other countries, with more emissions-intensive electricity, it would be longer. We cannot stop selling new cars in the next few years; however, we can ensure that more of the new cars we do sell are electric vehicles rather than petrol or diesel vehicles. Subsidies for fleets to purchase EVs will help, as these fleet vehicles will then be sold on to the second-hand market in roughly 5 years.
Any focus on electric vehicles would need to be in parallel with a strong focus on improving public and active transit options, expanding on the Green Party’s Transport policy; “Everyone should be able to get around affordably, safely, efficiently, and with minimal impact on the environment.” Public and active transit have far more benefits than simply electrifying the vehicle fleet, but it is not an either/or decision as the Green Party have rightly specified – we need both.
Overall?
Overall rating: 6/10 – some good options, some poor options, could do better. Let’s see the Green Party put more of a focus on effective ways to reduce emissions, as they do in their Energy and Climate Change policy documents, rather than mere virtue signalling.
The Dig and the Better Futures Forum are running this Transitional Energy Series in order to address what we see as the major questions New Zealand faces surrounding energy if we are to make this transition.
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