Sunday, November 1, 2009

The problem with correct information out of context

Deborah Coddington is an honest woman. She admits in her column
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10606549&pnum=2
that she, with the Martinborough community, are "not opposed to wind farms per se" but that she, like the Martinborough community, don't want them anywhere near her. Fair enough. This is a real problem with renewable energy that New Zealanders will have to get their heads around. see http://www.energycomment.co.nz/2009/10/wind-energy-doctor-jekyll-and-mr-hide.html

Ms Coddington reported that a recent Martinborough community meeting was addressed by a Mr Rob Morrison. Mr Morrison is, according to Coddington, a co-founder of the Copenhagen Climate Council (I don't doubt this I just haven't checked it); and an architect of the arrangements that may replace the Kyoto accord. Unfortunately I think the statements attributed to him in the column are generally out of context, misleading and somewhat disingenuous.

The points attributed to Mr Morrison are:
  • generating energy from wind costs twice as much as the price received
  • you can't store wind energy (yet)
  • it won't help with winter peaks in demand
  • it won't replace coal
  • it won't mean cheaper power and it means more expensive bills
  • New Zealand already has numerous choices to build generation capacity to meet future electricity demand

Well two out of six is... pretty bad actually.

Lets look at these assertions. "Generating energy from wind costs twice as much as the price received" - not necessarily true. I assume Mr Morrison is using information about many European wind projects where the very high "feed-in tariff" subsidies have lead to many uneconomic developments. New Zealand has no such subsidies but does have windfarms that are close to the money. New Zealand has some very good wind sites, with good average wind speeds, but not everywhere.

"You can't store wind energy (yet)" and "it won't help with winter peaks in demand" - both of these statements are true.

"It won't replace coal" - false. Mr Morrison may mean here that coal power stations will still be required to ensure security of supply under most renewable energy scenarios. If this is the statement that he is making then I agree (see http://www.energycomment.co.nz/2009/10/what-now-for-huntly.html) but I still think the statement is misleading. Even under the scenario where the Huntly coal power station is retained for security of supply then all wind energy that can be delivered to demand (transmission can be an issue) will offset the marginal generator, which will normally be Huntly coal. Wind energy will be maximised and coal energy minimised. This is wind energy replacing coal energy even if the coal station is still required for energy security.

It is in Mr Morrisons assertions that "it won't mean cheaper power and it means more expensive bills" that I cannot but feel that Mr Morrison is being highly disingenuous. Contrary to popular opinion generators are unable to force any price they like in the wholesale electricity market. If a generator builds an uneconomic power station then they will lose money. But the best windfarms in New Zealand will be economic because there will be a device that significantly increases the cost of power and will mean more expensive bills. And that device is Mr Morrison's own Copenhagen Climate Change response. New Zealand's best windfarms will become economic because of a deemed cost of carbon (deemed by a market mechanism far more arbitrary than any electricity market) that will increase everyone's power bills.

And finally "New Zealand already has numerous choices to build generation capacity to meet future electricity demand" - false. New Zealand is in an energy crunch. We don't have significant proven energy reserves in gas, although the gas is probably there. Major hydro schemes are a no no, and there is limited further developments in any case. Geothermal is all go but is fundamentally limited. Solar and marine are possible future choices but are many years away from being commercial. Small distributed generation is mostly too expensive (there are significant economies of scale in electricity - although technology continually improves this). Wind is definitely a current part of New Zealand's energy future (but only those sites that have the consistently high wind speeds).

Mr Morrison suggests we use less and put the effort into energy efficiency. This I can also agree with. There is a lot of potential in energy efficiency. However, I believe everyone continues to underestimate the true opportunity costs in energy efficiency, which I believe is why there continues to be little take up. We don't yet understand these opportunity costs properly and, therefore, we don't yet have the correct policy levers to encourage energy efficiency. I agree that this should be properly focused on.

Mr Morrison reputedly calls on power companies to stop being sneaky, and this may be good advice. However, probably accidentally, there is a degree of sneakiness in Mr Morrison's own reported comments.

The final comment in Ms Coddington's article is "build your farms far away from people." I'm sorry. It's just not that simple.

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