Eric Pyle, Chief Executive, New Zealand Wind Energy Association
Eric Pyle sees the wind sector picking up both internationally and domestically this year.
GLOBALLY THE WIND industry had its best year ever in 2015. That is not surprising given that nearly every year since the wind industry began has been its “best year”. In 2014 some 51GW of new wind generation was installed. In 2015 it was around the 63GW mark and total installed capacity exceeded 400GW.
Strangely, the International Energy Agency continues its bleak outlook for wind generation. But that is nothing new.
The IEA has consistently under predicted wind and does not seem to learn how to predict wind well. Currently the IEA is predicting that wind development will reduce to some 40GW annually and stay at that level. If this were true the wind industry would be sounding major alarm bells – but the industry is confident about the future.
So if the IEA can’t predict the growth of wind accurately then who can? The answer is Greenpeace. To date Greenpeace has been spot on in terms of the growth of wind – growth is tracking the Greenpeace 2010 prediction. So what does Greenpeace predict now?
By 2020 Greenpeace estimates that nearly 80GW/yr of wind will be installed globally and a total capacity of around 900GW. This amount is an increase on the 63GW/yr in 2015, but not a huge increase in percentage terms. Unbelievably the IEA is predicting some 35GW/yr in 2020, a drop of 50 percent from the current installation rates.
So why is Greenpeace optimistic about the future of wind?
Part of the answer is that the technology continues to improve and there is still more to come. Wind generation looks set to decline in price by some 30 percent over the next few years mainly as volume increases and efficiencies are gained in the manufacturing process. And there are still technological advances occurring in a range of areas. The wind industry continues to innovate.
In 2016 the world is likely to have an even stronger focus on reducing CO2 emissions. The gradual shift in policy from pro-fossil fuels to pro renewables will probably continue. Subsidies will be rebalanced although the fossil fuel subsidies globally will remain huge compared with renewable energy subsidies for some years to come.
Wind technology is now proven and is cost effective compared with coal or gas plant. The stumbling block now seems to be familiarity with the technology and concerns about integrating wind into electricity systems.
Here in New Zealand we are familiar with integrating wind and other renewables into electricity systems. Agencies such as the International Renewable Energy Agency (IRENA) are recognising that the next stage in low carbon electricity transformation is integrating variable renewables into power systems.
Potentially our country can play an international leadership role for integrating renewables into small grid systems (less than 30GW installed capacity). There are some 80 such grids as compared to around 15 large grid systems.
A leadership role would also provide opportunities for us to become more actively involved in renewable energy and power system development. The market is large in many developing and middle income countries. Ethiopia, for example, is developing 1GW of new geothermal in partnership with the US and Iceland.
New Zealand needs to claim its status as the “go to” country for renewable energy development. As the geothermal situation in Iceland shows, we are being out competed internationally at the moment. Or, more correctly, we are scarcely part of the right conversations internationally. There is a real leadership role for the government to help this country get a good slice of the rapidly expanding international renewables market. The reward’s large and the costs to government are minimal. But government involvement is vital to help open doors for the private sector.
The future of Kiwi wind
So what is the situation here for wind generation? After a quiet year or two there are signs of increased interest in wind generation development. With the closure of the Otahuhu B combined cycle plant and the announced closure of Huntly [coal], many commentators are predicting a shortage of generation in New Zealand in the coming years.
Wind is well placed to replace the retiring thermal plants. There is some 2GW of consented wind generation. Importantly wind can be easily built at different scales and progressively built in small steps over time.
This year saw the completion of the Flat Hill Windfarm near Bluff – around 7MW. Pioneer Generation constructed the wind farm using Gamesa 850kW turbines. The site itself is tremendous, with one of the best wind regimes in New Zealand and therefore the world.
A few years ago the wind industry set a target of 20 percent wind generation here by 2030. Are we still on target for this? I suggest we are. Currently wind generation is around five-plus percent of annual generation. The technology is very cost competitive and will continue to improve. The best windfarm sites in New Zealand can now be developed for between $70 and $85/MWh.
If the aluminium smelter at Tiwai Point stays, demand growth continues as it has for the past year or two and Huntly does indeed close its coal-fired plant in 2018, then there is a great future for wind generation here.
Which means 2016 could mark the start of a steady wind generation build programme.