Energy Efficiency in New Zealand
Demand to hear the other
side of the electricity debate
An article by Heather Staley, Chief Executive, Energy Efficiency and Conservation Authority (EECA)
The
electricity debate, which has been re-energised since Meridian’s decision not
to proceed with Aqua, has been almost entirely focused on what the industry
calls ‘the supply side”. Various serious people have scored headlines over
what fuel we should be looking to and when and where our next power plants must
be. The electricity sector is complex and challenging, so it is sad that this
debate has - so far - been largely one sided.
It is a fact that demand is increasing every year. Energy demand tends to track
with economic growth, and this has been happening. Further, there are large new
demands for irrigation in the South Island that have called for more
electricity, there are 30,000 more houses each year, tourism is growing, and
sales of domestic accessories such as PCs, home theatres and dehumidifiers
continue to climb. Demand is increasing, but Aqua was never going to start
coming on stream until 2009 anyway. Amazingly, the demise of this project seems
to have led to a consensus that our energy future lies inevitably in coal. We
have it, so we should burn it to feed our insatiable hunger for electrons.
The fact is that coal could well be part of the answer. But no matter how
‘clean’ the electricity generators try to make the plant, there will always
be carbon dioxide (CO2) emissions from coal and that is bad for the environment.
There is also the cost of coal – at around 8 cents per kilowatt hour
(wholesale price) it is expensive. It is there as a back up if we need it, but
this need is far from proven. Some lobbyists are even using the ‘n’ word
(nuclear) and one wonders if this is another part of the strategy to make coal
look like an attractive option. Coal should be a last resort for New Zealand,
not a first resort. Last resorts are what we do when better options don’t
deliver.
And there are certainly better options before us. The first part of solving a
problem is to scope it. There’s a widely declared assumption that New Zealand
needs 150 megawatts (MW) of new power generation each year for all foreseeable
years. That’s around 3% extra per annum. Hence the supply side case for more
power stations. The 150MW figure seems carved into stone, but in fact it is
highly debatable when you flip your thinking from the supply side to the demand
side of the business.
There are some who say energy efficiency has little role to play. Dr Don Elder,
Chief Executive of Solid Energy (the main coal supplier), recently wrote that
New Zealand industry is already very energy efficient. This assertion suits his
position, but it is wrong. Almost every large electricity user can find ways to
save 5, 10 or 15% of the electricity it uses each year at less than the cost of
new supply. Energy efficiency is already having a significant impact on demand
growth and some companies are already finding those savings. This is routine.
Since these companies use 60% of our power, even a small improvement in
efficiency across the board makes a difference and, as some companies have
already shown, energy efficiency isn’t a one-off thing – there is still
scope for fine tuning systems from time to time and gaining additional savings.
A short history lesson. New Zealand’s development in the 20th century was
fuelled as much by cheap power as it was by grass and wool and meat. Lakes and
rivers, once dammed, gave cheap and apparently endless electricity. This enabled
our industries to develop, and it enabled us – the most remote nation on earth
– to enjoy first world lifestyles in our homes. However, anything which is
cheap and inexhaustible will often be wasted.
Naturally we became gluttons for power, but it couldn’t last. The next phase
of our national growth will be fuelled by smart thinking about how to get the
most out of electricity, as well as how best to produce it. Most developed
companies started ‘decoupling’ energy use from economic growth more than a
decade ago but in New Zealand there is still the belief that economic growth and
increased energy demand must go hand in hand. It doesn’t have to.
The beauty of energy efficiency is that it doesn’t affect our standard of
living (we save money as we reduce energy use) or productivity, and it is the
cleanest, greenest and fastest solution to meeting our future needs. Indeed, it
is often the cheapest as well. A good energy efficiency solution may cost a
company 1 or 2 cents per kilowatt hour (remember that new coal generation would
cost 8 cents, and that’s before the cost of transporting the power and other
mark ups) and it will also save the company money on their power bill.
Energy efficiency doesn’t mean going without – our rooms are still lit, our
heaters are still on and our food is still refrigerated. Production lines still
roll. But we use more efficient lighting, more efficient heaters and our food is
kept cold in more efficient refrigerators (the higher the number of stars on an
energy rating label, the more efficient). Efficient motors drive the production
lines.
Many of our leading businesses are embracing energy efficiency as a way to
reduce costs and gain an advantage. Energy efficiency doesn’t mean lower
quality or fewer products – Sealord reduced energy costs by 6.5% and at the
same time increased production by 7.5% by assembling an energy management team
and enhancing two heat recovery systems. Fonterra are aiming for a 10% reduction
in energy use across its dairy processing plants by monitoring and analysing
energy use and improving systems. Over a five year period, Carter Holt
Harvey’s Kinleith plant reduced electricity use by 17% and gas use by 34% per
tonne of product by improving plant, involving staff and doing things such as
reusing waste heat.
One of Auckland’s most prestigious commercial buildings, the Vero Centre, has
electricity consumption 10% less than the Property Council’s benchmark. The
Vero Centre was designed and constructed with energy efficiency in mind and the
building’s managers have continued to fine tune the building’s controls and
adjusted lighting and air conditioning. As a result, in two years energy
consumption has fallen by an additional 7% at the same time as occupancy has
increased by 10%.
The problem for many in the electricity sector is that when we don’t even
understand how to interpret changes in use, how do we measure absence?
We know demand is increasing. We know that supply is increasing. We are
uncertain about the lead times for some major investments and the consequent
effect on prices. We want easy, fast and cheap solutions. Investments in known
energy efficiency technologies are potentially capable of all three and you
don’t need a RMA consent to install an efficient motor or a heat recovery
system.
In 2001 California were facing blackouts but one third of all households saved
more than 20% of their electricity, 27% of all businesses saved more than 20% of
their electricity. California is now looking to energy efficiency, energy
conservation, demand response and renewable energy to meet all future
electricity demand needs. The world’s third largest economy is taking energy
efficiency and conservation seriously, why are some in New Zealand’s
electricity sector not?
In California they talk about the ‘secret surplus’ – the amount of
electricity being used that can potentially be saved. There are a plethora of
ways to cut consumption without cutting comfort or productivity, and that’s
exactly what smart households and smart businesses are doing today. And if these
are options are coupled with building more renewable power sources, then New
Zealand will have found a way to compete with the world while reducing
greenhouse gas emissions.
But if these measures are not enough, perhaps then - and only then - will we
need to go to the last resort – coal. It’ll still be there.
So the next time you read a headline urging that we burn coal to generate
electricity, ask yourself which side you’re on – the supply side or the
demand side.