Powered by Aotearoa (short version)
Can New Zealand become a “renewable energy superpower?”
OUR 2023 election campaign has been fairly lacklustre up to now. Many say that there has been little vision on offer.
And yet, for all that, a vision is starting to emerge in the course of the campaign.
A vision of a future in which we boost our generation of renewable energy severalfold and use it to attract productive, industrial investments to our shores and our cities.
Such a turnaround plan has just this month been given voice in Labour’s Climate Manifesto (25 September), which frames the green energy transition as an economic opportunity for New Zealand:
We’ll work to seize this opportunity and demonstrate the huge economic potential of New Zealand being a renewable energy superpower.
Nor are Labour the only ones to have begun thinking along these lines. National’s Rebuilding the Economy, out on the Friday before Labour’s Climate Manifesto, revisits a six-month-old flier called Electrify NZ, which recommended an urgent doubling of New Zealand’s supply of renewably generated electricity.
As we already get nearly five-sixths of our electricity from renewable sources of a historic nature — hydro and geothermal — the proposal in Electrify NZ means a near-doubling of total generating capacity, to convert industries and transport applications currently powered by fossil fuels to green electricity:
New Zealand can dramatically reduce its carbon footprint by shifting transport and industry off fossil fuels to clean electricity.…
But electrifying large parts of the economy will require enormous investment in renewable generation, transmission and local lines — more than $40 billion by 2030, according to a recent study. . . .
If this investment gap is not closed rapidly, New Zealand is unlikely to meet the international climate targets we signed up to, and Kiwis will end up paying more for their energy bills. (Electrify NZ; footnote references deleted)
A similar vision was floated by officials last year, in the 2022 Rautaki Hanganga o Aotearoa / New Zealand Infrastructure Strategy 2022–2052.
In what is perhaps this country’s most detailed manifesto for renewably powered re-industrialisation to date, Rautaki Hanganga lists three major overarching goals, of which the first is “Leveraging our low-emissions energy sources.” On page 10, this is described in the following terms, which are , if anything, conservative:
By harnessing our low-emissions energy resources alongside other complementary technologies like hydrogen, we could treble our annual electricity supply. If we harness these resources, we can attract energy-intensive industries to grow our economy, create higher paying jobs and improve our quality of life. This is good for us and it’s good for the planet.
I have added emphasis to the following passage on page 52:
Businesses will find it attractive to locate their energy-intensive activities in New Zealand when they can earn higher returns or face lower risks than they would in other countries. . . . However, we need to act quickly. Other countries are quickly moving ahead of us to leverage their low-emissions energy resources (see Case Study 2 for example).
In other words, a rapid dash for wind and solar would not only get us off the hook of failing to meet climate change targets, but could also serve as a springboard for the re-industrialisation of a de-industrialised nation, provided we act quickly.
Indeed, the same strategy was outlined four years ago by one of Australia’s best-known and most influential economists, Ross Garnaut, who proposed that Australia become a “renewable energy superpower,” to use our own Labour Party’s expression, in a book that came out in 2019.
Not surprisingly, the countries that are “quickly moving ahead of us” include Australia. Our Infrastructure Strategy’s Case Study 2 was an account of a 10 GW solar farm to be built in Australia’s Northern Territory at an estimated cost of A$22 billion, or A$2,200 per kilowatt. The peak capacity of this farm would be roughly equal to that of New Zealand’s entire national grid at the present time (9.8 GW).
(GW is short for gigawatt or gigawatts. One GW equals a billion watts or in more familiar units, a million kilowatts).
What the cost of A$22 billion for a farm with more rated power than the whole of our present national grid also makes clear is just how much the costs of the newer forms of renewable generation, both wind and solar but solar in particular, are coming down.
In fact, you could probably get such a solar farm even cheaper now. The last time I checked, solar panels were costing US $165 per kilowatt FOB in Shanghai.
What that means is that while a completed solar installation still involves construction and wiring costs, solar power is now getting very close to being a free good, like sunshine itself, at the level of the panel.
Another country that is quickly moving ahead of us, on this road, is Denmark. Though only one-sixth the size of New Zealand if we exclude its Greenland dependency, and much further from the equator, Denmark is nonetheless planning to upgrade its current solar power inventory, already at more than 3 GW, to 9 GW by 2030: a target just slightly shy of our total generating capacity today.
The Danes are also investing heavily in wind.
Yet we have been described as the ‘Saudi Arabia of wind’: and our solar power potential is colossal compared to that of Denmark.
The distance scales are different for the two maps, and so are the colour scales. Nowhere in Denmark gets past yellow on our map.
Our renewable energy potential is between one hundred and one thousand times our total energy use at present: not just electricity, but total energy use.
Together with our neighbours in Australia, we are in a more fortunate position than Denmark in that regard.
And in a still more fortunate position than nations such as Germany, where 83 million people inhabit a heavily industrialised landscape only one and a half times the size of our own.
As the following documentary makes clear, countries like Germany will have to work hard to meet their current energy demands from renewables, to the point of replacing agricultural shade cloth with solar panels and covering the surfaces of reservoirs with yet more solar panels on rafts:
As such, there is likely to be a general southward movement of the industries of tomorrow into countries that are less industrially developed at present, less thickly populated, or both.
To continue, most of our solar potential is in the South Island, close to the bulk of our existing hydroelectric systems.
The enormous solar potential of the South Island is mostly accounted for by the rain shadow of the Southern Alps, which stretches from Nelson to Central Otago.
Our existing hydro, which stores around one-tenth of a current year’s electricity requirements, is well placed to act as the ‘battery’ of a system of renewables in which most of the power will be coming from wind and solar.
Using the existing hydro as a battery means that the fluctuating output of solar panels can be smoothed out by hydro before entering the Cook Strait cables, at a virtually constant level of blended power.
As we have seen, the Australians are really going for the idea of becoming one of the renewables ‘superpowers’ of the future global South.
To expand on what they are doing over there, we have the example of the Tasmanian Renewable Energy Action Plan and the associated initiative called ‘Powered by Tasmania’, from which I shamelessly borrow the title of the present essay, Powered by Aotearoa.
In late 2020, South Australia’s then Liberal state government also announced a renewable electricity target of 500% of current electrical grid demand by 2050. This was intended to electrify South Australia’s existing industries along with the vehicle fleet and, as with Tasmania’s scheme, to attract additional industries to the state.
And then there is Queensland’s $19 billion Energy and Jobs Plan, part of a wider scheme for a tenfold increase in the amount of wind and solar power deployed in Queensland as they shut down their fossil-fired generation. You can click on the following cover thumbnail to go to the report.
Joe Biden’s Inflation Reduction Act pursues a similar agenda, hoping to revive the fortunes of a USA that prospered in the days when oil was both cheap and domestically abundant, and which is also reasonably replete with today’s sources of renewable energy.
And it is at this point that we come to a curious conundrum. Although such a strategy has been advocated and advanced for the last four years in Australia, and though Biden’s IRA is more than a year old as well, it is only just now that our politicians are talking about the same idea, even in outline form. And that’s despite the fact that we also pride ourselves on inhabiting ‘clean green New Zealand’.
Why is this? Does our concept of ‘clean and green’ imply an actual rejection of industrial society? Or does the opprobrium attached to the 1975–1984 National Party Prime Minister Rob Muldoon’s ‘Think Big’ energy projects still inhibit the politicians from thinking big once more, even after forty years?
The Think Big schemes were intended to create additional industries in a New Zealand widely deemed, in those days, to be overly dependent on farm exports (as, indeed, it still is).
At the heart of Think Big lay the idea that the main constraint on New Zealand’s industrial development was a shortage of domestic sources of cheap energy. ?And that new sources of cheap energy therefore needed to be created through additional hydroelectric dams, the accelerated development of the Māui gas field, and so on.
In a recent book by John Boshier, a Deputy Energy Secretary in the 1980s, we read that:
National’s 1981 election campaign was based on the proposition that the path to prosperity was through economic growth. Its Growth Strategy wanted to achieve a diversified and prosperous future after several decades of total reliance on traditional products and markets. New export industries in agriculture, forestry, fishing, horticulture, manufacturing and tourism were described in detail. . . . (Power Surge, pp 88–89)
National’s Growth Strategy — the more formal title for Think Big — was heavily opposed by a coalition of environmentalists opposed to the strategy’s environmental consequences and in some respects to the underlying growth philosophy as well, and, on the other hand, economic neoliberals opposed to the fact that it involved large amounts of state investment and a general rejection of free-market outcomes, which otherwise tended to favour agriculture and everything to do with the land.
It was out of this coalition that our neoliberal revolution of the 1980s, known at the time as Rogernomics after its chief political sponsor, Roger Douglas, and heavily dominated by opposition to the further industrialisation of New Zealand, seen as artificial and undesirable by environmentalists and neoliberals alike — a version of neoliberalism that thus had something of a ‘teal’ quality — eventually took shape.
At this point, it’s important to note that some of the opposition to Think Big, both environmentalist and neoliberal, went too far and became an over-reaction.
In environmental terms, for example, some of the Think Big schemes, such as the electrification of 411 km the North Island Main Trunk railway and extension of Wellington’s electric commuter railways from Paekakariki to Paraparaumu, were obviously not by any means ill-conceived, even if, at the other end of the acceptability spectrum, the proposed aluminium smelter at Aramoana, close to the globally significant Royal Albatross Centre, was.
It is also worth noting, on the economic front, that the idea of developing massive new sources of energy as a springboard for further industrial development did not originate with Muldoon: a politician who was unpopular for other reasons, such as his authoritarianism and apparent support for Apartheid South Africa, in ways that then rubbed off on his economic policies and made them unpopular as well.
In reality, for most of the twentieth century, our politicians of the right and left were focused, alike, on creating new opportunities for a growing population by expanding its energy supplies.
In 1904, William Hall-Jones, the Minister of Public Works and later, briefly, Prime Minister, compared New Zealand’s hydroelectric resource to the entire industrial steam-engine horsepower of late-Victorian Britain, and found that New Zealand came out on top.
In 1925, a New Zealand Government advertisement prepared for the New Zealand and South Seas Exhibition of 1925–1926, advertised New Zealand as the “Future Manufacturing Centre” of the Southern Hemisphere, on the strength of our hydroelectric resources.
The ad also offers “Special Inducements … for the Establishment of Industries.” This, too, was a feature of our policy for most of the twentieth century.
The industrialisation of New Zealand was seen as a strategic issue, too important to be left to purist economic doctrines. Since market forces favoured our natural advantages in land, their unfettered reign also implied a permanently small and bucolic population. If, on the other hand, New Zealand’s population were to expand to several million, most of it in cities, economic doctrines that favoured the land would lead to major inequalities and social problems. Therefore, our non-farm industries had to be helped to grow.
The drive for energy-based industrial development, special inducements and all, lasted for eighty years: from 1904, until the coming of the Fourth Labour Government in 1984.
Since that date, our population has grown by nearly two million, but without any real impetus to develop the nation further.
Instead, our economy has come to revolve around the land. Around farming in the countryside, and real estate in the cities.
The result has been an essentially Malthusian social order or one reminiscent of nineteenth century Ireland, in which the people are expected to live off the land and yet there are too many of them to do so.
As long ago as 1958, a Ministry of Works flyer called Town Planning Bulletin №1 dismissed the idea that we inhabit a land of agricultural plenty, claiming that that view of New Zealand was nothing more than an urban holidaymaker’s illusion:
The old myth[s] that we had plenty of first-class land and that there were vast areas of un-developed land waiting for the plough have died hard. Most of us knew only what we saw from the main roads passing through the plains or the fertile valleys between the hills.
Topographical maps tell a different story; but the most revealing experience is to travel by plane on our inland air routes. . . . Here and there a narrow coastal flat — too small to be called a plain — the occasional green valley with a road snaking along the middle; for the rest nothing but hills, mostly bush and scrub covered, rising to the main rugged mountain chain.
For that reason, nearly nine out of ten of us now cram into our urban areas, which have grown explosively since 1958: Auckland gaining a million since the mid-1970s alone and Tauranga tripling its population over the same period.
Yet, since the 1980s, there has been no real provision for this urban growth: neither in terms of jobs nor in terms of houses.
Explosive population growth and urbanisation in an era in which little is being done to develop new industries also helps to explain current ethnic tensions.
Driven out of Auckland and other North Island towns in the wars of the 1860s, the Māori returned a hundred years later to work in the industries of the booming cities those towns had become, just in time to have the plug pulled on those very same industries.
In an essay called ‘The Purpose of Social Policy’, the eminent scholar Ian Shirley wrote that:
Investment in New Zealand manufacturing declined by almost 50% between 1985 and 1989 and by 1991 registered unemployment represented 11% of the total workforce. Long-term unemployment became a serious social problem with the unemployment rate for Māori aged 15 to 24 years approaching 40%. . . . . As a consequence government became exposed to relatively high levels of welfare expenditure. In 1981 almost 115,000 people were in receipt of a welfare benefit — by 1985 that figure more than doubled and by 1992 it had trebled. The very policies that were designed to cut welfare expenditure created the largest pool of beneficiaries since the Great Depression.
A recent study for the Auckland Council adds that the rate of homeownership among Māori in Auckland currently stands at a mere 18 per cent, a figure far below that of the Pākehā (i.e., the descendants of the British and European settlers who took over Auckland and other favoured areas in the first place).
Unless we are able to resume a policy of energy-based industrial development, and of a parallel increase in other investments to cater for a growing urban population — most obviously in housing— this country will face a very dismal future: essentially, one of resumed conflict over land.
All of this seems quite plain, as does its industrial remedy. A remedy which, in more detail, would require a coordinated and planned expansion of:
(i) Additional Generating Capacity. Chiefly wind and solar, though new geothermal energy schemes may also have a part to play.
(ii) New Industrial Users. Not just the decarbonisation of existing industries, but the attraction of new industries to our shores with special inducements, which need not be huge, but nonetheless sufficient to compensate for the fact that we are in an out-of-the-way place where little has been done to develop new industries, or cultivate relevant skills, for the last forty years.
(iii) Grid Capacity. This would include the installation of additional, reversible pump-generators to some of our existing hydro dams, to render them still more battery-like.
One leg of this stool should not be allowed to get too far ahead of the others, nor fall too far behind the others.
Clearly, if we were to invest boldly in such a system right now, it would also help us to meet our Paris-agreement climate obligations, which otherwise risk blowing out in 2030 with a resulting bill for carbon credits that could exceed $23 billion.
For all the talk of planting trees, it is often overlooked that just one solar panel has the potential to reduce carbon dioxide emissions by an amount broadly equal to that soaked up by ten trees.
And a dash for wind and solar would also save us from having to scrape the bottom of the hydro barrel, as with the current proposal to pull 20 MW (0.02 GW) worth of water from the unspoilt Waitaha River.
Denmark is planning to add nearly 6 GW of solar over the next seven years: yet our solar potential is many times that of Denmark. Are we really that desperate for another 0.02 GW of hydro?
A dash for wind and solar in the manner of Australia and Denmark surely seems better than paying for carbon credits and ruining our last wild and scenic rivers into the bargain.
However, such a national plan may be incompatible with our current system of commercialised generator-retailers or ‘gentailers’, who only make investments if it is commercially profitable for them to do so.
The incumbent big-four gentailers have a track record of cautious incrementalism when it comes to adding capacity. There are various theories as to why, some to do with consenting issues and others to do with oligopolistic fears of overproduction and ‘spoiling the market’.
But what all critics agree on is that the expansion of renewable generation is not yet an urgent national priority — not yet part of a plan — and that that is the meta-problem.
Just lately, there has been an uptick of investment in solar projects, mostly by non-incumbents. However, New Zealand’s current peak load arrives at dusk. What this means is that without strong evidence of state support for industrial growth to make use of solar power as it is generated in the daytime, and general system expansion, it is likely that the current degree of interest in solar will be a flash in the pan.
Clearly, our politicians are starting to come around to the renewables-superpower idea. All the same, there is a danger of a failure to coordinate the joint expansion of renewables, industry, and transmission.
If so, despite the best intentions, our politicians may yet end up continuing to administer New Zealand’s decline instead: presiding over a country that would thereby miss out on the green energy transition in all its more hopeful aspects, and fail to play its true part in decarbonising the world.
At the very least, we should all be striving to give this important but still somewhat nascent initiative more of a profile.
This article is a distilled update of the author’s longer essay Powered by Aotearoa: Four decades of failing to plan for population growth in Aotearoa New Zealand, and how we can use the Renewable Energy Transition to catch up, on Medium.