Although it already covers 85% of its electricity from renewables, New Zealand is ramping its efforts to further cut emissions. In this vein, the country has made two announcements over the past few days: (i) the launching of what is said to be the world’s largest virtual power plant (VPP); and (ii) the establishment of a NZ$100 million (US$69 million) Green Investment Finance facility.
Minister for Climate Change James Shaw disclosed the plans on December 1, at an event hosted by Solarcity in Auckland. To fulfil the first announcement, the New Zealand-based solar company connected 3,000 residential solar plus storage systems to the national grid.
Currently, it is the largest undertaking of its kind, given that a similar project in Australia with German battery specialist sonnen GmbH is still in the planning stages. “Australia says it plans to build the world’s largest virtual power station but we’re actually doing it now with our existing systems and we’re adding more every day,” said Solarcity CEO Andrew Booth.
The South Australian Home Battery scheme will see 40,000 South Australian households equipped with batteries, some of which will provided by sonnen, Eguana Technologies and Alpha ESS through local manufacturing capacities and connected to the VPP. To this end, sonnen has built a new built production facility, which aims to have a throughput of 10,000 battery systems per year.
Solarcity’s existing solar customers already generate 13.6 GWh of energy via batteries that can collectively store 18 MWh of power and prevent 2,230 tonnes of CO2 from entering the atmosphere annually. The company has said the VPP will make its energy available to Transpower’s Demand Response Programme and be remunerated accordingly.
“We have cemented our position as one of the world’s leading hubs for renewable energy. This is an example of Kiwi innovation at its best, world-leading battery technology backed by a smart green financing mechanism lowering energy bills for our communities, and delivering on a cleaner, green energy future for our nation,” said Shaw.
In related news, New Zealand’s Prime Minister Jacinda Ardern and Climate Change Minister James Shaw launched the New Zealand Green Investment Finance Ltd (NZGIF) yesterday. According to the treasury department, NZGIF will be formally established as a company under the Public Finance Act 1989, meaning it will work independently from the government.
It did say, however, that NZGIF is mandated to focus on the decarbonization of transport and on improving distributed energy networks. Moreover, with New Zealand having already reached high levels of renewables generation, the financing company will also undertake commercial investments in industrial process heat, energy efficiency and agriculture, to help the country pursue its 2050 carbon neutral agenda.
“The Government’s [NZ]$100 million start-up capital injection is intended to stimulate new private sector investment in low-emissions industries; with returns over subsequent years expected to pay back the Government’s investment and see NZ Green Investment Finance stand on its own commercial footing,” said Shaw.
In launching the platform, the government highlighted that the transformation towards a zero-carbon economy poses significant challenges, although these can be overcome with smart investments.
Completely private investment companies are still hesitant to make deals of this scale, because the necessary information to fulfill their viability and risk assessments is not yet fully available for many technologies. Furthermore, such companies are more confined to the acquisition of financial products that fit the market. The government said NZGIF will fill this gap.