Transpower, New Zealand’s state-owned transmission grid operator, says falling solar and storage costs have sparked interest in PV for a market already well served by wind and hydro power.
The nation already uses renewable energy for almost 90% of its electricity demand, according to live transmission data on Transpower’s website, but PV is not even listed among the clean energy technologies in operation.
According to the grid operator, there are bigger investment opportunities ahead as New Zealand’s electricity demand is set to rise, due to increasing electrification industrial processes and mobility, in line with the country’s Paris Agreement obligations.
In its new Te Mauri Hiko Energy Futures report, the grid operator forecasts electricity generation will almost double between now and 2050.
New Zealand has installed 85 MW of solar to date, nearly half of which has been added in the last two years in more densely populated areas, such as Auckland and Canterbury.
The report stresses the potential for residential solar – being adopted at a rapid rate in neighboring Australia – is huge. With 1.8 million residential households and 300,000 businesses, the authors claim 11 GW of new PV could be installed. That number would only grow over time, as there is a need for new homes in New Zealand, and solar equipment is making efficiency advances. By 2050, the report’s authors say, the potential for rooftop PV could be around 27 GW.
Transpower said New Zealand is already experiencing demand spikes in the early evening hours and warned solar installations without storage would only amplify the effect. The grid operator has advised the utilization of energy storage in the form of electric vehicle batteries, residential and community storage systems, as well as utility-scale solutions, and is also supportive of a new tariff structure to encourage time-shifting.
The previous slow progress of solar was down to a perception, debunked by a study by the National Institute of Water and Atmospheric Research, that New Zealand had insufficient solar irradiation to make PV worthwhile. The national institute study found New Zealand boasts irradiation figures of around 1.5 MWh/m², comparable to northern Spain and well above the figures for Germany, the U.K. and the Netherlands.
New initiatives kicking off
In December, the country made two big announcements. One related to the launch of what is claimed to be the world’s largest virtual power plant (VPP), and a second concerned the launch of a US$69 million Green Investment Finance facility.
Minister for climate change James Shaw disclosed the VPP plans on December 1, at an event hosted by Solarcity in Auckland. The New Zealand-based solar company has connected 3,000 residential solar-plus-storage systems to the grid and its solar customers already generate 13.6 GWh of energy via batteries that can, collectively, store 18 MWh. Solarcity said the VPP will make its energy available to Transpower’s Demand Response Program and generators will be remunerated accordingly.
Shaw and prime minister Jacinda Ardern also launched New Zealand Green Investment Finance Ltd (NZGIF), in December.
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. The new entity, however, is mandated to focus on the decarbonization of transport and on improving distributed energy networks.
In line with those developments, the new Transpower report stated: “There is no silver bullet in the battle against unmitigated climate change or decarbonizing our economy. However, what this work shows, and what we assert here, is that solar energy is certain to play an increasing role in our energy future and in our efforts to avoid a climate crisis.”