JETRO Interview - Geothermal Power in New Zealand

Earlier this year JETRO Auckland paid a visit the Kawerau Geothermal Power Station, and conducted an interview with Mighty River Power CEO Doug Heffernan. An english translation of the article which will appear in the June edition of JETRO's internal publication, JETRO Sensor, is provided.

While the world is grappling with the issue of global warming, the New Zealand (henceforth, NZ)government announced in October 2007, as part of its “2050 energy strategy ”, a goal for 90% of its electric power supply to be made up of renewable energy by 2025.The main source of renewable energy in NZ is through hydroelectric power. While hydroelectric power contributed 66% of the total power supply in 1970, increasing electricity demand and diversification of power sources has reduced this percentage to the 55% level seen at present. Hydroelectric power generation is easily influenced by weather conditions, and at the time of the drought in 2007 brought a shortage to the power supply. Nuclear power generation is not adopted because the government firmly maintains its nuclear free policy.

Therefore geothermal and wind power have been favored options for electricity generation. NZ is favorably positioned to take advantage of these options. At present geothermal generation only accounts for 7% of power generation, but shows promise for making an increased contribution in the future. NZ topography shows similarities to the volcanic zone of Japan. High temperature geothermal resources can be found in close proximity to urban centers like Auckland, which has a higher energy demand. In this way, utilizing geothermal energy is advantageous in terms of cost. Furthermore, wind power makes an additional contribution to renewable energy generation. NZ government-owned Mighty River Power (henceforth Mighty River) chief executive officer (CEO) Doug Heffernan was interviewed.

---Would you classify geothermal energy as a renewable resource?
If correctly managed and carefully utilized it could be viewed as a renewable resource – because it could last for many generations to come. What is important is how geothermal resources are managed. Maori treat this land as an important part of their heritage and as a treasure.

--- How important is geothermal energy in NZ as part of renewable energy?
It is very important. New Zealand is lucky, it is a windy country – sitting in the middle of the ocean, and can also utilize some of this wind force. Historically geothermal power has contributed 5%, We expect this to increase to 15% in the next 10 years. Geothermal energy is important because it is a renewable resource –that is not easily influenced by the weather and it is useful because it is more reliable than other sources of energy.




--- Former Prime Minister Helen Clark announced a national target of 90% renewable energy by 2025, Are we still on target for achieving this goal?
I think that we are still on target.

--- Is there a change in the energy policy of incumbent Prime Minister Key?
The National government agrees with the goal for renewable energy, the direction is the same as the before, but it may take a longer time-frame. However, the vision is consistent.

--- What role does Mighty River Power have in achieving this goal?
Our company received its name, as can be guessed, from our involvement in hydroelectric power. By the time geothermal power was included, we already had 90% renewable energy production. We felt proud of that. There is a gas power station in Auckland, but it is small, and is a back-up system. Our primary focus will be on geothermal development in the years to come.

--- How will future changes to the Resource-Management Act help Mighty River Power?
The RMA has more influence on wind development than geothermal. From an environmental perspective geothermal energy has a low physical footprint. For wind energy production, the amount of land utilized would be a lot greater in order to generate the same amount of energy.


--- How does New Zealand rank in the world in competitiveness in geothermal power?
Because the temperature of the resource is very high – New Zealand has one of the lowest costs to develop geothermal activities. Indonesia and the Philippines also have plentiful geothermal resources. In the 70s and 80s New Zealanders acted as consultants in many of these countries because of their technical knowledge of the geothermal fields.

--- As for the history of geothermal utilization.
Scientifically we can identify large geothermal resources but there are certain limitations to geothermal development. Environmental tourism allocation is about one third of total geothermal resources. Another third are small and unattractive – and would be more expensive to develop. The last third is already developed or being developed. If New Zealand’s geothermal resources are fully developed we can estimate that this has the potential to double New Zealand’s existing geothermal capacity.

--- What are some of the problems associated with geothermal power?
In the past, using dated technology – the mining operations may cause damage to the environment. However with current technology and re-injection of geothermal fluid, many of these problems are avoided and we can prolong the life of these geothermal resources. In terms of CO2 emissions – these are extremely variable, but generally very low emission levels compare to other energies.



--- In comparison with hydro power and wind power what do you consider the attractive point of geothermal energy?
In New Zealand it is cheaper and more reliable and it has a small physical footprint. Most geothermal power stations operate at 98.5% minimum availability. In comparison, nuclear only has 60% availability; wind availability depends on wind-speeds and can vary from 20-40% availability. In addition, it is typically closer to the demand centres – for hydro power the location is in the South Island, whereas for geothermal the location is in the centre of the North Island – which means there is less transmission requirement.

---What do you think about the potential of solar energy for the future?
New Zealand is similar to Japan for its solar radiation index – in a very temperate zone. From my perspective it is a very expensive option for New Zealand, apart from solar water heating. It may develop by 2020, but any developments will follow global development and New Zealand will not lead in this area.

---What impact has the Kawerau Geothermal Power Station, completed in August 2008, had on New Zealand geothermal power production?
The Kawerau Station Increased New Zealand’s geothermal capacity by 20%



---Nga Awa Purua is currently under construction and is due to open in 2010. What contribution will this make to NZ’s geothermal production?
If opened, according to plan in the middle of 2010, it will contribute another 20% increase again. Other developments may occur in the future. 10km away there is exploratory drilling, with resource consent process to happen within the next couple of months on another 100MW project.