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Download the PDF: Paul Gipe EECA report 2006.pdf

Eight weeks ago the first decade of the new millennium has ended – a decade that brought about an enormous change to the energy sector. An increasing number of people, from Joe Average to some leaders of the worlds largest businesses, have begun to realize that fossil oil, coal and gas are finite resources we can less and less count on to satisfy our everyday energy needs; particularly in view of the increasingly fierce competition for raw materials brought about by the rapid industrialization of Asia. At the same time a new development, starting in Europe, has blown a refreshing breeze – or should we say new live – into the energy sector. This new age of the energy sector began on the 1st of April 2000 (and this is no joke) with Germany introducing the landmark legislation of the EEG (Act on granting priority to renewable energy sources). Over 5 dozen countries, states and territories have followed Germany’s lead over the last decade and introduced similar feed-in tariff (FIT) systems that have shifted the growth and replacement of electricity generation capacity away from centralized fossil fuel powered stations to countless distributed generation schemes that utilize renewable resources. Biomass, geothermal, wind, solar, micro-hydro, waste and marine resources harnessed in mostly small scale set-up have begun to make a meaning full contribution to the worlds electricity supply.

New Zealand has lagged behind these international developments. REFIT believes that NZ too has much to gain from obtaining more of our electricity from smaller scale, distributed renewable generation schemes – from increasing employment (particularly in rural regions) to stabilizing our electricity transmission network, and from reducing GHG emissions to avoiding environmental target conflicts and an improvements in our balance of trade, to name just a few. With New Zealand’s outstanding renewable resource potential we will have more to gain at a lesser cost while opening more opportunities than almost any other country around the world. All we need is a plan of action, conscious leadership and a level playing field for distributed renewable generation. REFIT will continue to work towards achieving this goal, and with your support the hope for a better electricity system in NZ will hopefully become reality sooner than many skeptics currently think.

1. Our strengths – our focus

Feed-in tariff systems offer plan-ability and security for developers of renewable generation projects and long term sustained benefits for electricity users, the economy and the environment by guaranteeing electricity take-off and fixed feed-in rates for extended periods of time (e.g. 20 years). However the design of tariff levels for different renewable resources and set-up scales, the level of (new entrant) tariff depreciation rates and the option for bonuses (e.g. location, co-benefits), also makes FIT systems a very flexible tool. Each country adopting the system has the option of designing a FIT system that suits its needs, addresses the most pressing problems and plays to their strengths.
So which general direction should a NZ FIT system take?

Naturally we advocate a FIT system as comprehensive as possible which should support a resource and size portfolio as broad as possible – however considering New Zealand’s unique resources and environment, our optimum FIT system may look quite different from overseas systems.

Biomass will and should play a much larger role in NZ than overseas.

Forests and farms produce vast amount of biomass waste and by-products.

This represents a reliable low-cost generation option that makes only real sense at small scale, e.g. where logistics costs are manageable.
Geothermal and micro- hydro generation should also play a larger role in a NZ FIT system than overseas. Although NZ already drives a substantial amount of electricity from theses two resources there is still a vast potential to be unlocked at small scale. Business-as-usual approaches won’t be able to get sizable additional micro-hydro and smaller geothermal electricity supplies into the wires, but under a FIT system these steady and relatively low cost supplies could benefit NZ greatly.
Wind generation is getting increasingly controversial in NZ; however we believe that the issues taken are more around the ownership structure and scale of the projects currently proposed rather than the technology itself. We believe that a sensible FIT system could defuse many controversies around wind energy technology, by allowing citizen participation and a focus on smaller projects that better fit the local environments and in aggregate enhance the reliability of wind generation in NZ. However, contrary to some overseas systems, wind generation shouldn’t be the sole (nor prime) focus of a NZ FIT system. For NZ solar PV will remain a wild card. Compared to our biomass, geothermal, micro-hydro and wind resource potential which are all “outstanding world class” our solar potential is only “quite OK”. Combined with the lack of domestic manufacturing capacities and (so far) lack of a mid-day air conditioning peak demand, solar PV in NZ will be further down the priority list than in other countries. However no other generation technology has seen such a rapid decline in costs over the last decade.
This trend is likely to continue, and not least to establish a knowledge and skill base around solar PV in NZ, a FIT system should support some solar PV generation. Similarly, in order to prepare for the future, a NZ FIT system should consider the development of renewables technologies that are still experimental today, such as wave, tidal or salt gradient generation, although electricity provision from these sources may be small initially.

Regarding scheme sizes the target for a NZ FIT system should be everything “too small to bother” for the established generators; aka < 10 MW. However we do recognize that different tariff levels will be needed for various scheme sizes also dependent on the utilized resource.
Smaller systems, e.g. household or farm scale, have very few and / or low environmental impacts, and therefore deserve relatively more support. Mid sized systems are ideal for community groups and cooperatives, and dependent on resource can already capitalize on economies of scale. An important consideration in this regard is the capacity of existing lines infrastructure, i.e. the question at what individual set-up sizes the benefits of distributed generation are maximized. Rule of thumb analysis would suggest that a large proportion of NZ electricity distribution infrastructure could rather easily cope with and benefit from connected distributed renewable generation schemes ranging from household scale up to 1 to 2 MW. REFIT is seeking exchange with local lines companies on the issues of optimum sizing of distributed renewable generation schemes, to ensure that the concepts we are promoting maximize the use of existing infrastructure and are fair to all players in the sector.

2. NZ small renewable generators hall of fame

Despite the less than favorable conditions for small scale renewable generators in NZ at present time, some projects utilizing renewable energy resources at small scale get off the ground none the less. These projects bare witness to the enthusiasm of their developers that often struggle against a multitude of engineering, finance and regulatory problems, but provide a raft of services and benefits to the NZ economy, environment and society, that is all to often forgotten, let alone compensated.

As a little thank you for their efforts REFIT NZ would like to acknowledge these enthusiastic developers by introducing them into our small scale renewable generator hall of fame. All REFIT supporters are invited to add to and extend the list – please send contributions by email. Over and above acknowledgement, we also hope that the hall of fame will provide some inspiration for other people to follow these examples.

New Zealand small scale renewable generator hall of fame

Developer Project Location Year Resource/Output
Godall & Beard Pupu springs Nelson 1987 m-hydro 200 kW
Lepper Trust Lepper piggery Taranaki 2010 biogas 50 kW
Windflow Ltd. Gebbies Pass Canterbury 2003 wind 500 kW
Landcorp Rangiora Canterbury 2008 biogas 20 kW
Energy 3 Weld Cone Marlbogh 2010 wind 750 kW
Energy 3 Southbridge Canterbury 2005 wind 100 kW
Christchurch CC QE2 Canterbury 2007 LF gas 230 kW
Westervelt Marlbogh 2010 m-hydro 3 kW

Community group Long gully Wellington Wind > 1000kW
Community group Waititi Dunedin Wind 500 – 1500 kW
Iwi group Lake Taupo Taupo m-hydro ~100 kW

3. A report by Paul Gipe

Recently, we’ve obtained a 2006 report by US energy consultant Paul Gipe, evaluating various policy mechanisms to further the uptake of (small scale) renewable electricity generation for the New Zealand Energy Efficiency and Conservation Authority (EECA). This report (attached to this email) analyzes overseas experience with a wide range of renewable energy policies in detail, and concludes that:

“Renewable Tariffs offer a better prospect than any other policy mechanism available today for the rapid deployment of renewable energy in New Zealand with the cooperation and participation of its citizenry.”

REFIT will be in contact with EECA to find out what follow-up work the very decisive findings of this report have led to, and how REFIT could be of assistance, helping to translate the findings of the report into reality.

Showing 1 Comment

Posted by Russell Michell on 03/11/2015 03:02 PM

Start "inside out"
Given the complaints that the idea of FIT schemes seem to stimulate, a really good idea in terms of designing an NZ FIT Scheme would be to consult those with "issues" as to the nature of them. A scheme can therefore be designed with these issues addressed and opponents coming on-side.

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