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Draft 2008 Generation Scenarios

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Background

As part of its role in overseeing aspects of transmission investment, the Commission is required to prepare and publish a Statement of Opportunities (SOO). The purpose of a SOO is to enable identification of potential opportunities for efficient management of the grid, including investment in upgrades and transmission alternatives.

A SOO must contain the grid planning assumptions (GPAs) which include the demand forecast and generation scenarios. These are then integrated together with the necessary transmission elements resulting from the power systems analysis (PSA) to form the market development scenarios (MDS).

By virtue of the link between the market development scenarios in the Grid Investment Test (GIT) and the scenarios set out in a SOO, the GPAs are a key input to the MDS that are defined in a SOO, which in turn form the basis for the application of the GIT to grid investment proposals.

Experience from preparing the Initial 2005 SOO suggested that providing stakeholders with an early opportunity to comment on the GPAs and other key input assumptions would be beneficial to stakeholders and to the Commission. In particular, it would:

  • enable feedback to be incorporated early in the SOO preparation process; and
  • provide a more accurate information base for preparing the MDS.

Accordingly, for the 2008 SOO, the Commission decided to seek participants’ input to the development of the GPAs and other key assumptions, before embarking on the detailed analysis work. The purpose was to enable feedback to be incorporated early in the 2008 SOO preparation process, thereby providing a more accurate information base for scenario development and undertaking the power systems analysis.

The preparation of the GPAs, in particular the demand forecasts and the generation scenarios, involves assembling a diverse range of data inputs, making a number of key assumptions, and designing modelling methodologies. One key input to the draft 2008 generation scenario was the information gathered through the Transmission to Enable Renewables (TTER) project, which provided a more up-to-date map of existing and potential renewables (hydro, wind and geothermal) in New Zealand.

In February 2008, the Commission prepared a package for consultation regarding the work in progress GPAs, and sought stakeholder feedback.

The material was published, and the process to develop the GPAs and key input assumptions for the 2008 SOO continued in parallel during the feedback period. In particular the scenario development tools were refined and the information gathering process continued.

Generation scenario outlines

The Commission has now completed its review of submissions and carried out further scenario development work.

The five draft 2008 generation scenarios are described below.

Scenario Description
Sustainable Path
 New Zealand embarks on a path of sustainable electricity development and sector emissions reduction. Major existing thermal power stations close down and are replaced by renewable generation, including hydro, wind and geothermal backed by thermal peakers for security of supply. Electric vehicle uptake is relatively rapid after 2020. New energy sources are brought onstream in the late 2020s and 2030s, including biomass, marine, and carbon capture and storage (CCS). Demand-side response helps to manage peak demand.
South Island Surplus
 Renewable development proceeds at a slightly more moderate pace, with all existing gas-fired power stations remaining in operation until after 2030, though taking a more mid-order role as gas prices increase. The coal-fired units at Huntly Power Station are shifted into a reserve role and eventually removed from service. Wind and hydro generation increase considerably, particularly in the lower South Island. Relatively little geothermal energy is utilised. Thermal peakers supplement renewable development.
Medium Renewables
 A 'middle-of-the-road' scenario. Renewables are developed in both islands, with North Island geothermal development playing an important role. The coal-fired units at Huntly transition through dry-year reserve to total closure. Thermal peakers and a new combined cycle gas turbine (CCGT) supplement renewable development. Tiwai smelter is assumed to decommission in the mid-2020s.
Demand side participation
 Demand-side participation becomes a more important feature of the market, driven by a desire from consumers of all types to become more involved. Electric vehicle uptake is high, and vehicle-to-grid technology is used to manage peaks and provide ancillary services. On the generation side, new coal- and lignite-fired plants are constructed after 2020, and geothermal resources are developed. Little new hydro can be consented, however, and some existing hydro schemes have to reduce their output (due to difficulty in securing water rights). Huntly Power Station remains in full operation until 2030. Electricity-sector emissions rise, though transport-sector emissions would be less than in other scenarios.
High gas discovery
 Major new indigenous gas discoveries keep gas prices low to 2030 and beyond. Some existing thermal power stations are replaced by new, more efficient gas-fired plants. New CCGTs and gas-fired peakers are built to meet the country's power needs; the most cost-effective renewables are also developed. The demand side remains relatively uninvolved.


Scenario weightings


With regard to the relative weightings accorded to the scenarios, it is essentially an academic point for their use within the 2008 SOO, as its purpose is solely to inform stakeholders to help them understand the range of possible futures. However, it is material for their use within the GIT.

Accordingly, the Commission has given careful consideration to the weightings of the scenarios. It has considered experience from the Initial 2005 SOO, feedback from submitters in the earlier GPAs consultation, and further development work. The Commission has also been mindful of recent policy announcements from Government, particularly the New Zealand Energy Strategy. At this stage, the Commission's view is that these five scenarios could all be assigned equal weight.

Scenario name
 Weighting
Sustainable Path
 20%
South Island surplus
 20%
Medium Renewables
 20%
Demand Side Participation
20%
High Gas Discovery
 20%


Modelled existing and committed generation projects

Existing and committed generation projects that the Commission have included in the generation expansion modelling are described below. 

Year Name
 Type Owner Island Nameplate MW
2008 Deep Stream
 Hydro Trustpower South 6
2009 Ngawha 2
 Geothermal Top Energy
 North 15
 2009 Kawerau Geothermal Mighty River Power
 North 90
 2009-10 West Wind  Wind Meridian Energy
 North  143

 

Modelled possible future generation projects

In addition to the committed projects identified, the modelling uses a long list of nearly two hundred other potential generation projects. These cover a wide range of technologies – wind, geothermal, hydro, gas, coal, diesel, marine, and demand-side.

The list of projects has been prepared by the Commission using information from:

  • the 'Electricity Generation Database' report prepared by Parsons Brinckerhoff Associates Limited;
  • the draft Annual Security and Reserve Energy Needs Assessment prepared by Concept Consulting Group Limited for the Commission;
  • the TTER project, for new hydro and geothermal generation ;
  • other commissioned reports on possible future generation projects;
  • publicly available information such as newspaper articles and generator websites;
  • industry publications such as annual reports; and
  • discussions with stakeholders.

These projects are divided into two groups – the 'near future' projects which are not yet committed but are likely to be constructed in the next few years, and the 'prospective projects' which might be built from 2011 on.

Near future generation

Some generation projects have been designated as not yet committed but ‘highly likely’ to be constructed in the first few years of the generation scenarios. The Commission has scheduled each of these projects in the scenarios, and assigned them probabilities and commissioning years that reflect uncertainty about whether and when they will be built. The assignment of these ‘highly likely’ projects to scenarios is intended to be credible and consistent with the scenario ‘stories’, but, within these constraints, is somewhat arbitrary.

The table below presents the projects that the Commission views as highly likely in the next few years and the scenarios with which they are associated. The name and location of one project have been omitted to preserve confidentiality.

Highly likely projects


 Description Sustainable Path
 South Island Surplus
 Medium Renewables
 Demand Side Participation
 High Gas Discovery
Anonymous gas-fired peaker  150 MW peaking plant in the North Island  2009      2009   
Taranaki gas-fired peaker  Contact Energy's proposed 200MW gas-fired peaking station in Taranaki    2010    2010  2010 
Rotokawa 2  Mighty River Power's proposed 130MW geothermal plant  2010  2011  2010  2010  2011 
Te Mihi  Contact Energy's proposed new geothermal plant - 220 MW, but replacing the 163 MW Wairakei Station  2011  2011  2011  2011  2011 
Hawea Control Gates  Contact Energy's 17 MW retrofit hydro project  2011  2011  2010  2012  
Wairau  Trustpower's 73 MW hydro project  2011    2011  2011  2013 
Te Rere Hau  NZ Windfarms' 49 MW expansion  2009  2010  2009  2009  2011 
Te Waka
 Unison's 102 MW wind farm  2010  2010    2012  
Titiokura  Unison's 45 MW wind farm  2010  2012  2010     


Prospective projects

From 2011, the generation scenarios draw from a list of 'prospective' projects. These projects vary widely in terms of their current status:

  • some are consented or going through the consenting process;
  • others have been proposed by generators, but are not yet in the consenting process; and
  • some have been suggested, but are not currently known to be being investigated by generators (because, for instance, they are not yet technically possible, or would not be economic under current market conditions).

Some of the projects are represented as generic plants (i.e. no specific project name or developer indicated). In some instances this is for reasons of confidentiality. In other cases it is a useful means of incorporating possible new technologies into the scenario mix.

The list of projects includes amongst other things:

  • over thirty possible wind projects, ranging from 15 to 300 MW , located throughout New Zealand (though with the majority in the North Island) and totalling to nearly 4,000 MW;
  • up to 150 MW of new interruptible load, up to 400 MW of demand-side response available at peak, and up to 1000 MW of vehicle-to-grid support from plug-in electric vehicles;
  • nine geothermal projects, located in the central North Island and totalling about 800 MW (in addition to committed and 'highly likely' geothermal projects);
  • fifty-five possible hydro projects ranging in size from 10 to 300 MW, located throughout New Zealand and totalling about 3000 MW;
  • six generic wave projects of 50 MW;
  • ten assorted cogeneration projects totalling to about 400 MW;
  • five gas-fired CCGTs totalling about 2000 MW (Otahuhu C, Rodney, and Taranaki CC 2, plus two generic 400 MW plants in Auckland and Taranaki);
  • up to five 200 MW peaking gas-fired open cycle gas turbines (OCGTs)s, located in Taranaki or the Waikato;
  • up to ten 150 MW diesel-fired thermal peakers, located as needed;
  • seven black coal plants (generic projects in the 300-400 MW range, nominally located at Glenbrook, Taranaki, Christchurch, Tauranga, Northland, and in the Waikato);
  • two lignite plants (400 MW generic projects located in Southland and Otago); and
  • seven coal or gas plants with carbon sequestration.

The Commission acknowledges that these projects vary widely in consentability and economic viability. For example, some of the modelled hydro schemes may face considerable barriers to obtaining consents. The selection of projects is merely intended to be indicative of the types of possible opportunities, and does not constitute an endorsement of the selected schemes by the Commission.

In some scenarios, some projects are not offered to the model because they would not be constructed due to assumed consenting difficulties, etc.

Generation scenarios

The full list of projects in each generation scenario is shown here:

The following plots describe the generation mix in the scenarios.

A full description of the scenarios is available in the draft 2008 SOO

Experimental revenue adequacy work

The Commission has commenced some work to produce price forecasts associated with the scenarios, in order to gain a better understanding of issues relating to revenue adequacy for new generation. This work is not complete, nor is it part of the GPAs.

 

Last update on 02 September 2008 11:56 AM