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Value of renewable energy assets was $13.8 billion in 2015

The asset value of all renewables used to generate electricity was $13.8 billion in 2015. Resource rents totalled $829 million (79 percent of total resource rents from electricity generation), up from $677 million (68 percent) in 2007 (see table 1).

Table 1

Resource rent from electricity generation
2007–15
 

 2007

2008

2009

2010

2011

2012

2013

2014

2015

 

 $(million)

Total electricity generation 

 997

 1,039

 1,030

 1,046

 1,037

 1,086

 1,081

 1,121

 1,046

Total renewables

 677

 675

 692

 761

 787

 817

 787

 861

 829

 

 Renewables – percent of total

Renewables

 68

 65

 67

 73

 76

 75

 73

 77

 79

 

 $(million)

Hydroelectricity

 574

 553

 549

 593

 596

 604

 575

 622

 586

Geothermal

 76

 84

 103

 115

 138

 147

 147

 168

 175

Wind

 14

 25

 27

 39

 39

 51

 51

 55

 53

Wood

 7 

 8

 8

 9

 8

 9

 9

 10

 9

Biogas

 5

 5

 5

 5

 5

 6

 6

 6

 6

Solar

 0.0

 0.1

 0.1

 0.1

 0.1

 0.1

 0.1

0.2 

 0.5

Source: Stats NZ

The percentage of resource rent from hydro-generation decreased over the period 2007–15 (as a percentage of electricity generated by all renewables). In contrast, the percentage of resource rent from both geothermal and wind increased (see figure 3).

Figure 3

 Graph, Resource rent from renewables, 2007 to 2015.

Water resources contribute over half the total electricity generation resource rent

Hydropower generates energy from turbines being spun from the force of water moving downstream. The potential energy created is captured by damming rivers and diverting the flows through pipes and turbines, which extract kinetic energy.

In 2015, 38 hydro-generation plants had an operating capacity of 10 megawatts or greater, with these stations accounting for over 95 percent of operating capacity. Of these, 19 were in the North Island, seven of which were in the Waikato region. In the South Island, generation plants were concentrated in the Canterbury, Otago, and Southland regions.

The resource rent from hydroelectricity generation was estimated at $586 million in 2015, up from $574 million in 2007. The latest figure accounted for over half the total resource rent from electricity generation (which includes non-renewables), which was estimated at $1 billion in 2015 (see table 1).

The asset value of water for electricity generation was estimated at $9.8 billion in 2015, up 2 percent from $9.6 billion in 2007. The higher asset value in 2015 reflects the increase in resource rent associated with hydro resources. The asset value and resource rent fluctuated over this period. The asset value fell to a low of $9.2 billion in 2008 and 2009, but peaked in 2014 at $10.4 billion. Resource rents showed the same variation, with a low of $549 million in 2009 and a high of $622 million in 2014 (see figure 4).

Hydroelectric generation accounted for 56 percent of New Zealand’s electricity generation (23,728 of 42,362 gigawatt hours) in the year ended March 2015. From 2007 to 2015, resource rent fluctuated due to the variability in total hydroelectricity production, which peaked at 24,950 gigawatt hours in 2011 (see figure 5).

Figure 4

Graph, Asset value of water used for hydroelectric generation, 2007 to 2015.

Figure 5

 Hydroelectricity, generation and resource rent, 2007 to 2015.

Historically, developing New Zealand’s hydroelectricity resource was an integral part of national economic development. However, many sites best suited for hydroelectricity generation have already been dammed. Further generation is limited by development costs, environmental concerns, and the need to manage competing demands between in-stream values and out-of-stream-uses (De Vos et al, 2009; Parliamentary Commissioner for the Environment, 2012). Between 2007 and 2015, the proportion of net generation attributable to hydroelectricity decreased from 58 percent to 56 percent. Over this period, development of hydro resources was limited, with only small generating schemes commissioned.

Value of geothermal assets doubles

New Zealand’s geothermal resources are derived from groundwater heated naturally within the earth’s crust. Groundwater heats when water seeps into the crust and comes into contact with a hot body of rock. Geothermal plants are in areas of past and present activity, with most geothermal-generating capacity in the Taupo Volcanic Zone.

The resource rent from geothermal electricity generation was estimated at $175 million in 2015, up from $76 million in 2007. The latest figure accounted for 21 percent of the total resource rent from electricity generation from renewables, which was estimated to be $829 million in 2015 (see table 1).

The asset value of steam used in geothermal generation was an estimated $2.9 billion in 2015, up from $1.3 billion in 2007 as seen in figure 6. The higher asset value (and resource rent) in 2015 reflects the increased share of geothermal electricity generation. Over the period, the resource rent and asset value increased steadily in line with the increase in both the amount of geothermal electricity generated and its share of all electricity generation.

Geothermal generation accounted for 17 percent of New Zealand’s electricity generation (7,091of 42,362 gigawatt hours) in the year ended March 2015. From 2007 to 2015, the resource rent increased steadily in line with total geothermal electricity production, which peaked at 7,091 gigawatt hours in 2015 (see figure 7).

Figure 6

Graph, Asset value of steam for geothermal generation, 2007 to 2015.

Figure 7

 Graph, Geothermal – generation and resource rent, 2007 to 2015.

The resource rent from total electricity generation and how that compares with geothermal generation is shown in figure 8.

Figure 8

Graph, Resource rent from total electricity and geothermal, 2007 to 2015.

The increase in electricity generation from geothermal energy between 2007 and 2015 was a result of the ongoing development of geothermal resources. New Zealand’s geothermal resources are a reliable, secure, and cost-effective source of renewable energy. Concerns about New Zealand’s dependence on hydro resources and the Maui gas field in the early 2000s prompted additional geothermal development (De Vos et al, 2010). Since 2007, eight geothermal schemes with a generating capacity of 10 megawatts or greater were commissioned (these were new schemes or upgrades to existing generating capacity) (MBIE, 2016).

Wind power emerges as significant environmental asset

Wind energy is the process of exploiting the kinetic energy of wind. Wind turbines convert this kinetic energy into mechanical power, which can be used to generate electricity. New Zealand has a relatively abundant supply of wind due to its physical geography – the country is exposed to strong, consistent westerly winds. In 2015, eight wind farms (mostly in the North Island) had a generating capacity of 10 megawatts or greater.

The resource rent from wind generation was an estimated $53 million in 2015, up from $14 million in 2007.The asset value of wind was estimated at $884 million in 2015, up from $238 million in 2007 (see figure 9). The increase in asset value between 2007 and 2015 was a result of the growing contribution of electricity from wind generation.

Wind generation supplied 5.1 percent of New Zealand’s electricity (2,149 of 42,362 gigawatt hours) in the year ended March 2015. From 2007 to 2015, the resource rent fluctuated with the variability in total wind generation, which peaked at 2,149 gigawatt hours in 2015 (see figure 10).

Figure 9

 Graph, Asset value of wind for wind generation, 2007 to 2015.

 Figure 10

Graph, Wind – generation and resource rent, 2007 to 2015.

Solar, biogas, and wood provide small contributions to renewable asset values

Solar photovoltaic (PV) systems directly convert solar energy into electricity. Light energy hits the solar panels and excites the electrons in the atoms of semi-conducting material –the movement of these electrons results in an electric current. Installed generating capacity of solar PV is currently limited but has experienced strong growth in recent years.

MBIE data on electricity generation includes estimates for distributed solar photovoltaics (PV) generation, which has been estimated using Electricity Authority data on the total installed capacity of grid-connected solar PV installations. This is converted to output using an assumed capacity factor of 14 percent (ie the solar panels produce their full output 14 percent of the time) (MBIE, 2016).

Biogas (mostly methane) is generated by the anaerobic digestion of organic matter by bacteria. Sufficient quantities of methane can be generated from landfills and wastewater treatment sites to provide a valuable source of energy. Biogas can be burnt to produce heat, or can be used in specialised combustion engines to create electrical energy.

Trees and plants use solar energy to convert water, carbon dioxide, and nitrogen into hydrocarbons. This energy is stored in plants and can be replaced by burning plant biomass. Burning plants produces heat, which can be used to create electricity.

Solar, biogas, and wood accounted for 1.8 percent of the total value of renewable energy assets in 2015. The resource rents from fuelwood, biogas, and solar were estimated at $8.6 million, $5.7 million, and $0.5 million, respectively, in 2015. For the March 2015 year, fuelwood supplied 0.8 percent of New Zealand’s electricity (348 of 42,362 gigawatt hours). Asset values for fuelwood, biogas, and solar were $143 million, $95.3 million, and $8.5 million, respectively (see figure 11). The asset value for solar showed the strongest growth from 2007 to 2015, with most of this occurring in the March 2015 year.

Figure 11

Graph, Asset value of wood, biogas, and solar for electricity generation, 2007 to 2015.

Further analysis and decoupling indicators

Decoupling indicators track the relationship between the use of resources and growth in production and consumption or population. We derive the indicators by comparing population growth with a relative physical flow (eg electricity generation). The focus of these indicators is to identify any divergence between environmental and economic or population aggregates (United Nations, 2014).

From 2007 to 2015, the total level of electricity generation decoupled from population growth (see figure 12), with the divergence in electricity generation compared to population becoming more apparent after 2011. This means that fewer energy resources in the form of electricity were being demanded per person, implying greater efficiency in energy resource use, which may be driven by economic considerations.

At March 2007 the estimated resident population of New Zealand was 4,219,400 (Stats NZ, nd). In 2015 this had increased by 9 percent to 4,580,000. Over the same period, total net electricity generation increased less than 1 percent (0.6) or 270 GWh (gigawatt hours). However, net generation had been declining since 2011 and increased slightly only in 2015. This increase in demand may be associated with improving economic performance and increased migration (Electricity Authority, nd). Gross domestic product (GDP) is New Zealand's official measure of economic growth. GDP statistics show that economic growth was 3.4 percent in the March 2015 year. Information on international travel and migration shows permanent and long-term migration counts for 2014, 2015, and 2016 (February years) were higher than the 2007–17 average.

Figure 12

Graph, Indexes for total electricity generation, resource rent, and estimated resident population, 2007 to 2015.

Hydroelectricity generation and precipitation

Higher annual levels of precipitation (mostly rainfall) will generally result in higher levels of abstraction for hydro-generation. This is evident when we look at a regional breakdown (see table 2). Most hydro-generation schemes are located in four regions. Where precipitation is lower than average, hydro-generation as a percentage of total generation will be lower and wholesale prices will be generally higher (see 2009–13, table 2). An exception to this was seen in 2009 when wholesale pricing was higher than usual but precipitation was also higher. This is partially explained by the precipitation data being in June years where a water year runs 1 July–30 June and the other components of table two being in years ending March 31. A further explanation is the effect of seasonality in rainfall – a very dry winter in 2008 resulted in high electricity prices (Electricity Authority, 2011) and this is visible in higher average prices and lower hydro-generation in the year ended March 2009.

Table 2

Hydroelectricity generation and precipitation by selected regions
2007–15

 

 2007

2008

2009

2010

2011

2012

2013

2014

2015

 Precipitation (million m3)

Waikato

 31,527

 34,652

 40,014

 36,481

 44,127

 34,720

 34,127

 30,056

 …

Canterbury

 60,841

 54,429

 77,535

 66,417

 66,885

 54,007

 69,822

 65,159

 …

Otago

 38,358

 37,262

 43,671

 40,772

 43,930

 34,439

 43,463

 41,955

 …

Southland 

 77,011

 68,004

 70,812

 79,221

 70,642

 57,946

 68,650

 77,846

 …

                   
Total

 522,435

 500,540

 594,342

 556,322

 603,393

 473,474

 506,337

 526,936

 …

 Precipitation as a percent of average precipitation 1995–2014 (%)

 Waikato

 85

93 

 107

 98

 118

 93

 91

 81

 …

 Canterbury

 95

 85

 121

 104

 104

 84

 109

 102

 …

 Otago

 95

92 

108 

 101

 109

 85

 108

 104

 …

 Southland

103

91

95 

106 

95 

78 

92 

104 

 …

                   
 Total

 95

 91

 108

 101

 110

 86

 92

 96

 …

 Abstraction for hydro-generation (million m3)

 Waikato

 51,512

 46,852

 56,740

 49,634

 57,743

 55,517

 51,041

 44,988

 …

 Canterbury

 60,658

 56,547

 57,469

 62,212

 63,621

 53,713

 57,779

 62,960

 …

 Otago

 28,667

 27,510

 27,826

 30,054

 30,787

 22,457

 28,336

 32,570

 …

 Southland

 11,978

 10,822

 11,214

 12,244

 11,340

 9,420

 10,890

 11,936

 …

                   
 Other regions

 1,665

 1,558

 1,589

 2,042

 1,971

 1,762

 1,088

 1,535

 …

 Total

 154,480

 143,289

 154,838

 156,186

 165,462

 142,869

 149,134

 153,989

 …

 
 Mean price $ per MWh

 60

 70

 105

 52

 52

 75

 81

 69

 74

 Net generation(GWh)

 42,091

 42,467

 41,870

 42,642

 43,407

 42,998

 42,714

 41,835

 42,362

 Hydro-generation(GWh)

 24,249

 22,616

 22,341

 24,194

 24,950

 23,918

 22,719

 23,209

 23,728

 Hydro-generation as % of net generation

58

53

 53

 57

57 

 56

 53

 55

 56

 Note: Water components are for June years; electricity generation and prices are for March years.
Symbol: … not applicable
Source: Stats NZ; NIWA; MBIE

NIWA produces the annual estimates for 11 components of the physical water stocks available in New Zealand. The data comes from a combination of direct measurement and modelled data (TopNet model). The model estimates how much water is gained through precipitation and lost through evapotranspiration, and summarises the surface component of water stocks in New Zealand. This information was presented in the form of a water physical stock account (see Water Physical Stock Account: 1995–2010) in 2011. This data was updated in 2015 for the July 1994 to June 2014 years. The latest version of the tables are available from Environmental indicators Te taiao AotearoaWater physical stocks: precipitation and evapotranspiration.

Information on water used for hydroelectric generation is supplied directly (to NIWA) by recording authorities. Abstraction for hydro-generation is equal to discharge by hydro-generation, as water used in hydroelectricity generation is returned to the hydrological system, meaning that net abstraction is generally zero. However, one hydroelectric power station in Southland returns water directly to the sea. The information is provided in June years (a year runs from 1 July to 30 June).

The volume of water abstracted for hydro-generation should not be compared with the volume of inflows because inflows is abstracted several times as power stations are often built in chains along rivers (Henderson et al, 2011).

We compiled wholesale prices from Electric Market Information’s final prices, which are available in monthly increments from October 1996. For this report we converted the data to annual (March year) mean values in dollars per megawatt hour ($/MWh).

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