Building a secure and sustainable energy system

10th Annual National Power ConferenceFebruary 2008

Hon David Parker

Minister of Energy

Renewable electricity target

90 per cent of electricity from

renewable sources by 2025

Renewables future makes economic sense

New Build Generation Costs

Forecast electricity generation

Forecast electricity generation

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2005 2010 2015 2020 2025 2030

GWh

Thermal

Renewable Source: Ministry of Economic Development

Role of fossil fuel generation

• Fossil fuel generation has a role to play (particularly gas)

But:• Changes to Electricity Act

being introduced to limit new fossil fuel baseload generation for next 10 years

Renewable preference

• 10-year restriction on the construction of fossil fuel thermal generation above 10 MW whose fuel source contains 20% or more fossil fuels.

• Exemptions allowed if:– Plant has emissions profile or load factor less than

prescribed level (in regulations)– Plant necessary for

• Mitigating an emergency• Reserve energy• Small isolated community• Cogeneration that improves energy efficiency

– Generation based on waste material– Related retirement of existing thermal significantly reduces

emissions

Key actions on renewables

• Emissions Trading Scheme• Pricing emissions

• National Policy Statement on renewable energy to provide guidance to councils

• Call-in powers available

Using energy more efficiently

Energy efficiency

• An untapped virtual source of energy

• Strategy covers whole of economy

• Long-term major savings possible

Oil prices

• Almost doubled in 12 months• Improved urban design • Improved transport efficiency

and better options• Improved broadband• Contingency plans• Support for exploration

Great South Basin exploration

• Around 500,000 square kilometres

• Remoteness/weather means high risks/costs

• Seismic survey indicated large petroleum volumes

• $1.2 billion of exploration in first five years

• Government policy of funding data acquisition vindicated

The future for coal

• Huge lignite coal reserves• Potential to power hydrogen

vehicle fleet• Carbon capture/storage still

poses questions• Much international research

underway• Government policy group

coordinating issues• Identified CCS issues:

Storage liability Ownership of CO2 and

pore spaces

Emissions Trading Scheme

• Internationally favoured measure

• NZ scheme in line with others

• Will include every sector of economy – forestry, liquid fossil fuels, stationary energy/industrial processes, agriculture/waste/others

• Linked to Kyoto trading markets

• Gradual introduction

Future cost of carbon

Electrical substitution in transport

• Low carbon future for transport essential

• Goal - take advantage of highly renewable/low carbon electricity supply

• Plug-in vehicles recharge from mains supply

• Battery range around 60 km – supplemented with conventional engine

• Modelling assumes they arrive around 2015

Longer-term predictions

• Slow ramp-up from 2015, for new light vehicles

• 17% of light vehicle fleet plug-in hybrid or electric by 2030, rising to 60% by 2050

• Eighty percent of travel in full electric mode

• Likely consumption around 8 TWh (14 percent additional load) in 2050

• Potential to draw energy from batteries during peak grid load periods

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