Eamon Rood, Energy News – Fri, 16 Sep 2022
Sector players must stop picking and choosing which part of the energy trilemma they respond to, according to speakers at a Business NZ Energy Council panel discussion in Wellington this week.
The panellists discussed how a ‘reactive’ approach to security, sustainability, and affordability of energy is potentially holding back New Zealand’s efforts to decarbonise and innovate.
Trends in technology and digitisation offer ways to leverage these trade-offs into a mutually reinforcing low-carbon energy system. But the panellists say making the most of that opportunity requires fresh thinking about the trilemma.
Considering its three limbs as part of one whole rather than as separate is a better approach, panellists agreed. That means acknowledging what isn’t working and clearly articulating issues to external stakeholders.
One of the panellists – Hiringa Energy head of operations Amelia Rentzios – says current debate tends to zero-in on one component of the trilemma at a time, usually in response to a particular event.
“If we’re looking at developing say, Southern Green Hydrogen, then the discussion is around sustainability; when electricity prices are up, the discussion is around affordability,” she says.
“It feels very reactive at the moment — there’s always a flavour of the day.”
Inequity and security of supply will always be challenges and “magical thinking” and cheap, abundant and sustainable electricity will be easy isn’t helpful. Nor are there any silver bullets. But a “macro” approach to issues would paint clearer picture of problems and help identify solutions, Rentzios says.
“I don’t think we’re necessarily looking at them all at the same time. Indeed, they do seem to compete with each other.”
Silos vs solutions
The other panellists were Robyn Holdaway, general manager public policy at Vector, and Ezra Hirawani, chief executive and co-founder of not-for-profit power retailer, Nau Mai Rā.
BEC executive director Tina Schirr facilitated the discussion, which ranged from the wholesale electricity market and new technologies to the energy crisis in Europe.
A recurring theme was reactive and ‘siloed’ thinking around energy issues in New Zealand, particularly in regards to decarbonisation, regulatory frameworks, and addressing energy hardship.
Holdaway says Vector and other electricity distributors, here and overseas, are experimenting with demand response and distributed generation and digital platforms to manage these technologies. Increasingly, they are finding approaches that can address all parts of the trilemma when used well.
But the conventional trilemma is problematic because by positing that managing its three limbs requires inherent trade-offs, it precludes solutions that are starting to emerge. This produces a tendency towards rigid, binary thinking when debating how these relate to specific things.
An example of this binary mind-set is the argument that clean but intermittent renewable generation requires overbuild and the all the expenses that entails. Some degree of that may be necessary, but it’s far from the only solution.
“It doesn’t have to be that way at all,” she says.
Right here, right now
She cites smart electric vehicle charging, which Vector has trialled and analysed extensively.
When done well, this takes pressure off the power network while ensuring customers’ bills are lower by avoiding peak demand and charges, a win for affordability and reliability.
Using EVs as batteries provides flexibility that would otherwise require investing more capital into the network. This creates costs savings that ultimately flow through to consumers, and also avoids construction and other emitting activities – building on the emissions gains that EVs already offer by displacing fossil fuels.
“Solutions that manage demand, that can strengthen coordination through the system, can support both affordability and reliability,” Holdaway says.
“They do this by increasing the utilisation of our existing infrastructure, reducing cost. Overbuilding on the other hand does the opposite — it reduces utilisation so it increases cost.”
Good technology and knowing how to use it is one thing. Having digital platforms that can manage demand quickly and effectively is another. Market participants need to invest in all these things now, Holdaway says, but they lack a regulatory framework that provides adequate incentives.
“We really need to be looking at our market and regulatory settings to make sure they are aligned with unlocking value of demand side,” she says.
“That does require a different regulatory approach to the siloed, 1990s regulatory approach that we’ve got currently.”
Talk, then act
Holdaway also says it’s the industry’s job, not consumers’, to internalise all this complexity and make the necessary adaptations.
Hirawani agrees, adding that the sector must understand that most people aren’t aware of the ins-and-outs and various conversations going on in the sector. For most, all they see is a monthly power bill that only seems to increase.
That’s particularly true for those in hardship, something Hirawani is very familiar with. The sector must break down its silos and let people know it is working on solving problems, he says.
While the sector needs to talk to consumers more, Hirawani thinks government officials must also talk to each other. In his experience, many parts of government are often unaware of what other ministries and agencies are doing in the same area.
“There’s heaps of conversations going on, but they’re conversations in silo and often disconnected with each other,” he says.
“A lot of these little side conversations are happening but nothing’s actually translating through to the customers.”
Government policies are often more visible to people. But again, there’s often too much talk and not enough follow-through. For example, Government’s 2019 electricity price review “came out ages ago” but actions taken are outnumbered by subsequent reports – with the concluding one coming next June.
“I know Energy Mate’s doing great work but other than that it’s just continuous reports,” he says.
“Now we’ve missed three winters and it probably won’t be implemented until the following June. It’s just a lot of hui going on really.”