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Making Renewable Energy Work for New Zealand document

1. Introduction

This paper outlines the critical contribution of RS&T in transforming New Zealand's transition toward a sustainable low carbon energy system.  Its focus is on enhancing the contribution made by renewable energy by taking the good ideas from the laboratory and making them ready for commercial use.  

If New Zealand is to take up the challenge of becoming carbon neutral, there will need to be concerted and coordinated actions by the government, the energy industry and by energy researchers.  This TRST provides a stepping stone opportunity in New Zealand's path to a carbon neutral future.

Energy challenges for New Zealand

Energy, in its different forms, heats and lights our houses, runs our factories, helps us cultivate and harvest our crops, manage our livestock and process agricultural products. And it fuels the transport that gets us to work and takes our goods to market. In doing these useful things it also produces 43% of our greenhouse gas emissions.

In New Zealand we also face challenges in the security and reliability of supply, the sustainability, and the affordability of the energy we need for our everyday lives. Some of the reasons for this are the depletion of the Maui gas field, high oil prices, pressures on electricity supplies in dry winters and the need to address the environmental effects of using fossil fuels.

The government is currently developing a New Zealand Energy Strategy (NZES) to respond to the challenges and provide strategic directions for energy use in New Zealand for the decades to come. The draft NZES has a vision for renewable energy:

“To maximise the proportion of energy that comes from our abundant renewable energy resources”¹

The government has also indicated a strong desire to transition New Zealand to a much more sustainable future with an aspirational goal of carbon neutrality for New Zealand.

The extended use of existing renewable energy resources and the development of new ones are critical to meeting government objectives and facing the global challenges resulting from the impacts of climate change.

Renewable energy – a definition

The term renewable energy broadly encompasses energy derived from resources that are either regenerative, or resources that, for practical purposes are not depleted by their use over very long time frames.  Examples of renewable energy resources include energy from wood and other biofuels, hydro, wind, geothermal and solar sources.

New Zealand has an extensive range of indigenous renewable energy resources.  Some such as hydro-electricity generation are widely utilised, while others such as marine energy have yet to be commercially exploited.

What is the opportunity? Why is it important to New Zealand?

The opportunity provided from the renewable energy TRST is to transform New Zealand's transition toward a low carbon energy system.  This requires the use of   diverse, distributed and sustainable energy supplies and the acceleration of RS&T effort on developing renewable energy technologies and their integration into the New Zealand energy system.

The focus of this opportunity would reflect the title of the opportunity – making renewable energy work for New Zealand.  Government investment to achieve this would be targeted at moving new technologies and ideas out of the laboratory and through the scale up, piloting and demonstration phase to a stage where they are investor ready and can be deployed commercially in New Zealand.

Scope

Energy and its current and future use in New Zealand is a very broad canvas.  It encompasses a wide range of energy resources, opportunities and technologies.  This breadth is echoed in the wide range of research programmes and science disciplines that are needed to meet energy challenges.   

While a wide range of energy R&D is important, the intention of this TRST is to “make renewable energy work for New Zealand”.  This objective implies a clear focus on R&D that:

• will involve piloting, scale up, demonstration and proving of new renewable energy technologies;
• will complement existing and future investments in more basic energy research; 
• will result in new renewable energy technologies being used in New Zealand;
• uses and integrates a range of disciplines, technologies and systems to provide renewable energy solutions for New Zealand;
• may have a focus on broad energy outcomes but  will not generally predetermine technologies or solutions to meet the outcomes; 
• will generally result in new energy technologies or solutions being ready for commercial investment and use in a period of one to four years .

Equally clear is what this TRST opportunity will not do.  It will:

• not support basic energy research;
• not directly support energy efficiency initiatives, except where these involve new technologies or opportunities that broaden the availability or use of renewable energy;
• not support low-carbon energy opportunities involving the geological storage of CO2;
• not support environmental research to understand the impacts of new technologies or support consenting processes;
• not support the research necessary to understand and support policy, incentives, regulatory or legislative needs of renewable energy opportunities;
• not fund R&D that is solely aimed at developing IP and commercial opportunities that will not be used in New Zealand.

In summary the renewable energy TRST supports the development and implementation of a wide range of technology solutions that will result in enhanced opportunities to use our renewable energy resources more extensively and in new ways.

This focus does not in any way detract from the need for New Zealand to become much more efficient in its use of energy.  It recognises, though, that even with these efficiencies there remains a compelling need for the development, expansion and integration of new renewable energy resources in New Zealand to help displace the current use of fossil fuels.

Similarly, the focus of the TRST does not detract from the need to undertake a broad range of more basic energy research in New Zealand across renewable and non-renewable resources.  The TRST opportunity complements this research by providing a mechanism for moving renewable energy ideas arising from basic research through to commercial use in New Zealand.

Critical contribution of research and development

New Zealand faces considerable challenges in the security, reliability and affordability of energy supplies.  In addition, the need for sustainable energy supplies is being increasingly recognised at scales ranging from the individual house or farm, through to the global level with the impact of human induced climate change.  Expansion of renewable energy opportunities will assist New Zealand to meet these challenges.

Research and development plays a critical role in the development of renewable energy in New Zealand.  While many renewable technologies and solutions will be developed overseas, R&D relevant to New Zealand also remains essential because of our particular renewable resources, energy needs and energy infrastructure.

New Zealand has renewable resources that are different from those found overseas.  The use of geothermal energy is uncommon internationally and these resources are unique to our geological strata.  While wind, marine currents and waves are ubiquitous, the scale, intensity, predictability and location of our resources are all unique to New Zealand.  And New Zealand's climate and soils will determine which biofuels are best suited for use here.

Similarly our houses, communities, agriculture and industries have energy needs that are different from those found elsewhere.  And finally our energy infrastructure has developed to support a long, thin group of islands with only ship-borne energy links to other countries.

This means that while New Zealand needs to be an efficient technology taker of renewable energy solutions, there is an ongoing need to understand our own resources and to adapt and integrate overseas technologies for use in New Zealand.           

Currently the strategic needs of New Zealand to increase the contribution made by renewable energy are greater than the commercial drivers of energy companies and others to widely utilise a variety of new renewable technologies.  This is particularly so when the new technologies have yet to be optimised and are less economic than alternatives.  R&D is needed to develop opportunities and bring them to an investor ready stage.  

2.     Future possibility - 2020

Energy transformation

By 2020 New Zealand's energy landscape will be transformed with electricity and heat supplies for home, farm and factory largely coming from low-carbon and sustainable energy sources.  This will have been achieved by the deployment of a broad range of renewable energy sources and the smart integration of these within New Zealand's energy infrastructure.  This transformation will be strongly supported by energy efficiency initiatives at all levels using many existing technologies as well as new solutions arising from research programmes.

The transport sector will also be undergoing a transformation in the sources of energy and the efficiency of its use in cars, trucks, boats and aircraft.  More than 80% of new cars sold will be flex fuel vehicles that are able to operate on petrol/ethanol blends of up to 85% ethanol.  Other vehicles will fill up with E10 at the pump.  The availability of biofuels will be increased as existing technologies are optimised for New Zealand conditions and new technologies are developed here and internationally.

Advances in battery technology will mean that plug-in hybrid electric vehicles will be recharged at night using renewable electricity to provide enough battery power for most daily commuter needs.  Public transport will be similarly transformed to use more renewable and efficient energy.  Buses using hydrogen powered fuel cells will be used in main centres.

International and local advances in hydrogen technologies will be adapted for New Zealand's needs.  Hydrogen will be used to store excess off peak renewable electricity and also directly as a transport and heating fuel in some off grid and niche areas.  New energy storage and integration technologies will provide greater resilience and reliability for intermittent renewable energy sources.

Supporting activities for the 2020 energy future

The transformation in New Zealand's energy landscape will not have happened in isolation of other understandings and initiatives in New Zealand and overseas.  In the period up to 2020 there have been the following developments:

• International and national recognition at a government, business and community level, that the future impacts of climate change are of a scale that requires major changes in all of the activities that result in greenhouse gas emissions.
• Producers and exporters of New Zealand's primary and manufactured products all recognise the need for “clean green and sustainable” exports to meet the progressively more stringent sustainability requirements of export markets.  All export sectors are committed to improving the overall sustainability of their sector and are making significant investments to improve energy efficiency and move to low-carbon and renewable energy alternatives.
• Studies will have mapped the full extent of all of our renewable energy resources and the opportunities these provide.  In addition, technology roadmaps will have been prepared for each of these resources to clarify the specific research programmes, infrastructural needs, demand profile and other activities needed to develop and utilise the resource in New Zealand.
• Innovation in renewable energy opportunities will be optimised by ensuring that all parts of the energy innovation pipeline have the necessary support and resources to enhance the research, development and deployment of new technologies and solutions.  This includes investment by the energy industry. 
• National and regional government have ongoing programmes to ensure that renewable energy innovation is supported by energy policy, legislation, regulatory systems, consent processes, incentive mechanisms and education and support programmes.  All of these initiatives are aligned to meet government’s strategic objectives for renewable energy deployment.

3.     Current State

New Zealand's total investment in energy research through Vote RS&T is close to $18 million.  The longer term renewable energy component of this includes research programmes studying geothermal, hydro, wind, solar, hydrogen, biofuels and marine.  These investments total a little more than $5m pa.

In 2007 the Foundation for Research, Science and Technology also made three 16 month investments which will help position future renewable energy investments:

• “Energyscape” led by NIWA ($1.3m pa) assesses the complete range of indigenous energy resources and the contribution these can make to New Zealand's energy future.
• “Bioenergy options” led by Scion ($1.1m pa) assesses the range of indigenous bioenergy options in a similar way to Energyscape above.
• “Hydrogen Economy” led by CRL Energy ($0.5m pa) to identify the role that hydrogen could play in New Zealand's energy system.

These three research programmes are integrated and include assessments of opportunities and research needs.  Only the bioenergy options project is limited to renewable resources.

Energy research is also undertaken in universities and by energy companies.  Otago University has established a National Energy Research Initiative (NERI) to help coordinate energy research across institutions and disciplines.

Foundation investments and university research involve primarily basic and applied research while the energy companies primarily fund operational research.  Overall there is a widely held view that there is a lack of commitment and investment for the piloting, proving and demonstration of new energy projects.  This area is beyond most Foundation research investments and is pre-commercial so lacks commercial commitment as well. 

This support gap in the energy innovation pipeline is constraining the deployment of new renewable energy solutions.  From a science perspective, researchers undertaking more basic research perceive that funding will not be available to take their good ideas and technologies to an investor ready stage so do not have a strong incentive to progress their ideas.  Energy businesses, on the other hand, do not have the level of commercial certainty they require to make the investments necessary to commercially deploy new renewable energy opportunities.  

Despite the limited scale of renewable energy investment in New Zealand, there are research programmes and areas of expertise that have attracted international interest.  For example research on photovoltaic electricity using plant based porphyrins has received attention recently.  And biofuel production from algae has also received international investment support.  A third area is that of understanding rumen microbiology to find new ways of transforming cellulose to biofuels.

4.     Changes required

Achieving the renewable energy transformation described in the future possibility 2020 scenario above will require changes in both public and commercial research investments and these will need to be explicitly supported by government policy and regulatory and other incentives to stimulate the development of new renewable energy technologies.

Research investments and changes

1. The provision of new funding to support the experimental development, scale up, piloting and related pre-commercial activities, that develop the results of existing renewable energy research to an investor ready stage. 

This funding will help bridge the gap between existing R&D involving new energy technologies and the commercial take up and exploitation of these.  This pre-commercialisation funding gap has resulted in the failure of renewable energy opportunities being developed in a timely and efficient way in New Zealand.  The funding would support broad outcomes related to government renewable energy policy, but would not be prescriptive in relation to any particular renewable resource or technologies.

The R&D investments made are likely to be varied in scale and type.  They may involve new renewable resources or technologies, new ways of adapting existing technologies or integrating energy from new technologies into the wider New Zealand energy infrastructure.  It is likely that commercial partners will be co-funding many of these initiatives and supporting their pathway to commercial uptake.

2. The processes of undertaking and evaluating renewable energy opportunities will identify new research needs across the spectrum of energy research from basic to commercial.  Innovation in renewable energy in New Zealand will be optimised if these long and short term research needs are clearly identified, prioritised and communicated to the agencies that are best placed to fund them.

3. In making these piloting and demonstration investments, the Foundation for Research, Science and Technology will need to ensure that its funding processes enable both the capital and operational requirements of piloting and demonstration projects to be met in practical ways that support a range of technology solutions. 

Supporting activities

4. Each of the different renewable energy resources will be mapped and the research needs, opportunities and constraints of the resources all identified.  This will assist government, researchers and industry to make decisions about the use of each resource and the priority for developing technologies to deploy it.

5. Energy companies will routinely make medium and long term strategic investments in renewable resources and technologies that will support their commercial activities.

6. Government energy policies, and related legislation, regulatory systems, consent processes, incentive mechanisms and education and support programmes will be aligned to support the renewable energy strategy and objectives.

Case studies of transformational renewable energy opportunities

Harvesting biofuels from algae – green fuels from goo

Two New Zealand companies are exploring the opportunity to extract liquid biofuels from algae grown in nutrient rich effluent from sewage ponds or other organic wastes.  As algae grow they store plant oils called lipids in their cells.  These lipids can be extracted from the algae and converted into biofuels.  One of the companies, Aquaflow Bionomics Corporation or ABC, has shown that biodiesel from algae can supplement conventional diesel fuel in cars.

Steps in the production of biofuels from algae include optimising the production of algae in ponds, harvesting and dewatering the algae, and extracting and converting the lipids into usable biofuels.  

Ethanol from waste industrial gases

LanzaTec New Zealand Limited is a New Zealand based company that has received international investment to develop a technology that generates ethanol from the carbon monoxide component of waste flue gases.  The company’s intention is to develop a process that can be retrofitted to existing industrial facilities.

There are similar opportunities to increase algal growth by bubbling waste CO2 from industrial processes into algae ponds.  If the CO and CO2 used comes from fossil fuels the process is not strictly renewable.  But these gases could also be produced from burning or gasification of biofuels.

Oceans of opportunity

The total energy in the waves and tidal currents around New Zealand's coasts is enormous, but unlike wind, none of it is yet being harnessed to produce electricity.  While the development of wind turbines is well advanced, the exploitation of marine energy is currently where wind was at some 15 to 20 years ago. 

But marine energy devices are being developed and tested.  A New Zealand consortium of IRL, NIWA and Power Projects Ltd. has developed a promising prototype of a wave energy device to capture the energy in waves and generate electricity.  It has been trialled in Lyttleton Harbour.

Another group, Neptune Energy, is proposing to anchor turbines in Cook Strait to harness the strong tidal currents which are created by different tidal levels at the east and west sides of the Strait.  Marine turbines are currently being developed in the United Kingdom.  A similar proposal has been proposed to harness tidal flows in and out of the Kaipara Harbour.

The power of willows

Biojoule, an Auckland company, is seeking investment to build a pilot plant that will convert willow trees into ethanol and other valuable products.  Trial plots of willows have been planted in the Taupo region.  When willows are cut they sprout and regrow shoots which can be harvested annually. 

The company proposes to integrate existing technologies to extract lignin and xylose from the willow chips and then ferment the remaining plant material to produce ethanol. 

The efficiency of existing processes to produce ethanol from cellulose have yet to be optimised to a level where they are economic.  The Biojoule model extracts value from lignin and xylose as well as ethanol to improve the economics.

Plug and play - renewable electricity runs the meter backwards

A Plimmerton company, KTL Technologies, wants to help homeowners and farmers make use of renewable electricity and reduce their reliance on power from the grid. 

Current systems that generate renewable electricity at a domestic scale often require considerable technical expertise to install and operate.  The batteries that store the power are also expensive and heavy and have limited life.

KTL hopes to be able to provide homeowners with a very smart electronic black box to overcome this.  Renewable power from wind, micro-hydro and solar photo-voltaic generation can be plugged into the black box.  The electronics and inverter in the box transform the power to 230 volts AC which is synchronised with the mains power from the grid.  The power is fed into the domestic wiring. 

The renewable power displaces some of the grid supply during the day and when demand is low at night, the home generated power will run the meter backwards.  KTL’s black box doesn’t involve new technologies.  But it does integrate existing technologies in new ways that will hopefully provide homeowners with a practical way to become cleaner and greener and reduce their power bills.

Annex 1

Examples of the type of research that might be supported by the Renewable Energy TRST to enhance renewable energy deployment in New Zealand

Renewable energy resource	Examples of TRST opportunity
Marine	Testing and optimising prototypes of marine wave and current energy devices.
Geothermal	Trialling home and community heating services using low enthalpy geothermal heat. Trial harnessing of heat from abandoned oil and gas wells.
Bioenergy	Piloting of pyrolysis or gasification technologies for New Zealand plants and wastes. Anaerobic digestion of farm wastes for whole of farm energy solutions.
Biofuels - liquid	Piloting or scale up of technologies to produce liquid biofuels from algae, trees and agricultural and domestic organic wastes. Optimising algal or tree production in the New Zealand environment and climate.
Wind	Testing of models or management systems to allow more wind energy to be connected to the grid. Modelling and forecasting of wind behaviour at local scales and short time intervals to obtain maximum generation from sites. Micro generation opportunities for New Zealand houses.
Solar	Developing systems to integrate solar hot water and PV into existing home environments.
Hydro	Developing or adapting micro hydro systems for run of the river and small scale generation for off grid applications.
Integrating technologies
Electricity	Prototyping systems to integrate renewable electricity into homes and grids. Developing smart meter/smart grid solutions to maximise the contribution of renewable electricity.
Hydrogen	Prototyping technologies to integrate hydrogen production and storage into off-grid electricity solutions using intermittent renewable energy from wind and solar.
Efficiency	Scale up and optimising biotechnology solutions to reuse waste CO and CO2 from industrial processes to produce gas and liquid fuels.

Footnotes

1 Powering our Future – towards a sustainable low emissions energy system, MED, December 2006

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