The need for energy storage

In Aotearoa New Zealand we are fortunate to have a strong history of investing in renewable energy. The continuing investment in renewables is supporting New Zealand to meet the expected increased electricity demand and has largely displaced thermal generation assets from baseload duty. 

As with other electricity markets around the world, the use of renewables means the market faces great exposure to climatic conditions and therefore New Zealand requires significant amounts of ‘flexible’ generation that can vary output to balance the variations in weather.

Off the back of its experience in Winter 2024, Genesis asked KPMG and Concept Consulting to assess the future requirement for Huntly assets to support New Zealand’s energy security over the short, medium, and long term.

Key takeaways from this report: 

1. Having a high degree of renewable energy generation means New Zealand needs the capacity to store energy for the times when nature does not align with needs. The storage system needs to be able to provide days, weeks and months of electricity supply.
   
   
2. Concept Consulting’s modelling shows that without thermal generation from the Rankine units as part of New Zealand’s energy storage solution, wholesale electricity prices would likely be 60% higher in the short-term (the next two-to-three years) and 11% higher in the long-term (ten+ years).
   
   
3. The choice of fuel used for storage is critical for security, price stability and environmental impact. There is value in New Zealand having diversity for its storage solutions, as seen by the impact of the lack of gas in Winter 2024.