Methane matters

Long-lived and short-lived greenhouse gases have been the subject of debate in New Zealand for some time. Understanding how they contribute to climate change is particularly important now the Government is considering a new emissions target for 2050. There are three options on the table:

  1. Net zero carbon dioxide
  2. Net zero long-lived gases and stabilised short-lived gases
  3. Net zero emissions across all greenhouse gases

This would replace the current target to cut emissions to 50% below 1990 levels by 2050.1

Which target?

The first target should be dismissed because it ignores other long-lived gases, including nitrous oxide, which accounts for over 10% of New Zealand’s emissions. Nitrous oxide lasts for over 120 years in the atmosphere. It has a warming effect that is more than 250 times that of carbon dioxide over a 100-year timespan.2

New Zealand’s nitrous oxide emissions have also been rising steadily since the 1990s as farming has expanded and intensified. These emissions stem from livestock urine and dung, and fertilisers. Cutting nitrous oxide emissions has the co-benefit of improving the health of our waterways, which have become heavily polluted by nitrate runoff from farms.3

This leaves us with the second and third targets, which is where it gets complicated. Should we cut all greenhouse gases to net zero? What is a long-lived and short-lived gas? And what does ‘net zero’ mean anyway?

Long versus short-lived greenhouse gases

Long-lived gases, including carbon dioxide and nitrous oxide, accumulate in the atmosphere. The total stock of historic emissions has locked in a degree of global warming that cannot be reversed. Ongoing long-lived emissions will continue to warm the climate.

Average global temperatures are now more than 1°C above pre-industrial levels.4 The only way to avoid the 2°C increase in global temperatures that we committed to under the 2015 Paris Agreement is to cut long-lived emissions to net zero. Both the second and third proposed targets take this into account.

Net zero implies that persistent long-lived emissions are offset, either by planting forests that absorb carbon dioxide or purchasing overseas ‘emissions credits’. The latter could, for example, serve to discourage deforestation abroad rather than planting more trees in New Zealand.

Short-lived gases also contribute to global warming, but the flow of emissions rather than the total stock in the atmosphere is what counts. This is because short-lived gases break down and exit the atmosphere faster. For example, methane is a short-lived greenhouse gas with an average atmospheric lifespan of just over 12 years.2 In New Zealand, methane from cattle and sheep makeup over 40% of our total emissions.3 Outside of New Zealand, methane is primarily emitted during oil and gas production, as well as equipment and pipeline leaks.

If atmospheric inflows of methane are equal to outflows then its contribution to global warming is fixed and, unlike long-lived gases, this does not worsen over time. Of course, this still implies some ‘warming’, even if it is not rising. This is the approach proposed for the second target.

Stabilising methane

It could seem fair to say that the New Zealand agricultural sector, which is responsible for the majority of methane emissions, should be allowed to continue emitting as long as it’s not making global warming any worse. However, implementing the second target is still likely to involve reducing methane emissions to shrink their overall contribution to climate change. This begs the question: how much methane-induced warming should be allowed? Or, at what level should we stabilise short-lived emissions?

The answer depends on our emissions budget ⎼ the amount that we can still emit in New Zealand, and globally, before breaching the 2°C temperature threshold agreed in Paris. The more long-lived gases we emit, the more we eat into our short-lived gases allowance. This is illustrated by the Productivity Commission’s diagram below:3


The second target leaves room for different interpretations of the appropriate stabilisation level. Once it is set up, the new Climate Change Commission will be able to advise on this. Depending on final wording of the second target, successive governments might be able to adjust the level. This could give us some flexibility in achieving our 2050 target, but would also result in some uncertainty for households and businesses. Since the chosen target is likely to remain in law until 2050 we ought to minimise ambiguity.

Warming decelerator

Deploying methane as a global warming ‘decelerator’ is the approach proposed for the third target. If outflows of short-lived gases exceed their flow into the atmosphere, this can actually counteract some of the warming being driven by historic long-lived emissions. If we cut methane emissions to net zero, their contribution to global warming will also reach zero within a few decades. The same cannot be said of long-lived carbon dioxide or nitrous oxide emissions.

The Paris Agreement requires us to “pursu(e) efforts to limit the temperature increase to 1.5°C”. This is a more aspirational target than 2°C, but the Agreement recognises this as the safer limit that “would significantly reduce the risks and impacts of climate change.”5  To have a high likelihood of limiting warming to 1.5°C, we need to limit the atmospheric concentration of greenhouse gases to 350 parts per million.6 But we exceeded this limit in 1988.7 The probability that warming is limited to just 1.5°C has been in steady decline ever since.

As the world continues to emit long-lived gases, cutting methane emissions can delay the arrival of the 1.5°C temperature limit. According to a leaked special report from the UN Intergovernmental Panel on Climate Change, this is expected to happen in 2040.8 Net zero methane would also dramatically improve our chances of avoiding warming of 2°C. Just as importantly, it might see us avoid climate tipping points, like the collapse of the Gulf Stream or the melting of the Arctic permafrost ⎼ events that cannot be reversed.

Methane has a warming effect over 80 times stronger than carbon dioxide over a 20-year period.2 This effect does not last forever, but the next few decades are crucial because we have already run up a debt. Cutting methane emissions to net zero is like selling your car to meet your mortgage repayments and avoid foreclosure.

Our climate, your say

It is difficult to conclude whether the second or third target is best. Both are grounded in science and make sense. 

Should New Zealand cattle, sheep and dairy farmers cut exports and innovate their way to net zero? Industry, as well as the energy and waste sectors that produce long-lived emissions, certainly must. 

New Zealand will not remain unaffected by sea level rises, extreme weather events, drought and wildfires, or an increase in airborne diseases and the other effects of climate change. Yet, we know that developing countries will bear the brunt of this. Should New Zealand cut all emissions to net zero by 2050, so our neighbours in the low-lying coral atolls in the Pacific have the best chance of preserving their homes?

The choice is ultimately a moral one, even cosmopolitan, as it asks us to consider the benefits to people beyond our borders.

You can make a submission here: Our Climate. Your Say.

[1] New Zealand 2050 target, Ministry for the Environment
[2] Global Warming PotentialIPCC Working Group 1, Assessment Report 5, Chapter 8, Table 8.7
[3] Low-emissions economyProductivity Commission
[4] Climate Monitoring, US National Oceanic and Atmospheric Administration
[5] The Paris Agreement, UNFCCC
[6] Radiative Forcing Stabilisation Level, IPCC Working Group 2, Assessment Report 4, Chapter 19, Figure 19.1
[7] Atmospheric carbon dioxide, US National Oceanic and Atmospheric Administration
[8] IPCC Final Draft ReportReuters

Further reading:

New Zealand Agricultural Greenhouse Gas Research Centre

NZ Climate Change Research Institute, Victoria University

Ministry for the Environment



Net Zero

New Zealand must map out a path to carbon neutrality by 2050 as our challenges are harbingers for the rest of the world. We already have a 85% renewable power mix, but we must figure out how to close this gap. Transport is responsible for most of New Zealand’s carbon dioxide emissions and 20% of total emissions, as is the case globally. Agricultural emissions make up more than half of our emissions profile. Dairy, meat, crops and horticultural products are exported, so international dietary preferences must figure in our national debate on climate change. We must also ask ourselves if aluminium production still has a place in New Zealand, and how many trees we should plant each year.

I moved home to New Zealand late in 2017, just a few weeks after a new centre-left government was formed. The Labour Party entered into a coalition with New Zealand First and a confidence-and-supply agreement with the Greens. Before Christmas, the new climate change minister and Greens’ party leader announced the Government’s intention to pass a Zero Carbon Act, whereby the New Zealand economy would achieve carbon neutrality by 2050. Industry, think-tanks and public sector officials have produced huge volumes of data, modelling, analyses and arguments since then. Within the last few weeks, the Interim Climate Change Commission was announced and the Productivity Commission published a 500-page draft report on the transition to a low-emissions economy. We all want to know what do we need to do to reach net zero.

I am reviving this blog with the aim of discussing climate change issues in New Zealand as I believe what we do here matters greatly. Small-emitting nations are responsible for up to 30% of total global greenhouse gas emissions. Given the nature of our challenges, decarbonising power, transport, agriculture and industry in New Zealand can provide a blueprint for decarbonising the world. We have the opportunity to demonstrate how to reach net zero.

100% renewables

Around 85% of New Zealand’s annual electricity supply is generated from renewable sources. Gas or coal-fired generation is used to meet winter demand peaks and back up supply in low rainfall years.  Hydroelectricity constitutes more than half of the national power mix. In a high hydrology scenario, with good seasonal rainfall and snow melt, hydro-power can meet up to 65% of our annual power needs, but dry years present a great challenge and a barrier to reaching 100% renewables.1

Norway is often held up as an example, given its comparable population size and reliance on hydro-power. However, the tiny Nordic nation has almost six times the amount of lake storage available in New Zealand. That’s just geography and topography. We can’t build another lake. Or we could, but the major legacy hydro-power schemes in New Zealand already disturb our ecosystems and divert major waterways so as to generate power. Under current resource management laws, it is highly unlikely that a new large-scale hydro-power scheme would get built in New Zealand. We could feasibly expand lake storage in current schemes, but not double it, which is what would be required. Further, this would do little to address the main barrier to reaching a 100% renewable power supply, which is our dry-year risk.

Wind power

At an emissions price of $75 or greater it will be economic to build enough wind farms to reach about 95% renewables in New Zealand, according to Concept Consulting. Wind farms will be important to ousting baseload gas and coal power plants over the next decade. This means that fossil fuels will never need be burnt to meet electricity demand when wind is available. Wind power only comprises around 6% of current supply, so resource consent and project permitting should be fast-tracked to encourage new build. Today, a significant number of wind projects have actually been consented, over 2.5GW according to the NZ Wind Energy Association, but project developers are waiting for prices to rise before starting construction. However, wind power cannot ensure our power supply is 100% renewable in a dry year since it is not guaranteed to be available during winter peaks when demand is at its highest. Grid-scale or rooftop solar exacerbates the seasonal storage challenge as it only generates during periods of low demand and has a much higher output during the summer. We need power sources that are as flexible as coal and gas-fired power plants to meet seasonal demand.

Another important issue is that wind is highly correlated throughout New Zealand. To simplify, if it is a windy day in Auckland it is likely to be a windy day in Wellington. When south-westerlies or westerlies, or any given weather system, move across New Zealand we get high volumes of generation at all or most wind farms, but when the weather is mild then wind generation is generally low throughout the country. More geographically diverse locations can be selected for future wind farms to reduce the effect of this correlation. Nevertheless, New Zealand is an island nation lacking any electricity interconnectors to other countries, so we cannot import electricity from a neighbour as happens in the European Union or the United States when wind power cuts out. We are on our own.

Big batteries

Grid-scale battery storage projects have been making headlines around the world. Tesla installed a massive battery in South Australia after Elon Musk made a promise to do it in 100 days or for free on Twitter. Bloomberg New Energy Finance’s (BNEF) lithium-ion battery price index shows a fall from US$1,000 per kWh in 2010 to US$209 per kWh in 2017. This fantastic cost decline is a cause for celebration. It will bring more storage into our homes and bring more flexible services to our power grids. It has already brought us mass-market electric vehicles. Nevertheless, this technology cannot economically provide seasonal or dry-year power storage of the scale required at present. They just do not pack as much punch as hydro storage.

Let’s make some optimistic assumptions. Suppose, Tesla can manufacture a 10kW battery next year. The buffer that we might need in a dry year is 4000 GWh in New Zealand – this is the extra energy we can store in hydro lakes during wet years. We have around 1.5 million households. This suggests we need 400 million batteries, or over 250 Tesla Powerwalls per household. Even at a discounted price of just US$2000 this would require an investment of over US$500,000 per household or US$800 trillion in total. More than four times our current GDP. We could spend that money more wisely to reduce our greenhouse gas emissions.

Car culture

Power sector emissions have declined 13% since 1990 and make up less than 10% of total emissions. In the same period, transport emissions rose 70% and constitute 20% to New Zealand’s emissions. Car ownership reached its highest level ever last year, at 774 light vehicles for every 1,000 New Zealanders. This is almost the highest vehicle ownership per person worldwide (Ministry of Transport).

This is the beast we must tackle. Electrification is the key pathway with existing technology to cut the majority of transport emissions. To charge electric passenger vehicles and e-buses, electrify trains, and reduce fossil fuel usage for heating, a reliable and affordable electricity supply is crucial. Rising power prices or an uncertain supply could frustrate decarbonisation in these emissions-intensive sectors and lead to worse overall outcomes (Concept Consulting). That’s why it is vital to not prematurely force a 100% renewables goal in the power sector.

Nevertheless, with more wind, batteries and additional geothermal power plants, it is technically feasible to reach the 100% renewables target when we have average or high rainfall. This would be achieved at great expense and put significant upwards pressure on power prices. Other flexible technologies, such as demand response or renewable power-to-gas, hold great potential to help New Zealand reach 100% renewables. Biomass or tidal power generation could emerge as affordable means to generate electricity in New Zealand in the next few decades. Solar and wind offer a comparatively low-cost pathway to reduce emissions in most countries that currently have a high share of coal and gas-fired generation, but how we plug the gap between 95% and 100% in New Zealand isn’t obvious yet.



The New Zealand Emissions Trading Scheme (ETS) is our main tool for encouraging decarbonisation. The scheme requires emitters to pay for each tonne of carbon dioxide or other greenhouse gas produced – this is called an emissions unit. Farmers are currently exempt from participating in the ETS, which covers energy, waste and industry. To achieve net zero this will have to change since agriculture contributes over half of our emissions. To ensure a gradual transition for farmers, they should receive free emissions units upfront and have trading at the full emissions price phased in over time.

Carbon dioxide is not the culprit in the agricultural sector. In New Zealand, the main agricultural greenhouse gases are nitrous oxide and methane.
Nitrous oxide is a potent, long-lived greenhouse gas with over 200 times the global warming potential of carbon dioxide. Produced from livestock urine and dung, NO2 emissions rose 48.5% between 1990 and 2015, and make up 10% of our total emissions.1

Methane is a short-lived gas in the atmosphere. In other countries it is mainly generated as a byproduct of oil and gas exploration. These are called ‘fugitive’ emissions. In New Zealand, methane is biological in origin stemming from cattle and sheep. It has a very powerful heating effect in the short-term and can serve to accelerate or delay peak temperature or tipping points in the climate system.

Changing land-use from dairy, sheep and cattle farming to new forests or low-emissions crops and horticulture (growing fruit, vegetables and flowers) is key to achieving carbon neutrality in New Zealand by 2050. This implies that fewer sheep and cattle will be farmed in the future. Reducing, though perhaps not eliminating, dairy and meat exports raises important questions about food production. The carbon footprint associated with a diet rich in animal protein is an issue that is likely to loom larger in public debate.

Planting trees

Planting forests, also known as afforestation, currently offsets about 30% of New Zealand’s greenhouse gas emissions annually.1 At the moment, foresters can voluntarily participate in the ETS and profit from offsetting emissions. However, the registration fees and complexities of trading discourage small foresters from joining the scheme. Facilitating forest-owners participation in the ETS will provide new sources of income to agricultural regions, as farmers switch from pastoral farming and dairying to horticulture, crops or forestry.

All pathways to net zero, require forestry to play a major role. Afforestation is like a credit card, buying us time to develop alternative technologies to replace current agricultural and industrial processes. A methane vaccine for animals or other biological inhibitors that can be mixed with their feed are being researched, but these technologies remain unproven. Selective breeding, though it can take decades, will also continue reduce the amount of methane produced per animal.

Beyond 2050, when all economically viable land for new forests has been used, emissions offsets or reductions will have to come from elsewhere, so research and development funding is important. Government funding for research into emissions mitigation technologies is about NZ$20m per year, with roughly NZ$16m going to agricultural programmes. Given the contribution of agriculture to GDP (6% in 2015), and its proportion of total emissions, this is a small sum. More than NZ$1.5 billion is spent funding innovation in other areas.1 One option is to use revenues from the auctioning of emissions units to fund new mitigation technologies and research.

There are few affordable means to cut emissions from pastoral and dairy farming without reducing herd populations at present. Forestry, cropping and horticulture will offer alternatives. If all sectors are covered by the Emissions Trading Scheme, businesses that reduce their emissions will be rewarded and pay for fewer emissions units. It is the main tool we have to encourage the changes and innovation required in all sectors to dramatically cut our emissions and reach net zero by 2050 in New Zealand.


[1] Statistics & figures sourced from the Productivity Commission’s draft report unless otherwise referenced, Low-emissions economy, 27 April 2018.

Gas goes global

Unlike the highly liquid global oil market, natural gas has always been traded regionally. Asia, Europe and North America represent three different gas markets with their own unique dynamics.

Regional gas markets

Asia is very reliant on LNG (liquefied natural gas) imports. Natural gas demand significantly outstrips low levels of domestic production. Prices spiked after the Fukushima Daiichi disaster in 2011 when Japan began importing record volumes of gas for electricity generation to replace the output of nuclear power plants that were shut down.

North American gas production has always been strong, but exploded over the past few years. Hydraulic fracturing (or fracking) activity and the discovery of significant shale gas reserves halved North American gas prices between 2010-11. Prices remain at historic lows today. Henry Hub in Louisiana, where North American gas is physically delivered as well as virtually traded, is the world’s most liquid spot and futures market for natural gas. North America’s well-developed pipeline infrastructure also minimises transportation costs and promotes access to the market. And a high degree of competition lowers the barriers to entry.

Europe’s numerous trading hubs are still developing and are yet to match Henry Hub’s liquidity. Until recently the majority of European wholesale gas buyers maintained long-term contracts with mega-suppliers – namely Russia’s Gazprom and Norway’s Statoil. According to the Oxford Energy Institute, 2015 was the first year that more than fifty-percent of gas trades in Europe took place on the spot market. Demand has yet to return to pre-2008 levels and is still soft across the continent, but prices remain consistently higher than in the US.

Gas producers rely on pipeline infrastructure to connect supply with demand centres. This is why North America’s shale gas revolution and the subsequent decline in natural gas prices have not affected European prices – no pipeline crosses the Atlantic. But, LNG can easily be shipped between the continents. Why then are the world’s two biggest gas markets still disconnected?

Intercontinental LNG trade

LNG (liquefied natural gas) is made by cooling natural gas to -162ºC. This transformation to liquid shrinks the volume of the gas 600 times, making it safe and easy to ship. LNG is colourless, odourless and non-toxic. Nevertheless, the added cost of liquefaction, sea transportation in specialised vessels and regasification at the destination has so far limited global arbitrage opportunities.

Yet, a barrage of new LNG investment over the past few years has lead some to speculate that natural gas markets are globalising. The International Energy Agency claims that global liquefaction capacity will increase by forty-five percent between 2015 and 2021, with most of this growth coming from the United States and Australia. If this glut makes enough cheap LNG available then North American and European gas prices might slowly converge.

In February, the Cheniere Energy LNG terminal at Sabine Pass between Texas and Louisiana was the first to begin exporting. In anticipation of a LNG supply glut Eastern European countries, including Poland and Lithuania, have been building regasification terminals. Lithuania is testing floating regasification technology – offshore plants connected by pipeline to the shore. Spain, being part of a peninsula, is isolated from the European continent’s pipeline network. Historically, this has made it an important destination for LNG cargoes. In fact, the economic downturn since 2008 created an opportunity for Spanish buyers to reload LNG cargoes and sell them in Asia where prices are higher. This churn enhances liquidity. Otherwise, LNG is injected into the network all over Europe. There are important regasification terminals in the Mediterranean: Italy, Greece and France, as well as north-western Europe: the UK, the Netherlands and on France’s west coast.

US LNG producers are increasingly flexible too – offering variable volume contracts or FOB (free-on-board) cargoes. Variable volume contracts permit buyers to increase or decrease the amount of gas they take depending on their needs. They may purchase extra volumes to take advantage of high spot prices – reselling the LNG cargo or trading gas locally. Or they may reduce their volume off-take when local demand is low. FOB means a buyer has not yet been found nor locked into delivery. An LNG cargo leaves the liquefaction terminal and can be bought and resold “on board”. The cargo may eventually be dumped in a spot market at a loss if a buyer can’t be found, but LNG suppliers’ willingness to send out FOB cargoes shows liquidity to be improving.

Not yet a single market

European countries are keen to reduce their dependence on Russian gas for political reasons. However, uncertainty remains as to whether US LNG can compete with Gazprom on price.  Analysts at the Oxford Energy Institute estimate Gazprom’s cost of delivering gas to Germany to be 3.5 USD per mmbtu (million British thermal unit). Whereas the break-even price for the cheapest US LNG supplies is around 4.3 USD per mmbtu – even with Henry Hub still trading at historic lows. Gazprom, Europe’s largest gas supplier, has significant spare production capacity and some of the lowest cost production in the world. Given these conditions, LNG traders are unlikely to win a price war on the continent.

In sum, greater supply and liquidity in the global LNG market offers some opportunities for arbitrage between the continents and provides European gas buyers with options. This does have the potential to disrupt Europe’s monopolies and introduce greater competition into the market.  Yet, LNG and pipeline gas markets are not one and the same. Whilst the price gap persists, gas markets will retain their regional characteristics.


Green energy for developing nations

Paradoxically, those nations which are most vulnerable to climate change’s ill effects also require significant energy investment. Yet, emerging economies such as China’s and India’s cannot grow whilst still relying on coal-fired electricity and oil for transport. The consequences for the planet and human lives would be catastrophic. It’s clear that developing countries must leapfrog current technologies in favour of low or zero-carbon energy sources.

This may seem an unfair burden to impose on less prosperous nations. Yet, solar power is becoming financially attractive, in addition to it’s green credentials. The levelised cost of electricity, or the minimum price for which electricity must be sold so that a power plant breaks-even, shows solar power converging on gas and coal. Such gains were driven by significant cost reductions in the manufacturing of solar panels since 2010.

Long-term contracts to purchase solar power in developing countries including South Africa, the United Arab Emirates, Peru and Mexico support such analysis. The Economist cites an example earlier this year: Enel Green Power, an Italian power company, won a tender to provide Peru with 20 years of PV solar power at a rate of less than $48/MWh. Soon after, Mexico also awarded the company a long-term contract to generate solar power at a price of about $40 per MWh. Bloomberg New Energy Finance describes these contracts, and another awarded to ACWA in Dubai in January, as the lowest subsidy-free solar contracts seen so far. 

Large grid-connected solar projects in China and India accounted for most of the global growth in solar capacity additions last year. China’s biggest project yet – a 200 MW solar power plant  in the Gobi desert – is now under construction. It could eventually power up to a million homes. The Indian government is flirting with offering 2-4 GW tenders for solar power plants. Solar power is central to both the Chinese and Indian governments’ plans for economic growth and reducing greenhouse gas emissions. 

Off-grid solar in Africa

Grid-connected, large-scale solar does not suit developing countries currently lacking in grid infrastructure though. Further, difficult terrain, a significant rural population or remote communities present a challenge to electrification. M-Kopa is an innovative company currently bringing cheap, off-grid solar electricity to more than 200, 000 households across Kenya, Uganda and Tanzania – reaching places that landlines and power lines do not. Customers pay 35 dollars upfront for a solar panel, LED bulbs and a flashlight, a radio and cellphones chargers. The package would normally cost around 200 dollars. This is paid off, via a mobile banking service, in installments proportional to the amount of energy consumed. Once their initial loan is paid the electricity is free.

By M-Kopa’s own estimate over 80-percent of their customers live on less than 2 dollars per day. An average off-grid Kenyan household spends 75 cents per day on energy. Kerosene is the most common source of energy – used to cook food and light homes. A customer saves about 750 dollars over four years after switching to M-Kopa’s basic solar kit the company claims. Kerosene is not only expensive, it is also very pollutive – its fumes cause nose and throat irritation, respiratory disease, and blacken the walls of homes. Its combustion also releases greenhouse gases. Yet, M-Kopa is a profitable, private firm – the green benefits are almost an accident.

Self-sufficient energy islands

In Haiti, the poorest country in the Western hemisphere and devastated by the 2010 earthquake, more than 75-percent of the population does not have access to electricity. Non-profit EarthSpark International estimates that rural Haitians spend 6.5-percent of their annual income on kerosene and candles for home lighting, whereas the average American family contributes only 0.5-percent. The inhabitants of Les Anglais had no electricity and relied on kerosene until Earthspark brought a self-sufficient, solar microgrid online last year. The pay-as-you-go system has connected hundreds of homes and reduced households’ energy costs.  Earthspark has ambitions to install a further 25 microgrids throughout Haiti.

The grid-connected electricity that does exist in Haiti  is generated  by burning diesel imported from Venezuela. Isolated islands, such as Haiti, suffer disproportionately from upswings in global energy prices, being dependent on fuel imports. In this context, renewables can become highly competitive with imported fuels for electricity generation.  

An abundance of wind and sun also makes islands well-suited to renewable energies.   Electricity storage technologies are needed to ensure reliable supply from the grid though, since islands also lack interconnections to other regions. Akuo Energy, a French renewables company, has used lithium-ion batteries, existing technology, alongside solar power plants in French overseas island territories to provide a reliable source of clean power. A number of facilities are now in operation in Corsica and Ile de la Réunion that have contributed to improving the islands’ energy self-sufficiency.

Islands with tropical climates also have the necessary oceanic conditions to take advantage of an established renewable energy technology called Ocean Thermal Energy Conversion. OTEC relies on a temperature difference between colder deep water and warmer shallow water. The difference is exploited to vaporise a working fluid circulating in a closed circuit, which in turn spins a turbine coupled to a generator. This provides a reliable, steady source of electricity and no pollution. An OTEC demo facility began operations in Hawaii in 2015 and is currently powering around 150 homes. A pilot project in Martinique is being jointly developed by Akuo Energy and DCNS. Construction is expected to get underway this year. Installation will make this facility the largest OTEC project to date.

The COP21 agreement signed in Paris last year specifically mentions small island nations in the text. This recognises their unenviable position as victims of both climate change and energy poverty. The climate change related calamities visited upon islands include rising seas levels, more intense and more frequent droughts and cyclones, as well as a heightened vulnerability to airborne diseases. Clean energy development is imperative for such island nations, as well as other developing countries: to reduce their energy bills, lift communities out of energy poverty and to improve their self-sufficiency. Incidentally, this will also help bring greenhouse gases under control . 


New Zealand’s contribution

Last year at the 21st United Nations Conference of Parties (COP21) in Paris, 195 countries negotiated a global agreement to address climate change. The agreement does not stipulate specific emissions reduction targets, unlike its predecessor, the expired Kyoto Protocol. Instead each negotiating party was asked to voluntarily submit their Intended Nationally Determined Contributions (INDC) for reducing global emissions.

New Zealand’s INDC commits to reducing greenhouse gas (GHG) emissions to 30-percent below 2005 levels by 2030. Currently, renewables comprise around eighty-percent of New Zealand’s electricity mix. The government plans to increase this to ninety-percent by 2025, following the closure of the two remaining large-scale coal-fired power plants before 2018.

This low-carbon electricity generation is a huge advantage. It might be exploited to decarbonise the transport sector, which produces seventeen-percent of New Zealand’s total GHG emissions. New Zealanders depend heavily on road transport. This is due in part to having a widely dispersed population. Fuel efficiency standards already apply, targeting heavy diesel vehicles for road freight in particular. Fully electrifying public transport networks in Auckland and Wellington, as well as providing incentives for private ownership of electric vehicles, would go some way to reducing GHG emissions from the transport sector.

Yet agriculture contributes almost half of New Zealand’s total GHG emissions. The sheer size of the agricultural sector is impressive given the island nation’s size and population. New Zealand produces around a fifth as much milk as the US – a country seventy times more populous. Agriculture is also behind New Zealand’s high carbon intensity per capita – fifth among industrialised nations.

Nevertheless, New Zealand is one of the world’s most efficient agricultural producers. Milk production has trebled since the 1990s though methane emissions from cattle doubled. New Zealand has been successful in researching and adopting efficient farming practices. This includes effective pasture management, and breeding and feeding animals to yield more milk and meat. The New Zealand Agricultural Greenhouse Gas Research Centre is investigating  new means to breed or feed sheep and cattle so that they produce less methane, or introduce enzymes to their stomachs, through harm-free drug treatment or vaccination, that reduce their methane emissions. The government has committed $48.5 million to the New Zealand Agricultural Greenhouse Gas Research Centre before 2019. A further  $45 million is earmarked for the Global Research Alliance on Agricultural Greenhouse Gases. These institutes promote technologies and practices to reduce agricultural GHG emissions worldwide.

Reducing New Zealand’s agricultural emissions is a significant challenge. Until better technology is developed and widely deployed to capture or mitigate agricultural emissions the government does not expect that aggregate agricultural emissions will be reduced substantially beyond 2030. In the same vein, low-carbon technology must be widely deployed within the transport sector to encourage further emissions reductions post-2030.

This is why the New Zealand government supports a global carbon market. Currently an Emissions Trading Scheme (ETS) operates in New Zealand. Transport fuels are included to incentivise less carbon intensive forms of transport, but the scheme excludes pastoral agriculture. The inclusion of this sector would significantly affect New Zealand’s global competitive advantage and exports.

New Zealand’s agricultural emissions are ultimately associated with meat and dairy products consumed elsewhere in the world. Almost all agricultural produce is exported. New Zealand agricultural producers could not pass on the cost of carbon to consumers even if they were required to participate in the NZ ETS, since China, the US, Australia, Japan, the UK and other importers are liable to seek lower-cost supplies in the global marketplace. If other agricultural exporting countries were required to integrate a carbon price into their sales then the playing field would be more even. In fact New Zealand would have an advantage as one of the more productive agricultural exporters. This would also incentivise low-carbon farming and food production globally.

Currently, the electricity sector is leading the charge to decarbonise the world’s economy by encouraging the uptake of renewables. Yet agriculture comprises 14.5 percent of global GHG emissions. To realise more ambitious reductions in the next decade and beyond, significant research, development and funding needs to be directed towards agricultural technology and practices.

Or we might consider the vegetarian’s solution to climate change. Demand for meat has been rapidly rising in developing and emerging economies including China, India and Brazil. Though a reversal of this trend – and reduced global demand for meat and dairy – may not be the solution that the New Zealand government pictured.

100% renewables

Two or three years ago European think tanks were asking if an electricity mix with a 50%, 60% or even 90% share of renewables was workable. What is threshold above which the electricity grids of Europe would no longer be able to absorb intermittent renewable energies?

Electricity grids have strict ramping constraints, which means the flow of electricity cannot change dramatically from one moment to the next. Solar and wind power introduce intermittency into the grid. We know when the sun will go down, so solar panels’ contribution can be gradually phased out every evening. Different sources of power will have to compensate during the night. Wind speed and direction is less predictable. For countries with a high penetration of wind generation, like Germany or Denmark, what source of power can be called upon to compensate for a sudden drop in wind? Nuclear power plants cannot increase or decrease their output in a timely manner – this takes hours. Efficient Combined Cycle Gas Turbines (CCGT) and other modern thermal generators are fit for the task, but would playing back-up be profitable for these units?

European thermal generators’ annual revenues have suffered over the past few years. The economic downturn since 2008 has had a role to play in this, but competition from renewables is the main source of the discomfort. Renewables generators produce electricity cheaply as they do not have the fuel costs that gas and coal power plants do. Renewables also have priority access to the grid in countries such as France and Germany that are looking to increase renewables’ share in their national electricity mix. This means renewable generators have the right to sell electricity before other producers.

Nevertheless, reliable generation is still required. Thermal generators could charge a heavy premium for electricity during periods of supply scarcity to make up for lost generating hours cannibalised by renewable generators. In this way an increased share of renewables was expected to cause frequent price spikes, as well as negative price events when renewables oversupply the market. Electricity prices would become highly volatile.

Paying thermal generators a ‘capacity’ fee to remain online and ready to increase output at short-notice has been proposed as a solution to their financial troubles.  And if more thermal generators remain in the market then competition between them will help to avoid price spikes.  However, these so-called capacity markets have not found many advocates. France intended to launch an organised market for capacity certificates this year – an initiative that has been put on hold by a European Commission investigation into the competitiveness of the measure.

Yet, more recent research has started to show it is feasible to have an energy-only market with a high penetration of renewables in Europe.[1] The concerns about grid instability and price volatility have not come to pass. Perhaps even 100% of electricity generation could be derived from renewable resources if other conditions are met. What are these conditions?

Firstly, diversity of supply is a tonic. A great number of interconnections crisscross the European continent allowing countries to import or export electricity from their neighbours. This allows surges in renewable supply to be sent elsewhere when needed. In periods of local supply scarcity one country can import from a neighbour. Where supply bottlenecks exist the European Commission incentivises investments in new interconnectors. This can be a slow process but the examples of supply bottlenecks are isolated. For most of the year French and German spot electricity prices converge. This shows that arbitrage is effectively taking place between the continent’s two biggest electricity markets.

Wind and solar capacity has a lower utilisation rate than thermal capacity that only technically need to be offline during maintenance. To ensure reliable electricity production in a system dominated by renewables a greater proportion of capacity needs to be installed – and in diverse locations – in order to increase the diversity of supply.

Disruptive technologies like batteries will eventually be integrated into wind and solar farms to improve control over their electricity output. Battery technology may even compete with thermal generators as back-up for renewable supply disruptions. Other technologies, such as tidal or wave energy, and smart grid management will eventually become commercial as well.

Further, liberalised electricity markets provide utilities and investors with trading opportunities to balance their production portfolios and hedge financial risk. Weather forecasts help to predict the output of a solar farm for the next day. If a producer expects  production to be much higher than initially contracted they can sell excess electricity in an organised, day-ahead auction at a European power exchange. On delivery day, if the producer’s actual output is lower than the contracts sold on the previous day, then they still have the opportunity to buy back the electricity on the intraday market.

European power exchanges are also innovating. New products on these platforms are being tailored to renewable generators’ needs. Previously electricity had to be delivered in one-hour blocks, which does not map onto solar farms’ ramping constraints. The ability to trade with a 15-minute or 30-minute resolution is a relief for traders balancing renewable portfolios. Certificates which guarantee the origin of electricity as renewable will soon be offered on the market too.

Today, a European electricity mix dominated by renewables seems feasible. Renewables’ intermittency has not lead to blackouts or high price volatility. If there’s no new investment in gas and coal-fired generation we may yet witness supply inadequacy in the future. Yet, European cooperation, diversity of supply, new technology and dynamic spot markets may be enough to avoid this fate.


[1] Such as the International Energy Agency’s 2014 report: The Power of Transformation

Another good resource for this topic: Dispelling the nuclear ‘baseload’ myth: nothing renewables can’t do better


Coal condemned

During the last decade, the majority of the OECD countries decoupled their economic growth from energy consumption. Normally these rise in tandem – a trend that persists in developing countries and world’s soon-to-be fastest growing and most populous nation, India.

This decoupling happened as developed nations shifted to providing services and building knowledge economies, which is less energy-intensive than industrial production and manufacturing. China too has started down this path. Policy-makers now talk of “decarbonising” the economy. That is, only producing and consuming energy which does not release greenhouse gases into the atmosphere and contributing to climate change.

Decarbonisation is currently focussed in the electricity sector where it is being helped along by policy incentives. Subsidies, guaranteed prices for electricity and tax-breaks dramatically boosted the growth in renewable electricity generation across Europe in the last few years. The liberalisation of Europe’s electricity markets and new regulation improving competition also played a role. Although, falling prices and technology gains spurred the sector’s expansion more than any government policy, particularly for solar power.

For renewables’ expansion to make any difference to greenhouse gas emissions coal-fired power production has to be tackled. Although it is cheap, burning coal releases significantly more greenhouses gases than other fossil fuels including gas in the electricity sector and oil in transportation. Europe’s aging fleet of coal-fired plants are also extremely inefficient at generating electricity compared to newer gas-fired units. A quarter of electricity in the European Union and almost forty-percent in the United States is still generated by burning coal. It is around two-thirds of the electricity mix in China where the resulting air pollution in its major cities is fuelling a sense of urgency.

Political leaders are aware of this danger and are acting to reduce coal production and consumption in many countries around the world. By 2025 all coal-fired power in the United Kingdom will be shut down according to current plans. New Zealand will close its two remaining large-scale coal-fired power plants in 2018. The provincial government of Alberta in Canada, where the tar sands industry alone produces more emissions than Portugal, has announced plans to phase-out coal power over the next fifteen years. China’s goal is to cap coal consumption in 2025 and accelerate its decline thereafter.

President Obama’s Clean Power Plan intends to restrict emissions from current coal-fired power plans, substitute coal with gas-fired or zero-carbon generation and impose strict emissions standards on new plants. The goal is to cut emissions in the electricity sector by a third relative to 2005 levels. Coal mining states have fiercely contested this “war on coal”, which is bound to be difficult for certain towns and regions whose local economy and workforce are dependent on coal mining, not just in the US. Nevertheless, coal needs to eventually exit the electricity sector if the commitments made by the US and 195 other countries at COP21 in Paris late last year are to materialise.

Yet, none of the above is enough to slow climate change. India is set to contribute the greatest share of growth in global coal demand in the future, mostly from increased domestic production. How it intends to reach its goal to produce forty-percent of its electricity from non-fossil fuel sources by 2020 is unclear. In Germany, coal’s resurgence in the power sector has cast a shadow over its achievements in increased generation from renewable resources. Angela Merkel’s government is working on a plan to phase out coal by mid-century. From the European Unions’s biggest economy this is too long to wait. Decarbonising electricity production by phasing out coal remains a long way off. Coal has been condemned by the world’s leaders but not yet replaced.

COP21 à Paris : les acteurs prennent leur place

Le 30 novembre, des représentants des nations du monde arriveront à Paris avec l’intention d’établir un accord global pour lutter contre le changement climatique. À Copenhague en 2009, le manque d’inputs des participants avant la conférence avait freiné les efforts des négociateurs danois et la COP15 s’était terminé sans accord. Cette fois-ci, les coordinateurs français ont impliqué les participants en amont, en leur demandant de définir des engagements volontaires avant le colloque COP21. Un appel auquel 190 pays ont répondu. Cette approche est flexible et adaptable aux particularités de chaque pays, mais elle engendre un engagement endogène à la fois. Des études en sciences politiques stipulent que l’on est plus susceptible de respecter des règles lorsque l’on a aidé à les mettre en œuvre.

Ainsi, les propositions des grands pollueurs, la Chine et les Etats-Unis, restent à ce jour les plus importantes et reflètent aussi une nouvelle situation politique. Des politiques visant à mieux respecter l’environnement sont devenues plus facile à justifier. En 2030, les chinois prévoient d’atteindre leur pic de consommation de charbon, le combustible fossile le plus polluant, et diminueront leurs émissions de CO2. En parallèle, cela permettra à la Chine de réduire sa pollution atmosphérique extrême afin de limiter les maladies respiratoires associées. Par ailleurs, le « Plan d’Energie Propre » du Président Obama réduira les émissions du secteur électrique américain d’un tiers par rapport au niveau de 2005. Cela équivaudra à retirer 166 millions de voitures du marché. Pourtant, les Etats-Unis réduiraient quand même les émissions GHGs grâce à l’explosion de la production de gaz de schiste.

Parmi les propositions de pays participants à la COP21, nombreuses sont celles visant à diminuer les émissions par le biais des énergies renouvelables.  En Allemagne, les énergies renouvelables sont la fondation même de la transition énergétique. Les autres pays européens briguent également un mix énergétique dominé par les énergies renouvelables. Cela encourage la recherche et le développement des technologies de l’énergie propre, plus efficaces et abordables. L’infrastructure, les outils financiers, les solutions techniques sont aujourd’hui manquants et leur mise en pratique requiert du temps et des fonds. Ainsi, l’on atteindrait une économie européenne plus verte, plus durable, plus noble, mais à l’horizon 2050.

D’ici là, l’Europe doit s’attaquer au charbon: le pire ennemi de la lutte contre le changement climatique. Sa combustion produit le double d’émissions par rapport au gaz naturel, en revanche le charbon est peu coûteux et peut suppléer l’intermittence des énergies renouvelables.

Le gaz naturel, pour sa part, répond également à l’abondance de demandes et à l’intermittence de l’éolien et du solaire sur le réseau électrique. En réalité, l’infrastructure énergétique actuelle répond aux besoins des centrales de charbon et de gaz et est déjà en place à des coûts non récupérables pour les investisseurs. Ainsi, il n’est pas possible d’adapter toutes les infrastructures, ni les mécanismes du marché, aux besoins des énergies renouvelables d’un seul coup sans gros choc économique. Le gaz naturel est le substitut le plus évident du charbon restant, nous permettant de switcher assez efficacement vers un combustible à l’intensité en CO2  moindre. Chaque 1% de la production globale de charbon substituée par le gaz naturel, peut nous faire économiser les mêmes émissions des GHGs  que s’il y avait une augmentation de 11% de la production énergétique des énergies renouvelables.[i]

Le gaz naturel peut nous accompagner pendant la transition vers un futur vert, car celui-ci n’arrivera pas tout de suite. Pourtant sans une augmentation importante du prix du CO2, le gaz naturel restera probablement plus cher que le charbon en Europe. Ces conditions économiques empêchent que la consommation du charbon diminue plus vite. Cela met en danger la capacité des européens à atteindre leurs objectifs de réductions des émissions GHGs.

Ceci est encore plus important dans les pays défavorisés car l’énergie est le moteur du développement économique. L’électrification de l’Afrique sub-saharienne et de l’Asie du Sud améliorera les vies de milliards de personnes. En Europe et en Amérique, l’industrialisation nous a permis de mener à une qualité de vie incroyable par rapport à nos ancêtres. Pourtant, si les pays moins développés à ce jour suivent le même chemin, l’effet sur la planète et le climat sera apocalyptique. Cependant il est extrêmement injuste et impossible de nier leur droit au développement.

C’est pour cette raison que l’Inde est un participant crucial pour la COP21. Ce pays sera le moteur de la croissance pendant les prochaines décennies, comme la Chine l’a été durant les précédentes. L’Inde sera aussi plus peuplée que le Chine dans quelques années. Le charbon constitue environ 40% du mix énergétique tandis qu’environ 25% de la population vit toujours sans électricité. Le charbon de bois et le bois, étant peu coûteux, ils restent des sources d’énergie très importantes. Leur combustion produit du monoxyde de carbone qui est fatal pour les humains à l’inhalation. De plus, un mélange des GHGs très puissants est émis lors de la combustion, y compris les particules, le dioxyde de soufre et le CO2.  Les indiens ont besoin d’une énergie moderne et propre.

A ce jour, la plupart de pays développés est parvenue à découpler la croissance économique et la croissance de consommation énergétique. Au cours du siècle dernier, celles-ci ont augmenté en tandem lorsqu’un pays s’est industrialisé. L’Inde doit se développer en délaissant les combustibles fossiles pour passer directement aux énergies propres: il faut un saut technologique. 

Les indiens ont annoncé leur intention de produire 40% de leur électricité de façon renouvelable d’ici à 2020. À part la Chine, l’Inde était la seule à bloquer un accord global à la COP17 de 2011. Son engagement récent rend la probabilité d’obtenir un accord à Paris très probable, mais l’aspect financier reste important. Le saut technologique nécessaire pourra se réaliser grâce à l’importation des nouvelles technologies et grâce aux investissements étrangers. À Copenhague, 100 milliards de dollars, chaque ans jusqu’à 2020, étaient consacrés aux pays défavorisés pour soutenir le développement des énergies propres, efficaces et renouvelables. Cela doit être encore ratifié à Paris. La Grande Bretagne et la France sont parmi les pays qui ont déjà augmenté leurs engagements financiers. On peut donc s’attendre à des résultats tangibles.

L’épineuse question qui reste concerne les pays qui ne bénéficient pas de l’influence des grands moteurs de croissance économique, surtout les îles nations qui souffrent déjà face à l’élévation du niveau de la mer et l’augmentation de cyclones plus violents. Est-ce que les représentants du monde se soucieront d’eux à la COP21?


[i] According the BP’s 2014 Annual Energy Outlook


La question nucléaire: à la recherche d’une énergie parfaite

En 1985, deux agents français ont sabordé le navire Rainbow Warrior de l’organisation écologiste Greenpeace dans le port d’Auckland en Nouvelle Zélande. Cette opération, effectuée dans la mer territoriale néo-zélandaise, a été conduite sur ordre explicite du Président de la République Française, François Mitterrand. Le Rainbow Warrior faisait alors cap vers l’atoll de Moruroa, situé en Polynésie française, où les militants de Greenpeace avaient tenté d’empêcher des essais nucléaires menés par les militaires français.

Cet incident a marqué un tournant décisif dans la politique néo-zélandaise puisque la résistance au nucléaire est devenue une partie importante de l’identité nationale néo-zélandaise. Cela est toujours le cas aujourd’hui. Tandis que la France se montre toujours fière de ses prouesses technologiques dans le domaine nucléaire, également en matière de production énergétique.

En France, le nucléaire constitue deux tiers de la production électrique, alors que quatre-vingt pour cent de l’électricité est produite de façon renouvelable en Nouvelle-Zélande. Cela ne signifie pas pour autant que Nouvelle Zélande produit moins d’émissions de gaz à effet de serre. Au contraire, vu son immense secteur agricole, les émissions par habitant la place en 5ème position dans le monde, soit seize places devant la France. En outre, c’est grâce à sa géographie que les néo-zélandais parviennent à générer la plupart de leur électricité de façon renouvelable, par le biais de la hydroélectricité et de la géothermie. Peu de pays bénéficient d’un tel écosystème qui permet la production d’électricité par ces moyens peu polluants. Normalement, pour augmenter leur capacité à produire de façon renouvelable, les autres pays sont obligés d’investir dans le solaire ou l’éolien, qui ne sont pas sans coûts.

L’énergie nucléaire a clairement des avantages. Elle ne produit pas d’émissions GHG en générant de l’électricité. Deuxième avantage, les français paient un prix moyen d’électricité beaucoup moins cher que les néo-zélandais. De plus, sa capacité de production est très stable, alors qu’en Nouvelle-Zélande, pendant les années de précipitations inférieures à la moyenne, le risque de coupures d’approvisionnement augmente beaucoup vu la dépendance du pays à l’hydroélectricité.

Face à l’obligation de fournir de l’électricité à une population beaucoup plus importante en France qu’en Nouvelle-Zélande, le gouvernement français a dès lors choisi de se tourner vers le nucléaire. En revanche, la consommation néo-zélandaise ne nécessite pas les gros volumes d’électricité que les centrales nucléaires sont capables de générer. Même s’ils n’étaient pas politiquement contre l’énergie nucléaire, les néo-zélandais n’en auraient pas besoin. Cela rend cette décision politique plus facile pour le petit pays qu’est la Nouvelle Zélande.

Néanmoins, nombreux sont les peuples qui ne soutiennent pas non plus l’énergie nucléaire, compte tenu des risques associés trop graves pour être ignorés. C’est le cas notamment aujourd’hui en Allemagne et au Japon, où la majorité de citoyens s’élève contre l’énergie nucléaire, ainsi qu’en Nouvelle-Zélande. En plus de nombreux décès causés par une explosion nucléaire, des maladies graves frapperaient par la suite tous ceux se trouvant à proximité. Après une telle catastrophe, l’environnement local resterait toxique pour des décennies. L’économie agricole de la région serait détruite. Aucune compensation ne suffirait à couvrir les pertes humaines et les dégradations de qualité de la vie pour les survivants. Même si le risque d’accident est statiquement faible, cela ne règle en rien le problème des déchets radioactifs produits lors de la production d’électricité.

Pourtant, le nombre de gens tué dans les explosions des mines de charbon ou affecté par les maladies pulmonaires est plus important que le nombre de victimes des accidents et des bombes nucléaires combinés. À la fin, il faut comprendre que tous les choix ont leur compromis en énergie. Le peuple français ainsi que le peuple néo-zélandais, comme tant d’autres, font face à cette problématique et essaie d’allier l’abordabilité, l’accessibilité et la sécurité tout en limitant les polluants.

En reconnaissant sa violation de la loi internationale par rapport à le naufrage du Rainbow Warrior, la France s’est excusée officiellement en 1988 et les relations diplomatiques avec la Nouvelle-Zélande ont été rétablies. En 1991 un accord d’amitié a été signé entre la France et la Nouvelle-Zélande. Depuis cet accord les deux gouvernements consacrent des fonds à la promotion d’échanges culturels. Les bourses scolaires font partie de ce programme culturel. L’auteure de ce blog était bénéficiaire de cette bourse en 2013 et elle est venue en France pour étudier la politique énergétique. Ce blog vise à comprendre les choix politiques en matière d’énergie sans condamner pour autant, tout en réalisant que l’énergie parfaite n’existe pas.

The New Zealand test

When machines permitting payment by credit or debit card were first developed New Zealand was one of the first countries within which this EFTPOS technology was deployed. Today one can buy a coffee or even a 50c bag of sweets with their VISA or Mastercard. Most businesses do not have a minimum purchase for which you can use your bank card. Few of us carry cash.

New Zealand’s market is often considered something of a test environment for new technologies. Our small island nation is isolated in the middle of the Pacific Ocean, but we have an advanced economy and large middle class. This, our small population and an open, competitive marketplace makes New Zealand the perfect place to trial new products and innovations. If the product meets a certain need it will rapidly penetrate the market. You will soon know if whether it can be profitable or not – and whether you should launch the product elsewhere in the world.

In May, US company Tesla teamed up with Vector, New Zealand’s biggest electricity distributor, to bring their much lauded lithium-ion batteries to New Zealand homes and businesses.

Like cellphones these batteries do not require heavy investments in supporting infrastructure networks. They permit households and businesses to install PV solar panels whilst managing solar power’s intermittency. The main problem with solar power is that the sun does not shine all of the time. When the skies are cloudy or night falls your photovoltaic rooftop panels stop generating electricity. So households and businesses still need to be connected to the main electricity grid to guarantee their supply, in spite of solar panels installations.

You can resolve this issue by stockpiling electricity during daylight hours to use at night. This seems simple enough. However, batteries boasting the voltage and lifespan needed to supply an average household with enough electricity to keep the lights on have not been brought to market. Basically it is too expensive. Prototypes are also massive in size.

In principle if compact, powerful and affordable batteries hit the market then you would not need to be connected to the electricity distribution network. In fact you or your local community could go off grid.

How many households do not bother to install a landline phone these days? Could new houses avoid connecting to the main electricity grid in the near future? It is only a matter of time before battery technology hits that sweet spot. You can read about how Tesla plans to achieve economies of scale that surmount the current cost problem here.

To take a residence off-grid you would also need a smart monitoring system that conserves energy and warns you to turn off unnecessary devices when the household is running low on juice. Vector is investing in energy management systems that would provide this kind of service. They’ve also been investing in photovoltaic solar power and micro wind turbines. The company is future-proofing its main business – just in case distribution services are no longer needed in New Zealand.

If a decentralised electricity supply model works in New Zealand it will probably fly elsewhere. I still can’t pay for a coffee by credit card in Europe though.