How electric vehicles might keep the cost of electricity up after Tiwai closes

The closure of the Tiwai smelter will only briefly reduce the country's electricity usage, Green Party co-leader James Shaw has warned, urging more investment in renewable electricity generation. 

The smelter is located at the very bottom of the South Island and uses 13 percent of the country's entire power supply. It's set to close in August 2021.

The resulting glut of electricity could see prices fall, one electricity sector CEO told the Gisborne Herald at the weekend.

"This development could help reduce New Zealand's greenhouse gas emissions, decarbonise the electricity system more quickly and result in cheaper electricity for New Zealanders," Eastland Group boss Matt Todd said.

"In a perfect world, closing Tiwai Point should theoretically result in greater shares of renewable electricity, a reduction in greenhouse gas emissions and cheaper electricity prices for all New Zealanders," sustainable energy expert Prof Ralph Sims of Massey University said.

But Green Party co-leader James Shaw told The AM Show on Monday the demand for electricity will keep rising, even without the smelter. 

"We know the demand for electricity is going to go up even after the Tiwai smelter closes, because we are going to have people switching towards electric vehicles," he said.

There are about 20,000 electric vehicles on the roads at the moment. Shaw claimed the number is increasing "dramatically", but Ministry of Transport data shows growth has been fairly linear over the past few years and actually dropped off this year - likely thanks to the COVID-19 pandemic.

"There are still 4.2 million internal combustion engine vehicles in the country and they stay on the road for about an average of about 15 years or so. So we do urgently need to do something about that," he said.

Shaw wouldn't talk about the Greens' plan to deal with the 4.2 million petrol-guzzling vehicles, inviting himself back onto The AM Show in a few weeks' time once the party had revealed it. 

Fossil-free plan

The Greens at the weekend unveiled a plan to bring forward the Government's 100 percent renewable energy target by five years to 2030, including a ban on new fossil fuel power generation and subsidising solar panels.

"In the last three years we did actually put in place the goal of setting New Zealand on a renewable path by 2035. We're now feeling confident enough - based on what we've learned and based on changes in the market - to be able to bring that forward by five years to 2030."

Getting solar panels onto as many homes and buildings as possible will benefit not just those who live and work in them but the entire country, Shaw says, because unused power can be fed into the grid for others to use.

And the more power that comes from the sun, the less we'll need to generate through burning fossil fuels - perhaps speeding up the closure of the Huntly Power Station. 

"We can anticipate that will definitely come offline probably in the next five years or so, if not sooner. It's not our choice about when it gets mothballed - it's a private asset - but the closure of the Tiwai smelter will probably bring forward that date, and the current operator has said they intend to get rid of it by 2030 anyway. We can anticipate that will probably happen sooner rather than later."

James Shaw.
James Shaw. Photo credit: The AM Show

The Government actually owns 51 percent of Genesis, which owns the Huntly Power Station, but Shaw -  who mistakenly said it was Mercury that owned the station - said it was a decision for management, not him. 

As for the 10-year timeline to decarbonise the electricity sector, as scientists say time is of the essence when it comes to preventing the worst of climate change, Shaw said things take time.

"If you've got to get a grid connection into somewhere, that's going to take some years for consenting, construction and so on. It's not fast. Then you've also got the actual asset itself, some of which are reasonably new."

New Zealand currently uses nearly 40,000GWh of electricity a year. While that's been rising for years thanks to our growing population, the amount of electricity demand per capita has been falling since the mid-2000s, data from the World Bank shows.  

Documents from the Electricity Authority show New Zealand currently generates about 0.2 percent of its electricity supply through solar. Most of our electricity is produced as renewable, the majority via hydro.

"It's got to come from somewhere, and the sun, we get it every single day," said Shaw.

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