4 ms·

If every large producer insists on hydro/green energy, the price of hydro will go up encouraging investment in more green energy. It's like arguing planting a

If every large producer insists on hydro/green energy, the price of hydro will go up encouraging investment in more green energy. It's like arguing planting a tree just denied someone else the opportunity to plant a tree in that square foot of dirt. I am sure they are paying a premium. Here in NZ we have an aluminium smelter that is directly connected to a huge hydro dam, rather than the grid, so they can claim it is powered by green energy regardless of how you look at it.

robocat 4y ago
> If every large producer insists on hydro/green energy, the price of hydro will go up encouraging investment in more green energy. I don’t think that is realistic, and your word “every” is doing some very heavy lifting to give an overly simplistic answer. Renewable electricity is over 50% in NZ[0]. From a pure economic argument, green demand would need to approach green supply before before hydro could gain much of an excess price. Paradoxically, it seems plausible to me that electricity generation companies have enough moat to be able to just squeeze profits out, and not increase green generation at all (regardless of your hypothetical financial incentives). Most renewable requires huge capital investments, and a few percent extra profit can easily not move the profitability needle enough to change a project from a no to a go. I would like to see a good economic and ecological comparison of the regulatory/tax choices the government could make, because I am somewhat suspicious about the recent electric-car subsidy. I have an acquaintance who has been part of a very well planned ($x million invested) solar project for NZ with an expected capital cost in the hundreds of millions, and anecdotally the government doesn’t seem to give a shit about it. Maybe they have the wrong political connections? Hydro is the same as a battery, so solar appears to be very sensible in NZ. > aluminium smelter [claims] it is powered by green energy I already answered that one in the comment you are replying to. More specifically: our NZ government has decided for decades to give Tiwai Smelter cheap electricity contracts (maybe for the sake of 2500 jobs), and finally decided to pull the plug on them. NZ consumers have had to buy marginally expensive and mostly non-renewable electricity over many decades due to that government choice. I haven’t looked at the country economics for the smelter, but I strongly suspect our government has been making uneconomic political decisions that have cost the country dearly. I presume they will put in a link from Manapouri to Benmore (connect to the Benmore to Wellington DC link, which isn’t 100% capacity constrained?[3]). I would also guess that the government was politically pressured to have more green generation for NZ, and shutting down Tiwai finally made political sense on the world stage to achieve “more” renewable generation. Who wants another 1992 due to mis-planning for our security of supply? 1992 was perhaps historical blindness given that: “the power crises of the early 50s when serious shortfalls in supply created shutdowns and blackouts throughout the country. These were a regular occurrence in the years between 1954 and 1957”[1]. Although I guess I would need to see a past analysis of the risks versus the costs to judge whether the 1992 economic GDP reduction was just an acceptable cost versus the costs of upgrading generation. Governments generally are motivated by quick wins, and are sometimes not motivated to use regulation to encourage long term risk reduction against fat-tail events. [0] https://www.mbie.govt.nz/assets/Data-Files/Energy/nz-energy-quarterly-and-energy-in-nz/electricity.xlsx https://www.mbie.govt.nz/assets/Data-Files/Energy/nz-energy-... [1] https://www.engineeringnz.org/programmes/heritage/heritage-records/new-zealand-electricity-system/ https://www.engineeringnz.org/programmes/heritage/heritage-r... [2] 2020: “Transpower has indicated it will cost $600 million to put the transmission structures in place to take the power from Southland to Auckland. That work was due to be completed over the next five to seven years.” The majority of Auckland electricity consumption is residential, the remainder of usage mostly commercial, and Glenbrook mill is less than 10%. https://www.stuff.co.nz/national/122113863/the-power-game-where-will-manapouris-electricity-go https://www.stuff.co.nz/national/122113863/the-power-game-wh... [3] https://www.transpower.co.nz/power-system-live-data https://www.transpower.co.nz/power-system-live-data
- teruakohatu 4y ago
  An interesting analysis. Feel free to reach out to me by email (my address is on my profile). Employment is certainly part of the reason the smelter remains open, but as far as costing the country money since it was built, keep in mind the dam was originally built for the purpose, at a time when the country desperatly needed hard currency. We have the dam because of the smelter.
  - robocat 4y ago
    > keep in mind the dam was originally built for the purpose, at a time when the country desperatly needed hard currency Yeah - 1971. Paid for by the government I think. And $600 million to connect it now into the grid is not chump change so there is that. But the transmission line from Manapouri to Tiwai can’t have been cheap either. Then again, it isn’t clear how much of that modern $600 million is to handle natural growth in Auckland (the DC link has already been upgraded). Meanwhile I’m guessing NZ imported oil during the oil crisis to run power stations up North!! I am guessing because the linked spreadsheet only goes back to 1974. The question is would NZ have been economically better off without the Smelter? Should it have been shut down long ago? What is the total ecological cost? E.g. https://www.rnz.co.nz/news/national/436877/smelter-stockpiles-100-000-tonnes-of-hazardous-waste-near-beach https://www.rnz.co.nz/news/national/436877/smelter-stockpile... Was Tiwai “justified” this century because of sunken cost fallacy?

robocat 4y ago

> If every large producer insists on hydro/green energy, the price of hydro will go up encouraging investment in more green energy. I don’t think that is realistic, and your word “every” is doing some very heavy lifting to give an overly simplistic answer. Renewable electricity is over 50% in NZ[0]. From a pure economic argument, green demand would need to approach green supply before before hydro could gain much of an excess price. Paradoxically, it seems plausible to me that electricity generation companies have enough moat to be able to just squeeze profits out, and not increase green generation at all (regardless of your hypothetical financial incentives). Most renewable requires huge capital investments, and a few percent extra profit can easily not move the profitability needle enough to change a project from a no to a go. I would like to see a good economic and ecological comparison of the regulatory/tax choices the government could make, because I am somewhat suspicious about the recent electric-car subsidy. I have an acquaintance who has been part of a very well planned ($x million invested) solar project for NZ with an expected capital cost in the hundreds of millions, and anecdotally the government doesn’t seem to give a shit about it. Maybe they have the wrong political connections? Hydro is the same as a battery, so solar appears to be very sensible in NZ. > aluminium smelter [claims] it is powered by green energy I already answered that one in the comment you are replying to. More specifically: our NZ government has decided for decades to give Tiwai Smelter cheap electricity contracts (maybe for the sake of 2500 jobs), and finally decided to pull the plug on them. NZ consumers have had to buy marginally expensive and mostly non-renewable electricity over many decades due to that government choice. I haven’t looked at the country economics for the smelter, but I strongly suspect our government has been making uneconomic political decisions that have cost the country dearly. I presume they will put in a link from Manapouri to Benmore (connect to the Benmore to Wellington DC link, which isn’t 100% capacity constrained?[3]). I would also guess that the government was politically pressured to have more green generation for NZ, and shutting down Tiwai finally made political sense on the world stage to achieve “more” renewable generation. Who wants another 1992 due to mis-planning for our security of supply? 1992 was perhaps historical blindness given that: “the power crises of the early 50s when serious shortfalls in supply created shutdowns and blackouts throughout the country. These were a regular occurrence in the years between 1954 and 1957”[1]. Although I guess I would need to see a past analysis of the risks versus the costs to judge whether the 1992 economic GDP reduction was just an acceptable cost versus the costs of upgrading generation. Governments generally are motivated by quick wins, and are sometimes not motivated to use regulation to encourage long term risk reduction against fat-tail events. [0] https://www.mbie.govt.nz/assets/Data-Files/Energy/nz-energy-quarterly-and-energy-in-nz/electricity.xlsx https://www.mbie.govt.nz/assets/Data-Files/Energy/nz-energy-... [1] https://www.engineeringnz.org/programmes/heritage/heritage-records/new-zealand-electricity-system/ https://www.engineeringnz.org/programmes/heritage/heritage-r... [2] 2020: “Transpower has indicated it will cost $600 million to put the transmission structures in place to take the power from Southland to Auckland. That work was due to be completed over the next five to seven years.” The majority of Auckland electricity consumption is residential, the remainder of usage mostly commercial, and Glenbrook mill is less than 10%. https://www.stuff.co.nz/national/122113863/the-power-game-where-will-manapouris-electricity-go https://www.stuff.co.nz/national/122113863/the-power-game-wh... [3] https://www.transpower.co.nz/power-system-live-data https://www.transpower.co.nz/power-system-live-data

teruakohatu 4y ago
An interesting analysis. Feel free to reach out to me by email (my address is on my profile). Employment is certainly part of the reason the smelter remains open, but as far as costing the country money since it was built, keep in mind the dam was originally built for the purpose, at a time when the country desperatly needed hard currency. We have the dam because of the smelter.
- robocat 4y ago
  > keep in mind the dam was originally built for the purpose, at a time when the country desperatly needed hard currency Yeah - 1971. Paid for by the government I think. And $600 million to connect it now into the grid is not chump change so there is that. But the transmission line from Manapouri to Tiwai can’t have been cheap either. Then again, it isn’t clear how much of that modern $600 million is to handle natural growth in Auckland (the DC link has already been upgraded). Meanwhile I’m guessing NZ imported oil during the oil crisis to run power stations up North!! I am guessing because the linked spreadsheet only goes back to 1974. The question is would NZ have been economically better off without the Smelter? Should it have been shut down long ago? What is the total ecological cost? E.g. https://www.rnz.co.nz/news/national/436877/smelter-stockpiles-100-000-tonnes-of-hazardous-waste-near-beach https://www.rnz.co.nz/news/national/436877/smelter-stockpile... Was Tiwai “justified” this century because of sunken cost fallacy?