Megawatts or Negawatts

Forest and Bird, Volume 22, Issue 4, 1 November 1991, Page 32

Megawatts or Negawatts

By

Roger Blakeley.

Urgent need to consider alternatives to building more power stations.

E LECTRICORP'S PROPOSALS to increase electricity prices in anticipation of the need for a new thermal power station in 10 years’ time recently hit the headlines. A simultaneous shortage in capacity, because of a cold winter and low storage in South Island hydro lakes, has kept energy issues in the news. All of this highlights the urgent need for this country to address the major opportunities for economic and environmental benefits through energy efficiency. There is an alternative to Electricorp’s proposal for a new thermal power generation station. It is called improved energy efficiency. It happens when consumers get the same amount of heat, light or other service for a lesser cost through requiring less energy. This source of energy has been called "negawatts". A unit of saved energy or "negawatt" is just as good as an extra unit of electricity or megawatt, and costs less.

That Is, It makes common sense as well as good economic and environmental sense for people to use energy efficiency measures (or buying "negawatts") up to the point where the costs equal the current price of electricity. The more efficiently a nation uses energy, the more cost competitive are its goods and services. At present, New Zealand ranks badly in terms of the amount of energy used to produce a unit of Gross Domestic Product (GDP). This international measure of energy intensity shows that while other OECD countries have reduced their energy intensity in recent years, New Zealand's has risen sharply. Between 1970 and 1988, the average energy intensity of OECD countries fell 25 percent while New Zealand's has risen 31 percent, as shown in Figure 1. The effects of the Think Big projects accounts for only part of this.

Domestic

A 1986 study for the Ministry of Energy by Jan Wright and James Baines, of the Centre for Resource Management, Lincoln College, showed that simple cost effective measures to achieve energy efficiency in just four areas — domestic water heating, home heating, lighting and appliances if fully utilised, could save the need for planned future power stations: Waikato thermal, lower Clutha hydro, Queensbury hydro and Mokai geothermal.

Industry

Case studies by the Ministry of Commerce in recent years have identified energy savings of 40 percent within the meat industry. The technology investigated includes cogeneration and boiler heat recovery, computer controls to optimise speed in blast freezers, and technical advances such as hot boning plants leading to substantial energy savings. Potential energy savings of a similar amount have been identified in the cement, glass, and steel manufacturing industries. The pulp and paper, aluminium, dairy and food industries also show great scope for more efficient use of energy.

Transport

The transport sector contributes 40 percent of New Zealand’s CO2 emissions, a significant proportion of our greenhouse gas emissions. If all petrol vehicles were adequately tuned, total fuel savings of around four percent could be achieved.

If more fuel efficient vehicles were used than at present, there could be an overall reduction in petrol use and, consequently, a reduction in greenhouse gas emissions. For example, a target of an increase by 50 percent in fleet average economy (from the present 30 mpg to 45 mpg) by 1995 would allow sufficient time, with the present rate of turnover of the fleet, to meet a target of a 30 percent reduction in carbon dioxide levels from vehicles by 2005. There would

be corresponding costs savings to the drivers. The use of CNG and LPG instead of petrol offers vehicle drivers potential costs savings of 30 to 40 percent for the same distance travelled, assuming engines are properly tuuned in each case. The corresponding reduction in carbon dioxide emissions is around 33 percent.

Competitive advantage

Improved energy efficiency would reduce the unit costs of production, increase firms’ international competitiveness, encourage economic growth and increased employment. So why don’t people take these chances to save energy and save themselves money? There are "institutional barriers" to the market delivering the full potential for energy efficiency. These include average instead of marginal cost pricing of energy, lack of competition in energy markets, lack of information to consumers, those who benefit are often

not those who pay, and company investment criteria which favour production ahead of energy saving measures.

Electricity industry reform

Let me suggest some fundamental requirements in the electricity industry. ¢ Consumers need to have the information and be able to purchase the required equipment and appliances. A good

example is Southpower's provision of computerised meters which provide customers with detailed information, never before available to them, about electricity consumption and costs. | am told that this has brought consumer savings of 20 percent in many cases and 10 percent on average. Recently, Southpower announced that it would pay customers not to use electricity, because of the current situation of high winter demand and low hydro lake levels. This is a sign of how, in the longer term, supply authorities

could be marketing energy efficiency. The structure of the electricity supply industry needs to ensure that there are the right incentives for industry efficiency and energy efficiency. Other aspects of the electricity industry restructuring which have been released in public discussion documents include the proposal to separate power charges into fixed costs such as installation of power lines and variable charges reflecting the electricity used. It is crucial that such separation is applied in a way that does not take away the incentives

for energy efficiency. There must be the right incentives for the new Electric Power Companies (to be established under the proposed Energy Reform Bill), to market energy services at the least cost, (including saved energy), instead of simply selling more and more electricity. For example, overseas companies already deal in markets in saved energy. This idea has been promoted in a recent report by the New Zealand Planning Council. Earlier work by American energy expert Amory Lovins suggests markets in saved energy

and innovative financial arrangements such as futures markets, arbitrage and competitive bidding. Market forces could be a powerful promoter of energy efficiency providing the "playing field is level".

New Zealand initiatives

There are impressive examples in New Zealand of companies successfully developing and applying energy-conscious technology to waste and other environmental problems. These include: e Auckland Regional Council's $15 million joint venture with the Auckland Electric Power Board to convert methane gas from landfills into electricity. Landfills being considered are Green Mount and Rosedale Road which together could generate enough electricity to supply 12,000 households. ¢ Electricorp’s $24 million re-injection system for the Wairakei power station to be spent over three years. Rather than releasing hot water containing some natural toxic chemicals into the Waikato River, water will be piped through reinjection wells back into the geothermal reservoir. ¢ The Ministry of Agriculture and Fisheries waste technology unit has developed anaerobic systems for meat and other processing plants. The system in place at the new Fortex Meat Processing plant, at Mosgiel, separates liquid waste and puts it into an anaerobic digestor. The process produces gas, which is harnessed to run a dryer, and eight hours later the effluent is 90 percent pollution-free. e FERNZ Corporation recently won the Arthur Mead Environment Award of the Auckland Branch of the Institution of Professional Engineers of New Zealand for a chemical plant at the NZFP pulp and paper plant at Kinleith which enables the bleaching process to achieve a ten times decrease in waste discharge. e Auckland University recently upgraded its heating, ventilation and air conditioning plant. For a capital cost of $73,000, a 50 percent saving in gas consumption ($60,000pa) was achieved. The payback period was 14 months. ¢ Bay of Plenty Electricity developed an insulation blanket for CIP (clean in place) hot water units, used on dairy farms for rinsing the interior of bulk milk tanks after each milk collection by a dairy company tanker. For a capital cost of $197 per unit, a 46 percent saving in energy use for the CIP unit was achieved. The payback period is 8.5 months. ¢ The Energy Management Group (of Ministry of Commerce) has calculated that $220 million is spent annually by public sector agencies on energy within their own in-house operations. Of this total, savings of 10 to 20 percent are achievable simply by ensuring equipment maintenance and operations are optimised to reduce energy consumption.

Further energy costs savings of between 15 and 60 percent are available through investment in energy efficient capital equipment. Energy efficiency can serve goals both of a more efficient and competitive economy and improved environmental quality. It is an opportunity that we cannot afford to miss. This article is reprinted from the August 1991 issue of the Ministry for the Environment publication Environment Update. Roger Blakeley is Secretary for the Environment, Ministry for the Environment, in Wellington. #

Energy per GDP = primary energy demand (toe)/GDP (1 million US$(1985) Source: Energy Balances of OECD Countries. 1986/87