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Nuclear Energy Prospects in New Zealand

(April 2009)

  • New Zealand is one of very few developed country not using electricity (indigenous or imported) from nuclear energy.
  • As hydro-electric potential was progressively utilised, nuclear power featured in national power plans from 1969 to 1976.
  • Concern about global warming due to carbon dioxide emissions from burning fossil fuels, especially coal, coupled with impending electricity shortages in Auckland, has put nuclear energy back on the agenda in New Zealand.

Background 

New Zealand has depended primarily on hydro-electric power for its electricity for many years, but scope for expansion is limited and even the reliability of present capacity depends on capricious rainfall, as in 2001 and 2003.

The last major hydro scheme was raising the level of Lake Manapouri to provide low-cost power for NZAS aluminium smelter in the South Island.

Hydro output has not increased over the last 15 years, and that growth in demand since 1990 has been mostly met by gas-fired plant, at least until the 1000 MWe state-owned Huntly plant shifted to using coal for 80% of its energy, with some negative implications for moving the fuel.  In 2004 a 50 MWe open cycle gas turbine was added, and in 2007 a 385 MWe gas combined cycle was added at Huntly.  At the end of 2007 the overall plant was running at about 30% reduced capacity due to high water temperature in the Waikato River.  The original 4 x 250 MWe steam plant uses water from the Waikato River to cool the condensers. Its licence requires that the maximum temperature of the river downstream of the station is less than 25°C. During summer, when the river temperature upstream can reach 24.5°C, the station must reduce the generation to remain within the temperature constraints on cooling water. This has meant that Huntly has been reduced to 40MW total output on very hot days.  To counter this, cooling towers have been built so  that one 250 MWe unit is always fully available.

Of 44 billion kWh of electricity generated in NZ in 2007, 53% was hydro, 27% gas, 7% coal, 8% geothermal, 2% wind and 1.8% biomass.  For 4.17 million people, average per capita consumption is thus about 9300 kWh per year, or 7900 kWh if aluminium smelting is treated as largely an electricity export.

The power is produced from 8.9 GWe capacity, including 5.35 GWe hydro, 1.12 GWe gas-fired, 1.15 GWe coal-fired and 0.45 GWe geothermal - mainly run as base-load.  In 2008 there was 0.325 GWe of wind capacity installed and 0.187 GWe more under construction.  Peak demand is over 6.7 GWe.

Nuclear-related policy 

In 1968 the national power plan first identified the likely need for nuclear power in NZ a decade or more ahead, since readily-developed hydro-electric sites had been utilised. Plans were made and a site at Oyster Point on the Kaipara harbour near Auckland was reserved for the first plant. Four 250 MWe reactors were envisaged, to supply 80% of Auckland's needs by 1990. But then the Maui gas field was discovered, along with coal reserves near Huntly, and the project was abandoned by 1972.

In 1976 a Royal Commission was set up to enquire further into the question. Its 1978 report said that there was no immediate need for NZ to embark upon a nuclear power program, but suggested that early in 21st century "a significant nuclear programme should be economically possible."

In 1987 New Zealand passed a Nuclear-Free Zone, Disarmament and Arms Control Act. This was largely a symbolic statement of opposition to nuclear war and weapons testing, and it prevented the visits by nuclear-propelled or nuclear-armed vessels (primarily US ones). Over 2000-02 a Bill to amend this Act and extend the nuclear-free zone outside territorial waters in order to restrict transit of nuclear materials between Europe and Japan was pushed by Greens but was eventually thrown out 108 to 7.

Electricity options 

Hydro-electric potential is largely utilised.

Natural gas supplies from the Maui field are diminishing, those from newer fields are expected from 2006. The Minister for Energy has commented on the undesirability of "committing NZ to the profligate use of a very valuable and increasingly expensive resource."

Coal is plentiful, particularly lignite in Southland. Huntly power station has been using mostly imported coal from Australia and Indonesia since it switched to 80% coal fuel when New Zealand's gas production started to decline. The future use of coal is constrained by the need to limit carbon dioxide emissions, or pay substantially for them. Carbon capture and sequestration costs, if the technology is proven, will be very high.

Wind is a well-known feature of many parts of NZ, and is already well used, with some of the highest capacity factors in the world. Moreover, there is a very good natural match between wind and hydro, in that the latter can be called into action or adjusted very quickly to compensate for wind variability. Denmark's high wind usage depends on Norway's hydro supplies, for instance.

However, optimum sites for wind turbines do not necessarily coincide with hydro power availability or load centres. There are also aesthetic considerations. Finally the Electricity Commission has raised questions of how much wind power can be put into the grid system without creating instability, due to its intermittency.

Nuclear power remains an option for NZ, using relatively small units of 250-300 MWe each, in power stations located on the coast near the main load centres. A bolder initiative would be to build an 1800 MWe nuclear power station north of Auckland, using two or three larger units.

Economics 

Figures from an OECD survey released in March 2005 show that at 5% discount rate nuclear in the range 2-4 c/kWh (US) is comfortably cheaper than coal in seven of ten countries, and cheaper than gas in all but one. At 10% discount rate nuclear ranges 3-5 cents/kWh and is again cheaper than coal in seven of ten countries, and cheaper than gas in all but two. These figures are for light water reactors built as larger units, and a cost penalty would probably apply for smaller ones. However, cost projections for the small HTR units are competitive with large conventional plants.

(See also paper: Renewable energy and electricity)

Opportunity cost, ethical and aesthetic issues 

New Zealand has shown itself interested in principle rather than merely pragmatic considerations and has sought to project "a clean, green image". Now unable to depend on hydro power as much as earlier, and having to retreat from using gas extravagantly for power generation, there is some discomfort with the substantial dependence on coal.

Aesthetically, both wind turbines and high-voltage transmission lines are seen by some as a blot on the landscape and detrimental to tourism.

A 2005 survey of business leaders showed that 94% were concerned about future energy supply in NZ, and nearly two thirds supported investigation of nuclear power.

The government is attempting to review the best application of limited supplies of gas, to minimise coal burning for the sake of Kyoto compliance, and to plan for the use of emission-free nuclear power close to the main load centre of Auckland. Auckland's power supply is particularly vulnerable to even minor incidents, and major interruptions have occurred in recent years. Nationally, new base-load capacity is required.

Nuclear fuel is abundant and involves no opportunity cost, having virtually no other peaceful use. Also wastes are contained and managed, rather than creating an environmental problem. It is a relatively very sustainable option, able to enhance the country's desired image. With minimal aesthetic impact, it would provide the power for Auckland's continued growth, including energy-intensive industry.

Sources:
NZ Government 1978, Nuclear Power Generation in New Zealand, report of Royal Commission.
NZ Power Conference papers, March 2005.
OECD/IEA Electricity Information 2007.

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