New Zealand Power Companies Propose Large Hydrogen Export Investment
July 21 2021 - 7:46PM
Dow Jones News
By Stephen Wright
WELLINGTON, New Zealand--Two New Zealand electricity companies
have proposed large investment in hydrogen production for export to
fill a shortfall in power demand if the country's only aluminum
smelter closes in the next few years.
Contact Energy Ltd. and Meridian Energy Ltd. say hydrogen
production could also be a partial solution to the dry-year power
crunch problem in New Zealand's hydro-dominated electricity
system.
The companies have asked potential customers and producers to
register interest in the project, which they say could be located
in New Zealand's Southland region, close to big hydro lakes.
Hydrogen is increasingly regarded as a low-emission fuel option
for transport and electricity generation. It can be produced
through several methods, using a range of energy sources, and
leaves only water as a byproduct when consumed in a fuel cell.
A Rio Tinto Ltd. aluminum smelter, that consumes about 13% of
New Zealand's electricity production, may close in 2024 if the
company fails to secure further subsidies for the remote plant at
the bottom of New Zealand's South Island. Its immediate closure was
averted last year by an agreement for lower power costs.
Contact and Meridian said their proposed production of hydrogen
for export would be "green" because it would use renewable
hydro-generation. In low-rainfall years, hydrogen production could
be reduced and the released hydro capacity could lessen use of coal
and gas to meet electricity demand.
New Zealand's government has been investigating the feasibility
of a new giant hydro lake as a possible solution to overcoming
vulnerability in the power system and to help reach a goal of 100%
renewable electricity by 2030. The lake for the so-called pumped
hydro scheme would be gradually filled by pumping up water during
off-peak demand periods and largely only used in extreme dry years.
Some power companies have said it wouldn't be a complete solution
for renewable energy, which has ranged between 80% and 85% of New
Zealand's electricity supply for several years.
Contact and Meridian said a McKinsey & Co. report they
commissioned estimated that a 600-megawatt hydrogen export facility
would make a one-off addition of 800 million New Zealand dollars
($557 million) to the economy and create thousands of jobs during
construction.
Write to Stephen Wright at stephen.wright@wsj.com
(END) Dow Jones Newswires
July 21, 2021 19:39 ET (23:39 GMT)
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