Does New Zealand Have Offshore Wind?
New Zealand has abundant wind resources, especially offshore along its extensive coastline. However, offshore wind is still an untapped renewable energy source in New Zealand. While there are currently no operational offshore wind farms, interest and exploration have grown recently as the global offshore wind industry expands rapidly. With high wind speeds and suitable sea depths off the coasts of areas like Taranaki and Auckland, New Zealand has significant potential for offshore wind energy generation. However, harnessing offshore wind also faces economic, technological and regulatory challenges. This article provides an overview of the prospects, benefits and barriers for developing offshore wind energy in New Zealand.
New Zealand’s Renewable Energy Sources
New Zealand has abundant renewable energy resources, especially geothermal, hydroelectric, solar, and onshore wind. According to the International Energy Agency (IEA), New Zealand generated around 80% of its electricity from renewable sources in 2020, making it a world leader in renewable electricity generation. (IEA)
Geothermal power provides around 17% of New Zealand’s electricity generation. The country’s geology allows it to tap into natural steam and hot water reservoirs, especially in the central North Island’s Taupo Volcanic Zone. Major geothermal projects include the Wairakei power station near Taupo.
Hydroelectric dams provide around 55% of the country’s renewable electricity. Significant hydro resources come from the Southern Alps and North Island mountain chains. Major hydroelectric facilities include the Manapouri Power Station and Clyde Dam.
Solar energy contributes about 1% to New Zealand’s renewable electricity mix. Installed solar PV capacity has grown rapidly in the last decade, from around 12 MW in 2011 to over 103 MW by 2020. Numerous small-scale solar panel installations exist across homes and businesses.
Onshore wind energy makes up about 6% of renewable generation. Wind farms operate in regions like the Manawatū Gorge in the lower North Island. However, onshore wind development faces some community opposition and grid constraint issues.
Advantages of Offshore Wind
There are several key advantages to building offshore wind farms compared to onshore wind farms. Offshore winds tend to be stronger and more consistent than onshore winds. According to the National Grid, winds over water are less turbulent and steadier, which allows offshore wind turbines to generate more energy. Studies show average wind speeds are 90 percent greater offshore than onshore (https://www.nationalgrid.com/stories/energy-explained/onshore-vs-offshore-wind-energy). The higher offshore wind speeds allow developers to install larger, more powerful turbines. Ørsted states that modern offshore turbines are over 850 feet tall and have capacities of 10-15 megawatts, much greater than most onshore turbines (https://us.orsted.com/renewable-energy-solutions/offshore-wind/what-is-offshore-wind-power/advantages-of-offshore-wind).
Another benefit is proximity to population centers. Many cities are located along coastlines, so offshore wind farms can be positioned closer to where energy demand is highest. This reduces transmission losses that occur over long distances from remote onshore wind sites (https://www.americangeosciences.org/critical-issues/faq/what-are-advantages-and-disadvantages-offshore-wind-farms). Overall, the advantages of stronger, steadier winds and larger turbines lead to higher capacity factors and greater total energy generation from offshore wind.
Global offshore wind capacity reached 64.3 gigawatts (GW) in 2022, driven by new installations of 8.8 GW. This represents a 16% year-on-year growth in capacity and offshore wind now accounts for 7% of total global wind capacity. Major markets for offshore wind include China, the UK, Germany, the Netherlands, Denmark, Belgium, and Vietnam.
China leads in total offshore wind installations with 21 GW, followed by the UK at 12.5 GW. However, growth rates are highest in emerging markets like Vietnam which installed over 1 GW in 2022. Established European markets like the UK, Germany and the Netherlands are expected to continue steady growth. The global offshore wind market is forecast to reach 234 GW by 2026.
New Zealand’s Wind Resources
New Zealand has excellent wind resources for generating electricity both onshore and offshore thanks to consistent strong westerly winds. The country has one of the best wind resources in the world due to its geographic location in the path of the Roaring Forties winds.
Onshore, New Zealand currently has over 20 wind farms in operation with an installed capacity of 700 MW as of 2022, generating approximately 5.4% of the country’s electricity demand. Some of the largest onshore wind farms include Te Rere Hau (150 MW), Tararua Wind Farm (161 MW) and Mahinerangi Wind Farm (36 MW). There is significant potential for more onshore wind farm development, especially in regions like Otago, Wellington and Canterbury which have excellent wind resources.
Offshore, wind maps indicate New Zealand has substantial wind resources suitable for offshore wind farms, particularly along the lower North Island and Canterbury coasts where average wind speeds can reach over 10 m/s. Studies have identified several promising offshore wind sites such as Otago Coast, Wellington Coast, West Coast North Island and Canterbury Banks Peninsula with potential capacities over 1000 MW each.
Challenges for Offshore Wind in NZ
New Zealand faces some unique challenges in developing offshore wind farms. The country’s waters are very deep, with much of the continental shelf over 200 meters deep, according to a report by the Ministry of Business, Innovation and Employment (MBIE). [1] Installing foundations and turbines in such deep waters significantly increases costs compared to shallower offshore sites.
The distance from offshore sites to the electricity grid on land is another challenge. New Zealand will require new transmission infrastructure to connect offshore wind farms to the national grid. Transmitting electricity over long distances leads to energy losses. According to MBIE, this transmission infrastructure could account for up to 30% of the total project cost.[1]
The high capital costs associated with building wind farms farther offshore and transmitting power long distances makes financing offshore wind projects difficult. As of 2020, MBIE estimated levelized costs for offshore wind in New Zealand ranging from NZ$130 to $220 per megawatt-hour. This is 2 to 3 times higher than onshore wind farms.[1] Reducing costs through technology improvements and economies of scale will be critical for offshore wind to succeed in New Zealand.
Government Policy
The New Zealand government has ambitious goals for transitioning to renewable energy sources. Under the Climate Change Response (Zero Carbon) Amendment Act, New Zealand aims to generate 100% of its electricity from renewable sources by 2030. To help achieve this, the government has implemented incentives and strategies focused on offshore wind.
In 2021, the government announced the Māori Renewable Energy Fund for onshore and offshore clean energy generation. The NZD 128.5 million fund aims to help iwi and Māori groups develop renewable projects like offshore wind farms. The government has also set up discussion groups with iwi to explore suitable offshore wind sites (Copenhagen Offshore Partners, 2023).
Additionally, the National Party recently proposed a policy to establish a fast-tracked permitting process for offshore wind within one year if elected in 2023. This would accelerate development compared to onshore renewable projects (RNZ, 2023). The government is clearly making offshore wind a priority in their renewable energy strategy.
Potential Offshore Wind Projects
New Zealand currently does not have any operational offshore wind farms, but there are several proposed projects in early development and feasibility stages. Some of the key potential offshore wind projects in New Zealand include:
The Waikato Offshore Wind Project off the coast of South Auckland and Waikato aims to generate 1.4 GW of energy. The developers have partnered with leading offshore wind companies and submitted an application for plan changes to allow offshore wind farms.
Developer New Zealand Offshore Wind is studying multiple potential sites around New Zealand including off the coasts of Southland, Taranaki, Wellington, and the East Coast. They aim to develop 5 GW of offshore wind capacity by 2035.
BlueFloat Energy has proposed an offshore wind project near Taranaki with up to 2.5 GW capacity. They have conducted preliminary studies on wind resources, seabed conditions, and connection options.
There are also early stage proposals for offshore floating wind farms such as the 600 MW Haumoana project being studied by Copenhagen Offshore Partners.
Economic Impact
The development of offshore wind in New Zealand could bring significant economic benefits. According to a report by the American Wind Energy Association, offshore wind projects in the U.S. are estimated to generate $25 billion per year in economic output by 2030 and support 83,000 jobs (https://cleanpower.org/resources/u-s-offshore-wind-economic-impact-assessment/).
Offshore wind can create many high-skilled, well-paying jobs in engineering, project management, manufacturing, construction, operations and maintenance. A NREL study found that a 500 MW offshore wind farm in the U.S. could support over 3,000 full-time jobs over its lifetime (https://www.nrel.gov/docs/fy13osti/57565.pdf). Local port facilities and shipyards can be upgraded to support offshore wind, creating additional jobs and industry growth.
In terms of energy costs, offshore wind is becoming increasingly cost-competitive with fossil fuels. As the technology matures and project scales increase, costs are projected to decline further. Domestic offshore wind can reduce a country’s reliance on imported fuels and exposure to global fuel price volatility. While offshore wind has higher upfront capital costs than fossil fuels, studies show its low operating costs deliver electricity at competitive long-term prices for consumers.
Conclusion
In summary, New Zealand has tremendous offshore wind resources, especially around the lower North Island and South Island. However, offshore wind development faces various challenges such as high costs and a lack of infrastructure compared to onshore wind. While no commercial-scale offshore wind farms currently exist in New Zealand, the government is taking steps to support offshore wind such as streamlining the consenting process. Small demonstration projects have been proposed, which could pave the way for larger offshore wind farms in the future. With improvements in technology and policies that support development, offshore wind has the potential to become a major renewable energy source for New Zealand and help the country meet its climate change goals.
The outlook for offshore wind in New Zealand remains promising but uncertain. With favorable policies and economic conditions, New Zealand could follow the global trend of rapid growth in offshore wind capacity. However, costs need to come down and infrastructure requires major investment for offshore wind to truly take off. The demonstration projects in the pipeline will provide key insights into the viability of commercial-scale offshore wind farms around New Zealand. If these early projects prove successful, the country could unlock its immense offshore wind resources and transform its energy mix over the coming decades.
