A Free-Market Energy Blog

New Zealand Windpower: Great Winds, Bad Electricity

By Bryan Leland -- June 6, 2009

The steady winds of New Zealand have allowed the country’s wind turbines to have the highest capacity factors for the wind in the world (around 37–40 percent). However, wind still has a cost premium to alternatives and is intermittent. In addition, output is about 10 percent below average in the autumn and early winter when it is most needed in New Zealand. The country’s abundant hydro resources (and pumped storage) cannot rescue wind from its intermittency and seasonality problems.

Prospectively, greater reliance on wind from government edicts is throwing good money after bad. Non-intermittent sources are far cheaper, not just reliable. A let-the-market-decide policy is needed in New Zealand as for the rest of the world.


The enthusiasm for renewable energy in the form of windpower, marine power, and the like, is driven by a belief that man-made greenhouse gases will cause dangerous global warming and that large-scale adoption of these technologies will “fight climate change.” To this end, thousands of megawatts (MW) of heavily subsidized wind power capacity are being added worldwide each year.

In New Zealand, we are told that windpower is economic compared to alternatives, that the unpredictable short term fluctuations can be covered by our “abundant hydropower” (and hydropower storage). Therefore, we should happily accept destroying iconic landscapes and upsetting people who live near industrial wind parks.

Compared to conventional power generation, wind has a low capacity factor (the ratio between the average output and the maximum output). Capacity factors of overseas wind farms vary from 18–30%. while 37–40% is typical in New Zealand.

The truth, as I will show, is that windpower is expensive compared to alternatives, hydropower schemes provide no spare capacity to back up windpower in a critical dry year, and wind power output is lowest in the late summer and autumn when New Zealand needs it most.

Furthermore, windpower adds a new source of major fluctuations to our power systems that is already unstable. Constant adjustment is needed to ensure that the total generation in a power system matches the normal fluctuations in load–seldom above 50 MW–on a second-by-second, minute-by-minute basis. If the fluctuations are excessive, the lights go out. With about 1,000 MW of windpower on the system we are likely to see swings of 200 MW in a few minutes. The system operator will find it very difficult–and expensive–to find generating plant that can match these swings. The cost will be passed on to the consumers.

Comparative Energy Analysis

Windpower is seasonal. I recently analyzed the output of wind farms in New Zealand since 2000. I found that the output was down 9% during the critical late summer/autumn period when the hydro lakes are at their lowest levels, while at a maximum in the springtime when it is raining and the snow is melting. So a large amount of backup from new gas turbine stations will be needed. The cost will be passed on to the consumers.

I have calculated the cost of power generated by new wind farms that cost $270 million (U.S.) for 143 MW ($1,850/kW), to be about 7.5 c/kWh at the station gate. Geothermal power costs about 5 cents. Generation from hydropower, gas or coal costs 5–6 cents. When the nuclear industry begins to mass produce new, small, sealed, inherently safe, high-temperature gas reactors, or advanced versions of existing reactors, the costs could be similar.

It is often claimed that isolated power systems in countries like New Zealand could run entirely from windpower and other new renewable energy technologies. The fact is that these intermittent and largely unpredictable technologies cannot provide a reliable supply unless they are associated with a low cost and efficient energy storage for periods of days, weeks, and months. The best available technology is hydro pumped storage which, in general, can store energy for only about 10 hours operation. Pumped storage is neither efficient nor cheap.

To illustrate the problems and costs I carried out a “clean sheet” study of a notional power system with a peak demand of 5,000 MW at a capacity factor of 60% giving an annual energy demand of about 26,000 GWh per year. (The New Zealand system is 7,000 MW and 43,000 GWh.)

I calculated the total cost of supplying the whole system from base load geothermal power similar to the 1,000 MW of geothermal power stations existing in New Zealand combined with hydro pumped storage to meet daily load swings. I then compared it with windpower backed up by large scale pumped storage that would cope with the rapid swings in output of the wind farms and also store large quantities of energy in the springtime for use in the autumn.

My calculations showed that the geothermal option needed 4,000 MW of geothermal plant and 2,000 MW of pumped storage.

With a capacity factor of 37%, the windpower option needed 9,500 MW of windpower plus 6,000 MW of pumped storage (a total of 15,500 MW) to supply the 5,000 MW of load. At first sight, this figure looks ridiculous but the fact is that the wind farms must generate sufficient power to supply the load and to meet the 25% losses involved in pumped storage. Also the pumped storage schemes have be able to absorb all the windpower generated when the system load is low and the wind output is high. If the windpower is generating 9,000 MW when the system load is only 3000 MW, then 6000 MW of pumped storage capacity is needed to absorb and store all the wind energy available.

Geothermal in my analysis was assigned a cost of $2,700/kW, which is the generally accepted figure for stations in New Zealand. Based on costs of recent wind farms worldwide, wind power runs about $2,300 per kW. I used a cost of $1,500 per kW for the pumped storage schemes which, from my background in hydropower, is on the low side for schemes that store energy in the springtime for use in winter. For the purpose of the study I ignored that fact that, worldwide, suitable sites are as scarce as hen’s teeth.

I made reasonable allowances for the cost of transmission. I made my own estimates for the costs of operation, maintenance and steam supply for the geothermal power plant and took the costs for windpower from a recent Finnish report.

My calculations showed that the geothermal powered system would cost about $15 billion and would supply power for about 6c/kWh. The equivalent wind powered system would cost about $30 billion and would supply power for about 14 cents/kWh–more than twice the cost.

The conclusion is that wind power is very expensive and large-scale power supply from windpower (and other new renewable technologies) cannot be contemplated until an efficient, low-cost method of storing large amounts of electricity for long periods is discovered. I am not aware of any technology that comes anywhere near to meeting this requirement.

My comparison was for an extreme situation where all the electricity comes from windpower. In a real system, the cost of wind would vary from 9c/kWh for a very small percentage of wind power and would increase quite rapidly to a plateau cost of about 14 cents as the percentage of wind power increased.


Windpower exists worldwide because of grants, tax breaks and massive subsidies and because, consumers, taxpayers and ratepayers, not the generators, pay for the cost of transmission and backup power stations. The fact that New Zealand has an unusually good wind resource, simply means that the burden on the consumer is not as large as it is in other countries. But it is still a burden.

I believe that, given the high cost and operational problems of wind power, no responsible Board of Directors of a state-owned or private company could—or should—agree to “investing” in windpower. There are better and cheaper alternatives.

The world has not been warming since 2002 according to leading temperature records. If this trend continues or deepens, there will be a worldwide $500 billion crash in the value of subsidized renewable energy projects and carbon trading. Let New Zealand lead the world by studying the evidence and evaluating the risks!


 [Editor note: Bryan Leland is a consuting engineer in New Zealand specialising in hydropower, power systems, and markets. More information is available on his homepage.]

One Comment for “New Zealand Windpower: Great Winds, Bad Electricity”

  1. Kenny Morse  

    Your conclusion is most correct. Weather fronts bring large swings in output from wind farms. The stresses put on the transmission system are immense durring these periods. Also the reliable performing recorces are financially and mechanically stressed when they make way for the wind generation.


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