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• 7. Developing the Scenarios

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• 7.1 Approach
• 7.2 With Aqua Scenario
• 7.3 Without Aqua Scenario
• 7.4 Key Differences

7.1 Approach

To establish the likely economic impact of Project Aqua we have developed and simulated two scenarios, one where Project Aqua is included and another where Project Aqua is excluded. We have developed the two scenarios using the following approach:

• The supply development options discussed in Section 6 have all been referenced to Haywards to allow ranking and comparison;
• For each scenario, supply development options have been scheduled to meet rising demand in "merit" order according to cost, taking into account committed (or highly likely) options and possible project lead times;
• To develop each scenario we have used a quarterly supply and demand "energy balance" model to establish likely system operation across a range of inflow years covering the full spectrum from "wet" to "dry";
• A "security of supply" criterion has been adopted to establish the timing of new plant options. This is achieved by simulating dry years and timing the development schedule to allow for similar levels of thermal utilisation and "moderate" but not "excessive" running of New Plymouth and Whirinaki on oil;
• The likely pattern of running and calculation of fuel consumption is established across the full pattern of inflow sequences.

7.2 With Aqua Scenario

The new generation investment schedule for the "with Aqua" scenario is outlined in Figure 5. The following factors are worthy of note:

• Committed or "highly likely" projects have been included up to and including 2005;
• The Genesis Power e3p CCGT project has been included in 2006;
• Hydro efficiency, hydro enhancement and small scale hydro projects totalling 87MW have been included at regular intervals over the period to 2020;
• Cogeneration projects totalling 160MW have been included at regular intervals over the period to 2020;

• Geothermal projects totalling 210MW have been included at regular intervals over the period to 2020;
• Two wind farms, in addition to those committed or "highly likely", totalling 175MW have been included over the period to 2020;
• Stage I of Project Aqua is commissioned progressively with turbines 1-3 during 2008 and 2009;
• Stage II of Project Aqua is commissioned progressively with turbines 4-6 during 2010 and 2011;
• During the commissioning of Project Aqua other projects have been restricted to a few small cogeneration and geothermal developments;
• Two coal-fired power stations in the South Island come on stream towards the end of the period.

The output of this scenario for a relatively dry year is illustrated in the quarterly supply/demand projection contained in Figure 6. For this illustration we have chosen the 2001 hydro inflow year which puts the power system under particular stress during the winter period.²⁶

Figure 6: Dry Year Production - With Aqua Scenario

Full size image of Figure 6 available.

Figure 6 demonstrates that, in a dry year:

• New Plymouth and Whirinaki are required to run reasonably significantly during 2004 and 2005;
• Following the commissioning of e3p in 2006, less running of New Plymouth or Whirinaki is required;
• This trend is emphasised during and following the progressive commissioning of Aqua from 2008 to 2011;
• The "security of supply" criterion of "moderate" running of New Plymouth and/or Whirinaki is being achieved.

7.3 Without Aqua Scenario

The new generation investment schedule for the "without Aqua" scenario is outlined in Figure 7.

The following factors are worthy of note:

• Several small hydro projects have been advanced and a total of 13MW more than in the With Aqua Scenario is included over the period to 2020;
• Several small cogeneration projects have been advanced and a total of 70MW more than in the With Aqua Scenario is included over the period to 2020;
• Several geothermal projects have been advanced and a total of 105MW more than in the With Aqua Scenario is included over the period to 2020;
• The two wind projects have been advanced and a third project is included towards the end of the period;
• The two coal fired power stations are advanced slightly and an additional 100MW has been included.

Figure 8 again demonstrates how supply is scheduled to meet demand in a dry year under this scenario. In particular, note that similar levels of dry year operation of New Plymouth and Whirinaki have been achieved in the two scenarios.

Figure 8: Dry Year Production - Without Aqua Scenario

Full size image of Figure 8 available.

7.4 Key Differences

The key differences between the scenarios are summarised in Table 9.

It is worth noting here that Project Aqua's 524MW has been replaced with 375MW of alternative capacity, while maintaining a similar level of supply security. There are two reasons for this:

• Some of the replacement projects are base-load in nature and are likely to provide more energy per MW than Project Aqua;
• Apart from the small hydro options the replacement options are less dependent on inflows, providing an enhanced contribution, relative to Aqua, in a dry year.

Figure 9: Supply and Demand Balance Mean Year - Two Scenarios

Full size image of Figure 9 available.

These factors are highlighted by Figure 9, which demonstrates the balance between supply and demand achieved by each of the two scenarios (averaged across hydrology) relative to the current situation. It demonstrates that:

• Following the commissioning of e3p in 2006 a slightly higher margin of supply over demand is maintained in both scenarios;
• The without Aqua scenario achieves a similar level of dry year security while providing a lower average margin.