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Wind energy is currently in its infancy in New Zealand with penetration having reached only 2.5% by the start of 2005.¹ However, wind energy penetration has reached over 60% in West Denmark, and is around 15% in a number of other countries. Most of those countries that currently have high wind penetration also have high capacity power transmission links to the electricity grids of neighbouring countries. These transmission links can be beneficial as they help to cope with the short-term power output variability inherent with wind-generated electricity.

New Zealand's situation is different as we have no transmission links to other countries and we also have a relatively small load relative to the size of our grid. A further complication is that our electricity supply system is effectively split into two islands connected by the HVDC link.² However, New Zealand does have a significant amount of flexible hydro-based generation that that could play an important role in offsetting the variable nature of wind-based generation.³

Wind energy has seen dramatic growth in the last two decades. The global installed wind capacity increased from 2,500 MW in 1992 to over 40,000 MW in 2003, representing annual growth of almost 30%.

¹New Zealand currently has approximately 168 MW of installed wind capacity, and a system generation peak of approximately 6600 MW.

²The HVDC link is a high-voltage direct-current transmission line that connects Benmore in the centre of the South Island and Haywards near Wellington. A key impact of the HVDC link, because it is a DC and not an AC circuit, is that the grid frequency is managed separately in each island.

³Hydro-based electricity can respond quickly to changes in generation requirements, and water can be stored for later use. These attributes make it complimentary to wind generated electricity's inherent variability. However, the degree to which hydro can compliment wind has not yet been quantified.