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TRANSCRIPT
Climate change impacts on NZ renewable
electricity generation to 2050
Dr Jen Purdie, Meridian Energy, May 2019 Presentation to MEUG
2
Disclaimer
This information in this presentation has been prepared by Meridian Energy Limited ("Meridian") to provide a general overview of Meridian
and the New Zealand electricity industry. It has been prepared solely for informational purposes and does not purport to be complete or
comprehensive and does not constitute financial produce, investment, tax or other advice. Past performance information provided in this
presentation may not be a reliable indication of future performance.
This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of
Meridian. All such forward-looking statements involve known and unknown risks, significant uncertainties, assumptions,
contingencies, and other factors, many of which are outside the control of Meridian, which may cause the actual results or performance of
Meridian to be materially different from any future results or performance expressed or implied by such forward-looking statements. There
can be no assurance that actual outcomes will not differ materially from the forward-looking statements.
This presentation is not and should not be construed as an offer to sell or a solicitation of an offer to buy Meridian securities and may
not be relied upon in connection with any purchase of Meridian securities. In particular, this presentation does not constitute an offer to sell,
or a solicitation of an offer to buy, any securities in the United States. Meridian's securities have not been, and will not be, registered under
the U.S. Securities Act of 1933 (the "Securities Act") or the securities laws of any state or other jurisdiction of the United States and may not
be offered or sold in the United States without registration except in a transaction exempt from, or not subject to, the registration
requirements of the Securities Act and any other applicable U.S. state securities laws.
All amounts are disclosed in New Zealand dollars (NZ$) unless otherwise indicated. Certain information in this presentation has been derived
from a number of public sources including data released by the Government of New Zealand and the New Zealand Electricity Authority and
public filings of other companies. None of Meridian (nor its officers, employees, agents or advisors) gives any warranty or representation
(express or implied) of the accuracy, completeness or reliability of the information, and it takes no responsibility for it. The information
has not been and will not be independently verified or audited.
1st May 2019 | Climate Change & Electricity Sector
MERIDIAN ENERGY LIMITED 3
Overview
1. Background – IPCC and Paris agreement
2. IPCC special report on Global Warming of 1.5°C – published Oct 2018
3. New Zealand and electricity industry implications
4. How is Meridian modelling climate change?
1st May 2019 | Climate Change & Electricity Sector
MERIDIAN ENERGY LIMITED 4
Background
• The United Nations body which assesses existing published science on climate change.
• Publishes summary reports of climate science.
• Provides the world with an objective, scientific view of climate change and its political and economic impacts.
Intergovernmental Panel on Climate Change (IPCC)
The Paris Agreement
• Its long-term goal is to keep the increase in global average temperature to “well below 2°C” above pre-industrial levels; and to
• pursue efforts to limit the increase to 1.5 °C.
• It requires all parties to define their own “nationally determined contributions” to greenhouse gas (GHG) emissions, and to report on these efforts and continue to increase their contributions in the years ahead.
1st May 2019 | Climate Change & Electricity Sector
• Drawn up in 2015, it is the most significant climate agreement ever signed.
• 197 parties have signed the agreement – every country in the world (except the Holy See).
• 181 have ratified it, including New Zealand.
MERIDIAN ENERGY LIMITED 5
IPCC Special report on Global Warming of 1.5°C – Oct 2018
- considers how to keep the world below 1.5°C temperature increase (above pre-industrial levels)
Source: IPCC
Forecast emissions
• Current Paris agreement pledgeswould result in a global temperature increase of 3.2 °C by 2100.
• Current government policies around the world are projected to result in a 3.4°C increase by 2100.
Source: Marland et al 2003Source: climateactiontracker.org
• Carbon emissions globally have vastly increased over the past two centuries
Historical emissions Required emissions trajectory
1980 2020 2060 21000
20
30
40
50
60
10
Bill
ion t
onne
s C
O2
pe
r yr
(GtC
O2/y
r)
1st May 2019 | Climate Change & Electricity Sector
Source: www.ipcc.ch/sr15/
MERIDIAN ENERGY LIMITED 6
How can the planet stay below 1.5°C? – four pathways
Renewable electricity
Oil UseGHG
emissions
P1
P2
P3
P4
Gas useCoal UseEnergy
demandNuclear energy
Carbon capture and storage
NB: other more minor factors are not included in this table.
Pathways
Key Increase Decrease
Small
Medium
Large Source: www.ipcc.ch/sr15/
MERIDIAN ENERGY LIMITED 7
How can we keep the world below 1.5°C temperature increase?
Governments alone
can’t do it – industry
must be involved.
Rapid and widespread
“disruptive innovation”
is needed
Rapid escalation in the
scale and pace of
transition is needed,
particularly in the next
10-20 years.
Widespread Carbon Dioxide Removal (CDR)
mechanisms will almost certainly be needed
(eg. tree planting and carbon storage)
Key take outs:
IPCC special report
on 1.5°C
Adaptation
globally is still
in it’s infancy
This is the first IPCC report to relate climate change
mitigation to the Sustainable Development Goals
and Poverty Eradication
Increasing the
proportion of
renewable electricity is
not enough on its own.
All pathways involve
reductions in:
• GHGs
• Coal use
• Oil use
1st May 2019 | Climate Change & Electricity SectorSource: www.ipcc.ch/sr15/
MERIDIAN ENERGY LIMITED 8
Source: climateactiontracker.org
Highly insufficientInsufficient2°C compatible
1.5°C compatible Role model
Critically insufficient
What are NZ’s emissions commitments, and how are we doing?
Strategy and Performance team
▪ NZ’s Paris Agreement pledge is to reduce GHG
emissions to 30% below 2005 levels by 2030
(black square on graph).
▪ NZ’s projected emissions (blue line) are not
meeting our Paris commitments.
▪ Currently emissions are ~15% above 1990 levels.
▪ Different colours in the chart illustrate NZ’s “fair
share” of global emissions (per capita). NZ’s
projected emissions (blue line) are staying in the
“highly insufficient” bracket.
China USA
Obama
policy
EU
Past
emissions
Zero emissions
Policy
pathway
Paris
pledge
Current
policy
projection
MERIDIAN ENERGY LIMITED 9
• The world is in agreement on the need for emissions reduction.
• Increasing pressure to decarbonise and reduce emissions is highly likely.
• Wide scale electrification of transport and industry is likely.
• Retirement of coal plant is almost certain.
Implications for the NZ electricity industry?
1.5°C or 2°C – what’s the difference?
Half a degree makes a big difference to the likely impacts.
Source: wri.org (using IPCC SR1.5 data)
NZ government has a number of initiatives on this issue
• Zero Carbon Act: expected July 2019. Will commit NZ to nett zero greenhouse gas emissions by 2050.
• Interim Climate Change Committee: set up in 2018 to advise government – report due this week?
• 100% renewable energy by 2035 (in an average hydrological year): government target.
• 1 billion trees by 2028: a major government tree planting initiative is underway.
• Emissions trading scheme: key tool for reducing emissions and meeting our emission reduction targets.
• Powering past coal alliance: NZ signed up & committed to phasing out coal in electricity generation by 2030
1st May 2019 | Climate Change & Electricity Sector
Meridian Energy 2050 electricity modelling
Dr Jen Purdie, Meridian Energy, May 2019 Presentation to MEUG
MERIDIAN ENERGY LIMITED 11
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Modelling the electricity system out to 2050 - LPCon
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1st May 2019 | Climate Change & Electricity Sector
MERIDIAN ENERGY LIMITED 12
Modelling inputs – future climate - generally
Projected annual temperature changes by 2090
Low emissions High emissions
Low emissions High emissions
Projected annual rainfall changes by 2090
Source: MfE 2018
• The following pages examine how the impact of climate change on lake inflows and wind generation is incorporated in the model.
• In a general sense, New Zealand temperatures are expected to get about 0.5 to 1°C warmer by 2050.
0.5 - 1°C 2 - 4°C
-5% to +10% -15% to +20%
1st May 2019 | Climate Change & Electricity Sector
• Rainfall is expected to get wetter in the west and south of NZ, and drier in the north and east.
MERIDIAN ENERGY LIMITED 13
Niwa
regional
downscaling
model
Rainfall
Wind
Seasonal
rainfall
changes
New wind
modelling
dataset
• Methodology used to modify our model inflow & wind inputs
Seasonal
adjustments
to wind data
Seasonal
adjustments
to inflow
data, based
on snow
melt
changes
NZ research on
snow pack
changes
+
New hydro
inflow
modelling
dataset
Modelled
snow melt
Higher
rainfall
volatility+
Global
Circulation
model
outputs
- mid-range
emissions
- model
average
Modelled future hydro lake inflows and wind generation
1st May 2019 | Climate Change & Electricity Sector
MERIDIAN ENERGY LIMITED 14
• Annually, Waitaki catchment rainfall is forecast to get 0-10% wetter by mid-century, compared to 1995 levels (see map at right).
- projected rainfall changes from 1995-2055 (% change), low-mid emissions.
- projected rainfall changes from 1995-2055 (% change), low-mid emissions.
Source: ofcnz.niwa.co.nz
- projected rainfall changes from 1995-2055 (% change), low-mid emissions.
Projected changes to rainfall by 2050
Annual
Winter
Summer
• In addition to this, rainfall is projected to change seasonally as well.
• Waitaki rainfall is expected to get
➢ wetter in all seasons,
➢ particularly in winter (bottom right graph), where it is expected to be 10-15% wetter by mid-century.
➢ 0-10% wetter in summer under low-mid emissions (bottom left graph).
MERIDIAN ENERGY LIMITED 15
• An example of this is shown in the below right graph, for Hermitage (Mt Cook) rainfall for February 2018, both recorded (blue) and simulated 2050 rainfall (red).
Projected changes to rainfall volatility by 2050
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Recorded rainfall Recorded rainfall + 8%
1st May 2019 | Climate Change & Electricity Sector
• An increase of 1°C of a parcel of air results in an 8% increase in moisture carrying ability of that air.
• Increased wind speeds (projected in coming decades) will enhance orographic uplift in the South Island in particular, enhancing both precipitation amounts and spillover over the Southern Alps and into the Waitaki, Clutha, and Manapouri catchments.
• For our modelling purposes, it is therefore estimated that each rain event will be 8% wetter by 2050.
MERIDIAN ENERGY LIMITED 16
• The Waitaki catchment receives half it’s summer inflows (or 22% of it’s annual inflows) from snowmelt (McKerchar
1998, Kerr 2013).
• The Clutha catchment 16% of it’s annual inflows from snow melt, and the Waiau 8%.
• Mid-century snowpack in NZ is expected to be ~20% smaller than today under a middle of the road emissions scenario (Hendrikx and Hreinsson (2011)).
Source: Hendrikx
and Hreinsson 2011
Percentage difference in mean maximum snow
accumulation in each year for 2040s and 2090s using
the 12-model average A1B scenario as input, when
compared to the current.
Projected changes to snow melt by 2050
1st May 2019 | Climate Change & Electricity Sector
• Melting glacier ice has been found to make up ~6% of Waitaki inflows. Glacial ice contribution to Waitaki inflows is likely to be reasonably consistent over the next 50 years, so has therefore not been adapted for in this study.
MERIDIAN ENERGY LIMITED 17
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Flow
(cum
ecs)
1932-2017 inflows long term average - Waikato Inflows
Baseline inflows (historical) vs 2050 inflows (projected)
Baseline inflows Mid-range emissions
Annual total inflow change now to 2050: -0.1%
280
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530
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1932-2017 inflows long term average - Manapouri Inflows
Baseline inflows (historical) vs 2050 inflows (projected)
Baseline inflows Mid-range emissions
Annual total inflow change now to 2050: +5.9%
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1932-2017 inflows long term average - Clutha Inflows
Baseline inflows (historical) vs 2050 inflows (projected)
Historical average inflows Projected 2050 inflows
Annual total inflow change now to 2050: +3%0
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1932-2017 inflows long term average - Pukaki Inflows
Baseline inflows (historical) vs 2050 inflows (projected)
Historical average inflows Projected 2050 inflows
Annual total inflow change now to 2050: 0% - no change
Lower inflows spr-sum-aut
Higher inflows winter
North Island hydro no change
Higher inflows winter
Higher inflows winter No change
spring/summer
Lower inflows spr-sum-aut
Modelled changes to inflows by 2050
MERIDIAN ENERGY LIMITED 18
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1932-2016 inflows long term average - Pukaki inflowsBase vs 2050 scenario
Base
Hi Emissions
Mid-rangeemissions
• Changes under a high emissions scenario (as compared to a middle of the road emissions scenario were examined.
• Due to the relatively short time frame (2050), the impact on inflows between the two scenarios were not significant.
Modelled changes to inflows under a high emissions scenario
1st May 2019 | Climate Change & Electricity Sector
MERIDIAN ENERGY LIMITED 19
-4.0
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2050 wind adjustments - Southland 1
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2050 wind adjustments - Canterbury
-5.0
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2050 wind adjustments - Northland
-10.0
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2050 wind adjustments - Otago
-4.0
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2050 wind adjustments - Wellington
Total annual change: -1.0%
Total annual change: +1.9%
Total annual change: +2.8%
Total annual change: +4.2%
Total annual change: +2.8%
Source: Niwa
▪ The South Island is expected to get windier in most regions.
▪ The North Island is expected to be:▪ slightly windier in the lower half▪ less windy in the upper half.
▪ The biggest change is expected to be in Otago, where a 4.2% increase in annual total wind is expected by 2050.
Northland – less windy overall
Wellington – slightly windier overall
Otago – biggest wind increase
Source: MfE 2018
South Island – 2 to 5% windier
Projected changes to wind speeds
MERIDIAN ENERGY LIMITED 20
0.30
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0.34
0.36
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0.42
0.44
0.46
0.48
0.50
1-Ju
l
1-Au
g
1-Se
p
1-O
ct
1-N
ov
1-De
c
1-Ja
n
1-Fe
b
1-M
ar
1-Ap
r
1-M
ay
1-Ju
n
Capa
city
fact
or
1932-2017 wind capacity factor long term average -
Manawatu - Base vs 2050 projection
Base 2050 projection
1.3Annual % change by 2050:
0.32
0.34
0.36
0.38
0.40
0.42
0.44
0.46
1-Ju
l
1-Au
g
1-Se
p
1-O
ct
1-N
ov
1-De
c
1-Ja
n
1-Fe
b
1-M
ar
1-Ap
r
1-M
ay
1-Ju
n
Capa
city
fact
or
1932-2017 wind capacity factor long term average -
Auckland - Base vs 2050 projection
Base 2050 projection
-2.8Annual % change by 2050:
0.35
0.37
0.39
0.41
0.43
0.45
0.47
0.49
0.51
1-Ju
l
1-A
ug
1-Se
p
1-O
ct
1-N
ov
1-D
ec
1-Ja
n
1-Fe
b
1-M
ar
1-A
pr
1-M
ay
1-Ju
n
Capa
city
fact
or
1932-2017 wind capacity factor long term average -
Wellington - Base vs 2050 projection
Base 2050 projection
1.9Annual % change by 2050:
0.30
0.35
0.40
0.45
0.50
1-Ju
l
1-A
ug
1-Se
p
1-O
ct
1-N
ov
1-D
ec
1-Ja
n
1-Fe
b
1-M
ar
1-A
pr
1-M
ay
1-Ju
n
Capa
city
fact
or
1932-2017 wind capacity factor long term average -
Otago - Base vs 2050 projection
Base 2050 projection
3.6Annual % change by 2050:
Less windy all year Windier in winter-spring
Windier in winter-spring
Less windy in summer
Less windy in summer
Windier in winter-spring
Less windy in summer
Modelled changes to wind farm capacity factor
1st May 2019 | Climate Change & Electricity Sector
MERIDIAN ENERGY LIMITED 21
0.20
0.25
0.30
0.35
0.40
0.45
0.50
1-Ju
l
1-A
ug
1-Se
p
1-O
ct
1-N
ov
1-D
ec
1-Ja
n
1-Fe
b
1-M
ar
1-A
pr
1-M
ay
1-Ju
n
Capa
city
fact
or
1932-2017 wind capacity factor long term average -
Southland - Base vs 2050 projection
Base 2050 projection
2.22Annual % change by 2050:
0.25
0.30
0.35
0.40
0.45
0.50
0.55
0.60
1-Ju
l
1-A
ug
1-Se
p
1-O
ct
1-N
ov
1-D
ec
1-Ja
n
1-Fe
b
1-M
ar
1-A
pr
1-M
ay
1-Ju
n
Capa
city
fact
or
1932-2017 wind capacity factor long term average -
Canterbury - Base vs 2050 projection
Base 2050 projection
2.51Annual % change by 2050:
0.25
0.30
0.35
0.40
0.45
0.50
1-Ju
l
1-A
ug
1-Se
p
1-O
ct
1-N
ov
1-D
ec
1-Ja
n
1-Fe
b
1-M
ar
1-A
pr
1-M
ay
1-Ju
n
Capa
city
fact
or
1932-2017 wind capacity factor long term average -
Waikato - Base vs 2050 projection
Base 2050 projection
-1.10Annual % change by 2050:
0.30
0.32
0.34
0.36
0.38
0.40
0.42
0.44
0.46
0.48
0.501-
Jul
1-A
ug
1-Se
p
1-O
ct
1-N
ov
1-D
ec
1-Ja
n
1-Fe
b
1-M
ar
1-A
pr
1-M
ay
1-Ju
n
Capa
city
fact
or1932-2017 wind capacity factor long term average -
Northland - Base vs 2050 projection
Base 2050 projection
-1.20Annual % change by 2050:
Less windy win-spr
Little change sum-aut
Less windy win-spr
Little change sum-aut
Windier win-spr
Slightly less windy sum-aut
Windier win-spr Slightly
less windy sum-aut
Modelled changes to wind farm capacity factor (continued)
MERIDIAN ENERGY LIMITED 22
• Increased demand is expected as electrification of transport and industry occurs.
• Higher temperatures across the year are expected to increase electricity demand from both summer cooling and winter heating.
• We expect to see increased irrigation load as climate changes strengthen, especially on the East Coast of NZ.
-600
-400
-200
0
200
400
600
800
1,000
1,200
No
rthl
and
No
rth
Au
ckla
nd
Sou
th A
uck
lan
d
Hun
tly
Ham
ilto
n
BO
P
East
coas
t
Wai
kato
Cen
tral
NI
Tara
nak
i
Man
awat
u
Wel
lingt
on
Wes
tCo
ast
Nel
son
/Mar
l
Can
terb
ury
Sou
th C
ante
rbu
ry
Cen
tral
Ota
go
Co
asta
l Ota
go
Sou
thla
nd
Tiw
ai P
t
NI SI NZ
ann
ual
en
erg
y [G
Wh
]
Changes to Heat-Pump Demand in 2050Driven by Climate Change of 1.5 - 2.0oC
Increased Summer Cooling
Reduced Winter Heating
+160MW peak
-600
-400
-200
0
200
400
600
800
1,000
1,200N
ort
hlan
d
No
rth
Au
ckla
nd
Sou
th A
uck
lan
d
Hun
tly
Ham
ilto
n
BO
P
East
coas
t
Wai
kato
Cen
tral
NI
Tara
nak
i
Man
awat
u
Wai
rara
pa
Wes
tCo
ast
Nel
son
/Mar
l
Can
terb
ury
Sou
th C
ante
rbu
ry
Cen
tral
Ota
go
Co
asta
l Ota
go
Sou
thla
nd
Tiw
ai P
t
NI SI NZ
ann
ual
en
erg
y [G
Wh
]Changes to Eastcoast Irrigation Demand in 2050
Driven by Climate Change of 1.5 - 2.0oC
Increased Summer Pumping Load
+170MW peak
Projected changes to electricity demand by 2050
1st May 2019 | Climate Change & Electricity Sector
Source: Meridian Energy
MERIDIAN ENERGY LIMITED 23
References
• Hendrikx, J. and Hreinsson, E.O. 2011: The potential impact of climate change on seasonal snow in New Zealand: Part II-industry vulnerability and future snowmaking potential. Theoretical and Applied Climatology 110(4).
• Kerr, T. 2013: The contribution of snow melt to the rivers of the South Island, New Zealand. Journal of Hydrology (NZ) 52 (2): 61-82.
• McKerchar, A., Pearson, C.P. and Fitzharris, B. B. 1998: Dependency of Summer Lake Inflows and Precipitation on Spring SOI, J. of Hydrology, 205, 66-80. DOI: 10.1016/S0022-1694(97)00144-3.
• Ministry for the Environment 2018. Climate Change Projections for New Zealand: Atmosphere Projections Based on Simulations from the IPCC Fifth Assessment, 2nd Edition. Wellington: Ministry for the Environment.
1st May 2019 | Climate Change & Electricity Sector