SOUTHDOWN POWER STATION - RESOURCE CONSENT APPLICATION AND ASSESSMENT OF ENVIRONMENTAL EFFECTS - EPA NZ
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SOUTHDOWN POWER STATION
RESOURCE CONSENT APPLICATION AND ASSESSMENT OF ENVIRONMENTAL
EFFECTS
November 2012
PART A: RESOURCE CONSENT APPLICATION
Mighty River Power November 2012
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APPLICATION FOR RESOURCE CONSENT PURSUANT TO SECTION 88 OF THE
RESOURCE MANAGEMENT ACT 1991
FORM 9
To: Auckland Council
Level 2
35 Graham Street
Auckland
1. MIGHTY RIVER POWER LIMITED (‘Mighty River Power’) hereby applies for a discharge permit to
authorise the discharge of contaminants to air from a power station made up of two gas fired
turbines, a gas/diesel fired turbine, and associated activities including the operation of a natural
gas fired ancillary boiler and a cooling tower.
2. The location of the proposed activity is as follows:
Site Address: 142-220 Hugo Johnston Drive, Penrose, Auckland
Legal Description: Lots 1 & 2 DP178192, contained within certificates of title NA109D/643 and
NA109D/644 (refer Appendix 1)
Site Area: 4.34ha
Regional Plan: Auckland Regional Plan: Air, Land and Water (ARP:ALW) (Operative in Part)
(the ‘Regional Plan’)
Air Quality: Industrial
Management Area: District Plan Zoning - Business 6 (the Operative Auckland Council Plan –
Isthmus Section) (the ‘District Plan’)
Location Plan: Refer to Schedule ONE below
3. No additional resource consents are needed for the proposed activity
4. Assessment of Environmental Effects (AEE)
Attached in accordance with the Fourth Schedule of the RMA is an assessment of environmental
effects in such detail as corresponds to the scale and significance of the effects that the
proposed activities may have on the environment.
5. Information required to be included by the district plan, any regional plans, the RMA or any
regulations made under that Act.
All relevant information required to be included in this application by the RMA and relevant
regional plans is contained as applicable within the application, the AEE, and the accompanying
technical reports, plans and information.
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Signature: 14 November 2012
-----------------------------
Stuart Lush
Generation Development Manager
For and on behalf of Mighty River Power Ltd
Address for Service of Applicant
Mason Jackson
Mighty River Power
160 Peachgrove Road
PO Box 445
HAMILTON
Phone: (07) 857 0199
Fax: (07) 857 0192
Email: mason.jackson@mightyriver.co.nz
Mighty River Power November 2012 Application to Discharge Contaminants to Air _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ SCHEDULE ONE: Location Plan
PART B: ASSESSMENT OF ENVIRONMENTAL EFFECTS
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TABLE OF CONTENTS
Page
PART A: RESOURCE CONSENT APPLICATION
PART B: ASSESSMENT OF ENVIRONMENTAL EFFECTS
TABLE OF CONTENTS
1. INTRODUCTION 1
1.1 Mighty River Power 1
1.2 Current Resource Consents at Southdown 1
1.3 The proposal 2
2. EXISTING ENVIRONMENT 3
2.1 Southdown Power Station 3
2.1.1 Location and Surrounds 3
2.1.2 Plant Description 4
2.2 Air Quality 6
2.2.1 Regional Air Quality 6
2.2.2 Local Air Quality 9
3. ELECTRICITY MARKET AND CONTEXT 11
3.1 Industry Overview 11
3.2 The Market 11
3.3 Demand and Growth 12
3.4 Supply 13
3.5 Southdown’s Past and Future 14
4. ASSESSMENT OF EFFECTS 15
4.1 Introduction 15
4.2 Positive Effects 15
4.2.1 Displacing More Expensive Generation 15
4.2.2 Avoided Transmission Losses 15
4.2.3 Avoided Cost of Transmission Investment 16
4.2.4 System Security 16
4.2.5 Employment 16
4.2.6 Site Infrastructure 16
4.2.7 Flexibiity and Alignment with Demand 16
4.2.8 Support for Renewable Generation 17
4.2.9 Dampening Volatility 17
4.2.10 Summary 17
4.3 Air Quality Effects 18
4.3.1 Nitrogen Dioxide (NO2) 20
4.3.2 Sulphur Dioxide (SO2) 20
4.3.3 Particulates (PM10 and PM2.5) 20
4.3.4 Heat Effects 21
4.3.5 Carbon Monoxide (CO) 21
4.3.6 Other Contaminants 21
4.3.7 Regional Effects 21
4.3.8 Summary 21
4.4 Effects on Aviation Safety 21
4.5 Amenity Effects 22
4.5.1 Context 22
4.5.2 Visual Effects 22Mighty River Power November 2012
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4.5.3 Droplet deposition 23
4.5.4 Summary 24
4.6 Effects Associated with Removing Southdown Operation Mode Restrictions 24
4.6.1 Baseload vs Peaking Mode 24
4.6.2 GE101 and GE102 in Open-Cycle 25
4.6.3 Removing Co-generation Requirement 25
4.6.4 Positive Effects 25
4.6.5 Summary 26
4.7 Summary of Effects 26
5. CONSULTATION 27
5.1 Civil Aviation Authority (CAA) 27
5.2 Transpower 27
5.3 KiwiRail 27
5.4 Carter Holt Harvey 27
6. NOTIFICATION ASSESSMENT 28
6.1 Public Notification Test 28
6.2 Limited Notification Test 29
6.2.1 Special Circumstances 30
6.3 Notification Summary 30
7. ACTIVITY STATUS 31
8. STATUTORY ASSESSMENT 32
8.1 Actual and Potential Effects on the Environment 32
8.2 Relevant Environmental Standards 32
8.2.1 Resource Management (National Environmental Standards for Air
Quality) Regulations 2004 32
8.3 Relevant Regional Policy Statements and Plans 34
8.3.1 Auckland Regional Policy Statement 34
8.4 Regional Plan Objectives and Policies 35
8.4.1 Part 1 ‘Values’ 35
8.4.2 Part 2 ‘Air’ 36
8.4.3 Summary 39
8.5 Other Matters 39
8.5.1 New Zealand Energy Strategy and New Zealand Energy Efficiency and
Conservation Strategy 39
8.5.2 Auckland Plan 40
8.5.3 Civil Aviation Authority (CAA) Requirements 41
8.6 Section 104B 41
8.7 Section 105 42
8.8 RESOURCE MANAGEMENT ACT 42
8.8.1 Part 2 42
8.8.2 Part 2 Conclusion 44
9. PROPOSED CONSENT CONDITIONS AND TERM 45
9.1 Proposed Conditions 45
9.2 Consent Term 45
10. CONCLUSION 47Mighty River Power November 2012 Application to Discharge Contaminants to Air _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ APPENDICES Appendix 1 Certificates of Title Appendix 2 Air Discharge Permit 30109 Appendix 3 Air Discharge Permit 28175 Appendix 4 Proposed Consent Conditions Appendix 5 Plant Description Appendix 6 Southdown Benefits Report Appendix 7 Air Discharge Effects Report Appendix 8 Peer Review of Air Discharge Effects Report Appendix 9 Consultation Feedback Appendix 10 Air Discharge Effects at Southdown Power Station: Long-term effects analysis Appendix 11 Southdown Power Station - Environs in the future
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1. INTRODUCTION
1.1 MIGHTY RIVER POWER
Mighty River Power Limited (“Mighty River Power”) is involved in both electricity generation and retail
supply. As the fourth largest electricity generator in New Zealand, Mighty River Power is a cornerstone
participant in New Zealand’s electricity sector. With more than 90 per cent of its annual generation
coming from renewable sources, the company’s business is based on low fuel-cost electricity
generation complemented by sales to businesses and homes. For the year ending 30 June 2012 the
company generated 7,068 gigawatt hours (GWh) of electricity. This figure represents approximately
18% of New Zealand’s total electricity consumption.
Mighty River Power sells electricity through multiple channels and retail brands, including Mercury
Energy, GLO-BUG, Bosco Connect and Tiny Mighty Power to more than 390,000 residential and
business customers. Mighty River Power’s metering business Metrix provides meters and meter-
reading services to residential and commercial customers across Auckland, and to other electricity
retailers.
The company’s Waikato Hydro System represents the greater proportion of its generation production,
although significant recent growth (of 40%) has occurred in its geothermal capacity. Mighty River
Power also owns and operates the Southdown Power Station (“Southdown”) in Penrose, Auckland.
Southdown has been operational since December 1996.
Mighty River Power’s generation assets play a pivotal role in meeting national electricity demand and
in maintaining New Zealand’s security of electricity supply, particularly in Auckland where Southdown
provides critical peak-hour demand generation for the Auckland region.
1.2 CURRENT RESOURCE CONSENTS AT SOUTHDOWN
The current resource consents for Southdown are outlined within Table 1 below.
Table 1: Summary of current consents for Southdown site
Current Resource Consents
Consent Reference Date Granted Expiry Date
Air discharge permit for 30109 Originally granted April 31 July 2015
turbines GE101 and GE102 1995
and auxiliary boiler BO103 (Several variations
followed)
Air discharge permit for 28175 March 2006 1 January 2029
gas/diesel turbine GE105
Stormwater discharge 36197 October 2008 31 December 2023
permit for the site
Landuse resource consent R/LUC/1994/5602763 April 1995 No expiry date
for the site
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Copies of current consents 30109 and 28175 are provided in Appendices 2 and 3 respectively.
1.3 THE PROPOSAL
This application seeks consent for the discharge of contaminants to air from a power station made up
of two gas fired turbines, a gas/diesel fired turbine, and associated activities including the operation of
a natural gas fired ancillary boiler and a cooling tower.
The duration sought for the consent is 25 years.
Suggested conditions for the consent form part of this proposal. These are provided in Appendix 4.
If granted with a satisfactory suite of conditions and expiry date, Mighty River Power will surrender
consents 30109 and 28175. The result will be a single consent encompassing all air discharges from
Southdown. The new consent will allow Southdown to operate in a range of modes including as a:
baseload power producer;
peaking power producer;
cogeneration site for the production of electricity and steam; and
producer of electricity only or steam only.
The modelling prepared as part of the Assessment of Effects takes a ‘worst case scenario’ approach,
so that any of the ways that that Southdown might be operated will have effects the same as or less
than the discharges modelled. Southdown may be operated in any fashion that has effects no more
than those modelled.
The new consent will also allow flexibility of operation of specific plant, for example allowing operation
of:
GE101, GE102, GE105 and the auxiliary boiler BO103 all operating simultaneously,
continuously and at full power or each such unit operating on its own or in combination with
any other unit on site;
GE101 or GE102 or both GE101 and GE102 in open or combined cycle mode with duct firing
anywhere between maximum and zero output; and
GE105 in open cycle mode either on its own or in combination with any other unit on site.
For the avoidance of doubt, no significant changes or additions to site plant are proposed as part of
this application.
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2. EXISTING ENVIRONMENT
2.1 SOUTHDOWN POWER STATION
2.1.1 LOCATION AND SURROUNDS
Mighty River Power owns and operates the Southdown Power Station situated on a four hectare
industrial property at the end of Hugo Johnston Drive in Southdown, Auckland. The site is held in two
parcels, with the power station occupying the southern parcel. The northern parcel is currently vacant.
Figure 1 shows an aerial view of the site and immediate surrounds.
Figure 1: Aerial view of Southdown site and neighbouring land
The topography of the Southdown site is flat, with vegetation established around the periphery of the
site. Railway lines surround the site to the east, south and west, with the Manukau Foreshore Walkway
and Manukau Harbour further to the south. The established land uses to the east, north and west are
all industrial, reflecting the underlying Business 6 zoning of the District Plan. The purpose of the
Business 6 zone is to:
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“... make provision for heavy, noxious or otherwise unpleasant industrial activity within the City.
Such activity typically generates significant effects which may pose a serious threat to the
natural environment and compromises the amenity and safety enjoyed by surrounding land
uses. For these reasons it is important that heavy and noxious industry is located in areas
where the impacts of these effects can be minimised and isolated.”
Similar to the Southdown site itself, the topography of the surrounding land is also flat, and within the
industrial properties at least, largely devoid of vegetation. To the northwest is the Southdown Reserve,
which contains established vegetation. Much of the Mangere inlet to the south of the site is covered in
mangroves.
The closest residential areas are One Tree Hill and Onehunga to the north; Mt Wellington to the east;
and Otahuhu, Favona and Mangere Bridge to the south and southwest. These residential areas are
further than 1km from the site and separated by other industrial areas in Penrose, Otahuhu, Westfield
and Onehunga.
2.1.2 PLANT DESCRIPTION
A detailed Plant Description of Southdown is included as Appendix 5. Southdown’s plant and processes
are illustrated in Figure 2 below.
In summary, Southdown comprises three gas turbines, of which two (GE101 and GE102) operate on
natural gas with nominal net power outputs of 45MW. The third turbine (GE105) is an open cycle
turbine that can run on either diesel or gas with a nominal net power output of 50MW. An additional
steam turbine (GE103) produces a nominal net power output of 37MW. The steam turbine uses steam
produced from GE101 and GE102 exhaust heat (combined cycle). Some of this same steam is currently
supplied to Carter Holt Harvey’s (CHH) Paper Recycling Mill located nearby. Southdown also has a
cooling tower and a gas-fired auxiliary steam boiler (BO103). The latter has been historically used to
generate steam for CHH at times when the combined cycle system is not operating. The site also has
an 800kW diesel powered generator used in site power outage emergencies.
Natural gas used on site is supplied via the North Island gas transmission pipeline network. Any diesel
firing of GE105 will be done so in accordance with relevant current consent conditions and with the use
of low sulphur fuel1.
Overall, Southdown is presently capable of producing about 175MW of electricity. It may be possible to
increase this output in the future through on-site efficiency gain initiatives. In order to realise future
potential improvements in efficiency, Mighty River Power requests there be no limits imposed on
generation quantum within the consent.
All electricity generated on site is fed into the national electricity transmission grid.
1
The original application for GE105 proposed use of low sulphur diesel fuel (10ppm sulphur or less). On 1 January
2009, the sulphur content of diesel fuel available in New Zealand was reduced from 50ppm to less than 10ppm.
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Figure 2: Southdown – Plant and Process
Visually, Southdown can be recognised by its three large turbine stacks and four slightly shorter
cooling tower stacks. Several large industrial buildings are also established on the Southdown site.
The oblique view shown in Figure 3 provides additional detail on various site components and their
locations within the site.
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Figure 3: Southdown Site Components
2.2 AIR QUALITY
2.2.1 REGIONAL AIR QUALITY
As a large and predominantly urban area, Auckland suffers from reduced air quality at times. This is
particularly evidenced by the occurrence of the “brown cloud” sometimes seen over the city, especially
on calm winter mornings. Air quality data gathered from Auckland monitoring sites indicates this
reduction in air quality causes exceedences of national air standards.
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Figure 4: Trends in exceedances in Auckland, 1998 to 2009 (Auckland Council website, May 2012).
The long-term trends of these exceedences are shown in Figure 4. This shows an elimination of CO
exceedances since 2004, a decrease in NO2 exceedances, and little decrease in recorded PM10
exceedences.
The principal source for emissions contributing to these exceedences in the Auckland region is the
vehicle fleet (See ARC Emissions Inventory, 2004). Auckland vehicles account for 84% of NOx
emissions, and 47-51% of all particulates in the region. Therefore, the number of vehicles on the road,
and the rate they are used, is the primary factor determining Auckland’s air quality – both now and in
the future.
The regional trend for vehicle use in Auckland can be examined using data on vehicle kilometres
travelled (vkts). This data is shown in Figure 5. From 2001-2008, the rate of increase of vkts was 2.1%
per year, but the rate of change decreased to 1.0% from 2008-2011. Auckland Council data (Trends and
Issues, 2009), shows a general slowing of this growth out to 2046, even taking account of the predicted
increased population.
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Figure 5: Trends for vkts in Auckland, billions (NZTA web site, Oct 2012).
Despite the increasing vkts in Auckland, overall contaminant emissions from vehicles have been
steadily falling. This trend has been driven by tighter overseas restrictions and is being seen in the
Auckland fleet as newer vehicles appear on the roads. These trends are well studied and are
quantified in the Vehicle Emissions Prediction Model (VEPM), developed jointly by the Auckland
Council, NZTA and Ministry of Transport.
The trend of reduced contaminant emissions from vehicles is predicted to continue. This is illustrated
in Figure 6 which shows dramatic reductions in CO since 2005 and even further reductions predicted in
future. Figure 6 also shows that emissions of PM2.5 and NOx from vehicles has reduced in recent years
and are projected to continue decreasing (Note: almost all vehicle emission is PM2.5 rather than PM10).
The rate of decrease in PM2.5 and NOx is about 8% out to at least 2030, and then at least 3.5% out to
2040.
Because of this, overall air quality is expected to follow an improving trend - at least out to 20402. That
is, despite there being a maximum possible projected 2.1% increase in vkts, this is overwhelmed by an
8% decrease in emission rates. Thus the total emissions from vehicles in the Auckland airshed is
expected to decrease by at least around 6% per year to 2030, and a further 1.4% per year out to 2040.
2
Note that this analysis of emissions covers the whole of Auckland. There may be increases in specific local
areas where traffic flows increase – such as around new motorway developments.
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Figure 6. Trends in vehicle emissions (from VEPM 5.0)
2.2.2 LOCAL AIR QUALITY
There are no residents, schools, rest homes, or neighbours located in close proximity to Southdown
that might be considered sensitive to the site’s air emissions. The nearest potential sensitive receptor
is the Sylvia Park shopping complex some 1.8km to the east north-east.
There are many other emitters of contaminants to air in the general areas of Onehunga, Penrose, Mt
Wellington, and Otahuhu (e.g. power stations, timber processing, other industry, ships). In addition, the
Southern Motorway to the east (with up to 120,000 vehicles per day) passes within 1.35km of
Southdown and the South-Western Motorway (SH20) and Mangere Bridge lie to the west. Apart from
Southdown itself, the next largest fixed source discharger located in the immediate area is the CHH
paper recycling site. This is located approximately 0.9km to the northwest of Southdown. The CHH site
contains an 18.5MW coal fired boiler which has recently been consented (2012). All these discharge
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sources contribute to background levels of contaminants both locally, and to a much lesser extent,
regionally.
In terms of the air quality close to the Southdown site, there is little definitive information available.
This is because there has been no ambient monitoring conducted nearby. However, given Southdown’s
relative distance from the major roads (when compared to many of the Auckland Council’s monitoring
sites), contaminant levels near Southdown are likely to be lower than any of the peak sites located
elsewhere.
Despite there being an absence of measured air quality data close to Southdown, Section 4 of this AEE
describes how, by using best practice modelling methods, the potential environmental effects of
Southdown’s emissions can nevertheless be assessed.
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3. ELECTRICITY MARKET AND CONTEXT
3.1 INDUSTRY OVERVIEW
The New Zealand electricity industry provides over 40,000GWh of energy per year to consumers. There
are four key components to the industry; generation, transmission, retail and distribution.
Electricity is generated by a number of different means in New Zealand before being transmitted to
local distributors and large users through the transmission system. Electricity is purchased and
subsequently sold to consumers by retailers, with this energy being physically supplied to homes and
businesses throughout the country via local distribution networks that are connected to the
transmission grid.
Due to our relatively small population, and abundance of natural energy resources, New Zealand has
the second highest penetration of renewable energy in the OECD. Last year, renewable energy
accounted for 77% of the electricity generated. Whilst New Zealand electricity production has long
been dominated by hydro generation, in recent years we have seen significant growth in both
geothermal and wind as renewable energy sources as we make progress toward the target of 90% of
electricity generation from renewable sources by 2025.
Given that hydro amounts to 58% of generation, the country has a reliance on inflows of water to hydro
lakes. These inflows can vary greatly from one year to the next as a result of climatic conditions. New
Zealand’s relatively low storage capacity relative to generation capacity results in very little ability to
store water from one year to the next. Unfortunately this can result in potential energy shortages and
subsequent conservation campaigns such as those seen in 2001 and 2008.
Whilst New Zealand has a relatively diverse generation fleet in terms of fuel type, the same cannot be
said for the location of that fleet. Generation is concentrated in the lower South Island and in the
Northern Waikato to Auckland areas. With the exception of the Tiwai Point aluminium smelter, which
consumes approximately 15% of New Zealand’s electricity, demand is greatest in our largest cities,
with Auckland accounting for approximately 25% of annual electricity demand.
In order to facilitate the transport of energy from the point of generation to consumption, New Zealand
has approximately 12,000km of high voltage transmission lines. Given the geography, and the distance
between generation and load centres, some energy is lost as lines heat up and radiate this heat to the
atmosphere. The energy lost through transmission is approximately 3-4%. In 2011 approximately 70%
of Auckland’s electricity demand was imported from outside the region. The amount of imported
electricity fluctuates from year to year depending on the availability of hydro fuels. In 2011, Auckland’s
generation fleet, 98% of which is thermal generation, operated at less than 50% capacity due to an
abundance of renewable fuel in other parts of the country.
3.2 THE MARKET
Electricity markets, unlike most commodity markets, have the unique characteristic that
instantaneous supply must equal instantaneous demand. This is due to the physical limitations of plant
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and equipment, as well as the prohibitively high cost and inefficiency of electricity storage. In NZ, in
order to facilitate meeting demand in the most efficient manner, there is a spot market for electricity.
Assuming perfectly flexible conditions, a generator in this market will generate at any price above their
short run marginal cost (which is usually the cost of fuel plus operational expenses) and shut down
whenever the price is below this. By following such a strategy, a generator will earn a return in any
period where the price is greater than the short run marginal cost.
In reality though, very few power stations have perfect flexibility due to the physical constraints of the
plant. Plant with renewable fuel sources such as wind, geothermal and run of river hydro, will
generally run whenever fuel is available. For thermal generators like Southdown, the constraints
around changing plant output can be significant. For example, to start up GE101 and GE102 in open
cycle mode at Southdown takes approximately 20 minutes, whereas starting these units up in
combined cycle mode takes approximately two and a half hours. More efficient combined cycle gas
turbines will have a lower short run marginal cost than their more flexible open cycle counterparts,
however this efficiency gain is offset considerably by the longer start and stop times necessitated by
the addition of steam turbines to the production cycle.
Mighty River Power’s decision on how and when to run Southdown needs to constantly consider
whether it is best to run cheaply more often (and risk running when not economic to do so), or to run at
a higher cost, in fewer periods. Having operational flexibility to call upon significantly assists this
decision making process.
3.3 DEMAND AND GROWTH
When considering demand for electricity, it is important to consider not only the total quantity of
energy demanded, but also the ‘shape’ of that demand. To meet the instantaneous demand as well as
annual demand we need to know in which hours of the day, days of the week, and weeks of the year the
demand occurs. Demand follows very different profiles depending on the sector consuming the
energy. For instance, residential load contributes more heavily to peak demand than the same annual
energy use in the industrial sector. It follows that demand in Auckland is highly variable given its large
residential and commercial use.
Transpower’s Annual Planning Report, which looks at grid capacity for the next 15 years, suggests that
peak demand will grow at an annual rate of 1.7% nationally, and at 2.1% for the Auckland area. From
these forecasts, by 2030 Auckland’s annual demand is likely to be 25-30% higher than today, and its
peak demand is likely to be 45-50% higher. This growth in demand is reflective of the fact that over the
next 30 years Auckland’s population is expected to grow to 2.2-2.5 million3. Currently, Auckland’s
installed generation capacity is only 681MW and there are no known committed generation projects in
the region at this time. This means Auckland must import approximately 65% of peak electricity
requirements. This incurs some cost of transmission. Of this 681MW, Southdown accounts for 25%.
3
The Auckland Plan
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3.4 SUPPLY
Figure 7 shows that natural gas remains a significant fuel source for New Zealand out to 2030.
However, it is clear that geothermal and wind will play an increasingly important role. These two fuel
sources have quite different characteristics although both operate with a near zero short run marginal
cost.
Figure 7: Annual generation by fuel type. Source: MED Energy Outlook 2011.
Geothermal plant is well suited to run base-load with almost no variation in output. Once the plant is
built, the fuel is very low cost, which means it is almost always economic for the plant to run. Secondly
there are physical constraints around the ramping of geothermal plant. It is relatively difficult to shut
down geothermal assets and therefore this is generally only done when maintenance is required.
Wind generation, although it also has virtually no short run marginal cost, is quite different in that
output is both highly variable, and also uncertain. Unfortunately, this variability in wind output is not
particularly well aligned with the variability in demand and so tends to compound the need for flexible
generation to meet demand peaks.
As gas costs increase and as renewable technology becomes cheaper, it is reasonable to assume that
these newer technologies will displace base-load thermal generation. However at the same time, they
will increase the need for other generation that is able to reliably meet peak demand. Thus, the gas
generation of the future will move along the spectrum from inflexible, low short run marginal cost
plant (it will not be low enough to compete with geothermal), to having higher short run marginal cost,
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but far greater flexibility (which complements the opposite characteristics of wind and geothermal).
This trend is already being observed, and is the key driver behind Mighty River Power’s desire to
secure operational flexibility at its Southdown site.
3.5 SOUTHDOWN’S PAST AND FUTURE
Since construction in 1996, Southdown’s generation profile has changed considerably. From a base
load, cogeneration plant, Southdown has moved towards more flexible, peaking generation. When the
changes to market conditions during that time are considered, it is clear as to why.
Real wholesale gas prices have increased by 86% since 2000. This cost increase is primarily due to the
reduction in production from the Maui gas field4. While this has caused the short run marginal cost of
Southdown to increase dramatically since it was installed, there has also been an increase in
competition for base load generation. This competition has come in the form of geothermal production
which has virtually doubled since 2000. In addition to the increase in geothermal production in the last
10 years, wind production in New Zealand has increased significantly. Wind is also displacing base
load thermal generation, and creates a need for greater installed peaking capacity to manage wind
generation’s intermittent supply.
These effects combine such that it is no longer economic to run Southdown as a base load plant
unless the country is facing significant supply uncertainty due to low hydro inflows. This is a good
outcome for New Zealand as thermal generation is being offset by renewable generation.
4
The Maui gas field is NZ’s largest, most flexible and pre-eminent gas find that has underpinned the development
of the NZ gas industry (comprising, methanol, electricity generation, domestic use etc)
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4. ASSESSMENT OF EFFECTS
4.1 INTRODUCTION
The environmental effects summarised in this section, and described in more detail within relevant
appendices, collectively represent the cumulative maximum envelope of effects contemplated from the
proposed activities at Southdown. More specifically:
The assessment of air quality effects assumes all units (including the auxiliary boiler BO103)
are operating simultaneously and continuously at full power (with duct burners on);
The assessment adopts whatever is the higher contaminant level between GE105 being fired
on gas and GE105 being fired on diesel;
The assessment adopts whatever is the higher contaminant level between GE101 and GE102 in
combined cycle mode and GE101 and GE102 in open cycle mode; and
The efflux (updraft) assessment is based on all units operating simultaneously and
continuously at full power and in open-cycle mode.
4.2 POSITIVE EFFECTS
An assessment of the positive effects and benefits associated with Southdown has been prepared by
Alton Analytics Ltd (referred to as the ‘Benefits Report’) and is included as Appendix 6.
4.2.1 DISPLACING MORE EXPENSIVE GENERATION
Since its construction Southdown has injected over 11,500 GWh of electricity into the grid. As this
energy from Southdown was offered at a price that has cleared in the market, and because this
generation is generally not the most expensive in the supply curve, Southdown has reduced the
wholesale price of electricity relative to the next highest cost generation being called on to meet
demand.
4.2.2 AVOIDED TRANSMISSION LOSSES
Transmission losses are part of the reason prices will differ across the national grid. Further
differences in prices can be caused by transmission constraints (bottlenecks in the system), which
physically limit the amount of energy able to be transported through various parts of the grid.
By being located in Auckland, close to demand, Southdown is able to reduce the transmission losses
that would be associated with generation supplied from further afield. This has an impact on electricity
price. In general, the further the electricity has to travel to its point of use, the more expensive it is to
purchase. This price effect clearly highlights that generation in Auckland, such as that injected at
Southdown, is of more economic value to the system than equivalent generation located further away
from Auckland’s demand.
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4.2.3 AVOIDED COST OF TRANSMISSION INVESTMENT
Whilst transmission losses are effectively a cost of transporting energy, peak demand periods also
create an additional cost of capital for the transmission system. This cost arises due to the fact that
the transmission system must always be adequate to maintain system reliability during peak demand
periods. Even if the full capacity of the system is only utilised very rarely, the investment in grid
capacity required increases as demand peaks become larger, even if annual electricity consumption
remains constant.
By reducing transmission demand peaks, the requirement for grid capacity is lessened and thus
investment can be deferred, creating savings in capital costs. In load centres such as Auckland, the
grid owner creates financial incentives for the distribution company to reduce load in peak times, thus
deferring capital investment in the grid. Southdown, due to its location and ability to generate during
very short duration peaks is able to effectively reduce the ‘net-peaks’ that occur in Auckland, reducing
the need for transmission capacity in these periods.
4.2.4 SYSTEM SECURITY
In the event of failure (forced outage) of parts of the transmission system, Southdown is able to provide
fast response generation to load in and north of Auckland. Southdown has been called upon on a
number of occasions when a ‘grid emergency’ has been called by the system operator. A recent
example of such an event was in December 2011 when a transformer failure caused the sudden
unforeseen loss of supply from the entire Huntly Power Station.
4.2.5 EMPLOYMENT
Southdown is staffed 24 hours per day, 365 days a year by station operators. Southdown also employs
a number of other operational, administrative and managerial staff providing direct employment to
approximately 27 full time equivalents on-site staff, up to 10 full time equivalent support staff, and
more than 200 contractors during peak maintenance periods.
4.2.6 SITE INFRASTRUCTURE
The site on which the plant is built provides a conduit for Kiwi Rail to progress with the electrification
of Auckland’s rail network. As part of this project there will be a new transformer installed for the rail
network, connected to the grid via the Southdown electrical switchyard. This enables the diesel
powered locomotives currently operating in the Auckland area to switch to electricity, resulting in an
indirect benefit to air quality.
Southdown also uses a considerable amount of water during its various processes (the majority of
which is recycled), however given the site’s proximity to an aquifer, a substantial amount of the water
requirement, on average 61% (357,000m3 annually), is supplied directly with non-potable ground water
reducing the need to use local supply as compared to similar generation on an alternative site.
4.2.7 FLEXIBIITY AND ALIGNMENT WITH DEMAND
The addition of the auxiliary boiler in 2005 enabled the plant to cease generating electricity during
times of unfavourable prices (due to low demand or excess supply), whilst still having the ability to
make steam for operational flexibility, ancillary services and meeting its obligations to steam
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customers. The addition of the open-cycle GE105 unit in 2007 enabled drastically reduced start and
stop times (15 minutes as opposed to 2 hours to full output from zero). The nature of the market
means that the flexibility provided by these two enhancements is often utilised on a daily basis. For
example GE105 is able to operate for single half hourly periods if required.
Southdown is very efficient, as it can be relied upon to deliver energy if required during demand peaks,
whilst at the same time reducing or even ceasing output when not required. This is in contrast to other
gas-fired plants who either have fast start capability (but lower efficiency), or higher efficiency, but
cannot cease output. Given the substantial residential demand in Auckland, and the resulting variance
in the demand profile, this ability to align generation with the load profile is of obvious regional benefit.
In fact any peaking plant which reduces prices during demand peaks will assist in reducing the cost of
servicing highly variable residential demand such as that seen in Auckland.
The ability to fire GE105 on diesel adds another dimension to Southdown’s flexibility. This provides the
further benefit of enabling some level of electricity supply to be maintained to the Auckland Region in
the event of a gas supply interruption should it occur (e.g. another gas supply pipeline break such as
occurred in October 2011).
4.2.8 SUPPORT FOR RENEWABLE GENERATION
New Zealand’s growing wind generation fleet is a source of volatility to the system as a whole. Whilst
weather forecasting technology is improving, wind generation output is still relatively uncertain at any
more than an hour into the future. With such a large amount of installed hydro capacity the annual
system output can vary greatly depending on climatic conditions (e.g. drought). Plant with the ability to
respond to these short or medium term variations in climatic conditions is required to maintain system
security. Southdown is well suited to these tasks.
By providing flexible, reliable generation, thermal peaking plant facilitates greater investment in
intermittent renewable technologies such as wind, solar, and run of river hydro. It follows that thermal
plant like Southdown actually helps underpin the Government’s target of 90 percent renewable
electricity generation by 2025.
4.2.9 DAMPENING VOLATILITY
By providing flexibility in output in various time horizons (hours, weeks and months), Southdown is able
to offset the variability in supply from renewable generation such that the risk of over or under supply
and hence volatility in the market is reduced. This in turn reduces the risk for retailers and industrial
users arising from that price volatility. By reducing risk, Southdown, as a flexible and reliable thermal
generator, contributes to a reduction in the cost of procuring electricity for industrial and commercial
users, retailers, and ultimately residential consumers.
4.2.10 SUMMARY
In the context of the New Zealand electricity market, Southdown provides a number of benefits. These
can be summarised as:
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Reduction in the cost of wholesale electricity through displacing the next highest cost
generation;
Avoiding energy loss through transmission of electricity from generation sources outside of
Auckland;
Avoiding cost of transmission investment required to meet peak demand loads in Auckland;
Security of supply to the Auckland region and the rest of the national grid;
Employment to a number of staff and contractors;
Site specific benefits such as the proximity of electrical switching equipment to Auckland’s rail
corridor to facilitate electrification;
Through the various flexibility enhancements made to the plant, provide the ability to align
generation with demand; and
Provide both short and medium to long term support for intermittent renewable generation
such as wind and hydro, therefore helping facilitate further renewable generation and
assisting New Zealand in achieve its renewable energy generation targets.
4.3 AIR QUALITY EFFECTS
An assessment of the air discharge effects from Southdown has been prepared by Endpoint Limited
(referred to as the ‘Air Discharge Report’) and is included as Appendix 7. This body of work has been
peer reviewed by Dr Bruce Graham (Graham Environmental Consulting Ltd). A separate peer review
report is provided in Appendix 8.
The assessment has been carried out using standard modelling methodologies and follows the
recommendations of the Ministry for the Environment’s “Good Practice Guide for Assessing
Discharges to Air from Industry” (2008) and it largely follows the Auckland Council’s new draft
guideline “Use of Background Air Quality Data in Resource Consent Applications” (2011). The
modelling has also been carried out with the Council’s preferred dispersion model (Calpuff), and uses
two years’ of meteorological data supplied by the Council (2005 and 2007).
The modelling was used to assess the following:
effects from other sources;
local dispersion of the plume, which occur within a few hundred metres of the plant;
existing background concentrations;
wider scale regional effects of the discharges;
updraft effects on aviation; and
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plume heat effects.
The results are compared with:
National Environmental Standards for Air Quality (revised 2011);
Ambient Air Quality Guidelines (published 2002);
Auckland Council Regional Air Quality Targets (revised 2010); and
Civil Aviation Regulations (revised 2006).
A summary of the air modelling results is provided in Table 2 below.
Table 2: Summary of modelling results
Contaminant Standard / Contribution of Peak ambient value
Guideline Southdown alone (includes Southdown
and background)
NO2 1-hour peak 200 108 188
NO2 1-hour 99.9%ile 200 65 145
NO2 24-hour peak 100 39 80
PM10 24-hour peak 50 0.4 40.4
PM10 annual 20 0.04 13.04
PM2.5 24-hour peak 25 0.4 30.4
CO 8-hour peak 10 0.02 2.52
SO2 1-hour peak 350* 2 22
SO2 1-hour 99.9%ile 350* 1 21
SO2 24-hour peak 120 1 9
Benzene annual 3.6 0.00006 1.00006
* The standards allow for 9 exceedences per year, provided the absolute peak does not exceed 570.
Overall, these results show that for all but one of the contaminants considered (PM2.5 – discussed
below), the combined effects of air discharges from Southdown and ambient levels are acceptable and
within standards and guidelines.
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4.3.1 NITROGEN DIOXIDE (NO2)
The modelling results for NO2 emissions demonstrate that peak NO2 emissions from Southdown
(including background levels) are well within the guidelines for 1 hour, 24 hour and annual values.
These values have been consistent over the two years that have been modelled and are expected to
remain consistent for the duration of Southdown’s operation.
Southdown is nearest to the Penrose monitoring site, which has experienced one exceedence of the
NO2 (1 hour) standard over the past twelve months. The proximity of the monitoring station to one of
the busiest sections of State Highway 1 means that it is likely that the exceedence was attributable to
motor vehicle emissions.
At a regional level, NO2 emissions from Southdown are considered to be responsible for 4.5% of the
region’s emissions (refer section 6.5 of the Air Discharge Report), with the main source continuing to
come from motor vehicles.
The NO2 emissions have been demonstrated to be within the relevant standards and guidelines.
4.3.2 SULPHUR DIOXIDE (SO2)
There are negligible SO2 emissions from gas-fired units GE101, GE102 and BO103. The only real
source of SO2 emissions occurs when unit GE105 is switched from operating on gas to diesel. Firing of
GE105 on diesel has been considered in the comprehensive discharge modelling for Southdown.
The modelling results for SO2 emissions demonstrate that the worse case peak emissions from
Southdown are well within the relevant guidelines for 1 hour and 24 hour values and are consistent
between both years of meteorological data used in the model.
4.3.3 PARTICULATES (PM10 AND PM2.5)
There is very little data on the emissions of PM2.5, which has meant that for the purposes of the
assessment the PM2.5 value has been taken to be the same as PM10.
The worst case results (E105 fired on diesel) demonstrate that the peak PM10 from Southdown
contributes less than 1% of background levels, and in total, peak PM10 emissions comply with the
guidelines for 24 hour and annual values. The results also demonstrate that peak PM2.5 emissions
from Southdown contributes to a little over 1% of background levels, but in total, peak PM2.5 emissions
could exceed the standard for the 24 hour value by 2.4μg/m³5. This exceedance is therefore almost
entirely attributable to other sources. The contribution of Southdown to particulate emissions is
considered to be below the level of significance
The modelling of particulate emissions from Southdown has also adopted a conservative emission
factor. The only other measurements taken within New Zealand (from the Otahuhu Power Station)
indicate that the conservative emission factor used may be unrealistically high and that actual
particulate emissions may be a factor of ten lower than the figures that have been used in the
modelling.
5
As set by the Auckland Council Regional Air Quality Targets (revised 2010)
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