By Jeremy O’Brien, Segment Director Energy, Seequent
How harnessing geothermal power could shape Aotearoa New Zealand’s energy sector.
Geothermal power has the potential to play a more significant role in Aotearoa New Zealand’s energy mix, but these major projects require large infrastructure investment. New Zealand requires $1 trillion of investment in infrastructure across multiple sectors in the next 30 years, and while the typical view of infrastructure investments is improvements to roads, hospitals, and water infrastructure, energy infrastructure is also a critical part of this.
This was highlighted last year when electricity prices skyrocketed. Dry lakes, low gas supplies, and low wind caused a shortage of energy supply that resulted in more pressure on our communities and businesses, even though there has been significant effort to invest in new renewable energy generation.
Geothermal energy has provided a baseload, low-carbon energy source to New Zealand since 1958, when the Wairakei Power Station (the world’s second) came online near Taupo. A first of its kind in the world at the time, the infrastructure at Wairakei was engineered to deal with steam and water, something that hadn’t been done in Italy or the United States.
Of course, New Zealand has a longer history with geothermal energy, which was first used here by Māori who cooked, heated and bathed with it. Māori remain central to the geothermal industry here as owners and partners of the taonga across power generation, toursim, and direct use, among other things. In fact, green hydrogen is produced from geothermal at Mokai as a part of Tuaropaki’s operation there.
For a sparsely populated archipelago at the bottom of the world, New Zealand has always punched above its weight in the geothermal space. New Zealand expertise has driven development globally, beginning with Indonesia and spreading to Kenya, Japan, and the Philippines, to name a few.
Geothermal energy has a wide range of uses here beyond electricity – in forestry, horticulture and tourism, for example. Supercritical or ‘super hot’ geothermal is an exciting area of research that could hold answers to meeting the country’s fast-growing energy needs, so it is encouraging to see the government ring-fence $60 million from the Regional Infrastructure Fund to explore its potential, including the infrastructure requirements for dealing with supercritical (greater than 400 degrees Celsius) fluids.
Also, in the past few years the geothermal industry has pushed hard to decrease emissions even further, with power plant infrastructure being adapted to capture emissions and new stations commissioned with the technology. Geo40 also continues to push the frontier of mineral extraction from geothermal fluids with silica extraction and early pilot plants extracting lithium.
The remaining low-hanging fruit for power generation was identified in 2021, when the Climate Change Commission’s ‘Ināia tonu nei: a low emissions future for Aotearoa’ report highlighted the importance of geothermal energy in the early stages of New Zealand’s drive towards further electrification of our energy sector.
A significant proportion of New Zealand’s power still makes the journey across the Cook Strait from the South Island to the North. From a New Zealand perspective, having more geothermal power plants in the central North Island, which is rich in geothermal resources, has the simple benefit of locating that source nearer to areas of highest population density.
As we head into 2025, the possibilities are truly exciting thanks to technological breakthroughs, both here and overseas, plus a changing investment landscape. It is for these reasons Seequent entered a two-year partnership with the International Geothermal Association in November last year to raise awareness of geothermal’s potential and promote its development.
Benefits for New Zealand from this partnership may take the form of a straightforward people exchange, shared best practices or exposure to advances in technologies where New Zealand can continue to shape the future of the industry. Recent and exciting technological breakthroughs globally include Fervo Energy’s application of oil and gas industry practices to successfully test enhanced geothermal systems technologies, which now power the local energy grid serving Google’s Nevada data centres.
While we have an abundance of geothermal institutional knowledge here in New Zealand, we also have some challenges in the sector, which look similar to the conversations being had in the public arena around roading and infrastructure.
We are faced with a critical question in New Zealand: How do we build confidence in investment and large-scale infrastructure projects, including geothermal developments, for the long-term benefit of us all? This is a crucial part of the infrastructure puzzle that is currently holding back the kind of investment needed to fully unlock the value of geothermal energy.
Geography is another challenge and opportunity. Are we at the point where major industries, milk-drying for example, would want to move when they have made large capex investments and are already operational? That would be a very difficult decision to make; the value proposition would need to be compelling to warrant the shift.
That’s a challenge we don’t have all the answers to yet, but we are seeing some innovative thinking emerge and no doubt that innovation will increase in pace if wholesale electricity costs continue to increase.
We can already see evidence that businesses will locate around a geothermal resource when the opportunity presents itself. In Taupō, the He Ahi business park has forged a relationship with Contact Energy that enables them to offer tenants foundation infrastructure – giving small and medium-sized businesses access to geoheat without having to drill their own wells.
Nelson Mandela famously said: ‘When the water starts boiling, it is foolish to turn off the heat.’ The possibilities for geothermal energy in Aotearoa New Zealand are many. We must strive to ensure geothermal reaches its full potential.