Build no more fossil-fuel power stations, says Government

The Otahuhu power station dominates the landscape over Otara Creek.

The Government is to direct state-owned electricity generators not to build any more fossil fuel-burning power stations and is considering extending the ban to private sector generators as well.

Unveiling its energy strategy yesterday, Energy Minister David Parker said the Government's view was that all new generation should be from renewable sources, except to the extent needed to ensure security of supply.

He would be writing to the SOE generators making it clear the Government expected them to follow that guidance.

Because competitive neutrality between the private sector and the SOEs was important, the Government was considering legislation to limit new baseload fossil fuel generation over the next 10 years, he said. It would decide by the end of the year.

That would curtail investor-owned Contact Energy's rights to build another gas-fired plant at Otahuhu, as well as state-owned Genesis Energy's plans for one at Rodney. Contact already has resource consents for Otahuhu.

It has said it intends its next $2 billion of generation investment to be renewables, but has warned that it might need to go ahead with Otahuhu C if it continues to suffer delays in getting resource consents.

Contact has called for greater use of the Government's powers to "call in" nationally significant projects under the Resource Management Act and direct them either to a special purpose board of inquiry or to the Environment Court - speeding up the consent process.

Parker said the call-in power was there to be used. "I expect more projects to be called-in in the future".

Genesis has just completed a 400MW gas-fired plant next to its old 1000MW coal-fired plant at Huntly.

It plans a similar 240MW machine at Rodney by 2010 and another at the same site by 2015, allowing it to progressively move the coal-burning plant to a reserve role.

By frustrating Genesis's plans for more gas-fired capacity the Government risks keeping Huntly's emissions-intensive plant operating harder for longer.

"It's a fiction that building more thermal power stations reduces your long-term emissions," Parker said.

"It's better to take longer to retire existing thermals and replace them with renewables."