Genesis secures more coal

By FIONA ROTHERHAM

Electricity generator Genesis Power has signed its second coal supply deal in a week for Huntly, New Zealand's largest thermal power station.

Genesis said the move helped to secure Huntly's competitive position at a time of uncertain future gas reserves, rather than a desire to burn more coal now.

"We're making sure we keep our stockpile," said Genesis chief executive Murray Jackson.

The Huntly Power Station is a dual-fuelled 1000 MW plant, capable of quickly switching from gas to coal or operating a combination of both.

In the latest deal, privately owned MacDougall Mining will supply 450,000 tonnes of coal from its Rotowaro mine to Genesis over the next four-and-a-half years.

That equates to about a year's present coal consumption at Huntly.

Last week, the state-owned enterprise signed a contract with Solid Energy for 340,000 tonnes of Huntly coal for delivery over the next 17 months.

Genesis also has the option of a further 200,000 tonnes for a further 12 months.

Earlier this year a deal was also made with yet another supplier, Glencoal Energy, for 450,000 tonnes.

Mr Jackson said that at present Huntly was required to meet any growth in electricity demand.

A fourth unit at Huntly, damaged by fire last year, is due back in service next month.

At present, around 10 per cent of the plant's total output is coal-fired.

Genesis has an eight-year deal for 90 petajoules of gas from Natural Gas Corporation, aimed at smoothing the post-Maui transition.

Mr Jackson remains concerned little attention is being given to planning replacement of the Maui gas reserves which account for more than 70 per cent of NZ's annual gas production. Contracted supply dips markedly from 2005 as Maui declines.

The Ministry of Economic Development's Energy Outlook forecasts significant growth in coal-fired generation, from 20.7 petajoules of coal annually this year to 31.7 pj by 2005, 35.2 pj by 2010 and up to 62.5 pj by 2020.

The ministry said around 2010 a new coal plant becomes economic.

Increasing coal-fired generation would impact on the Government's commitment under the Kyoto protocol to reduce its carbon dioxide emissions. A ministry report in March suggested any ban on coal-fired generation to reduce CO2 emissions would raise electricity prices by up to 13 per cent.

Mr Jackson said Genesis was committed to pursuing alternative technologies, including boosting its wind farm generation. An announcement is likely soon on new wind farm sites in addition to its existing Haunui site in southern Wairarapa, which generates 3.5 MW annually.

"It is challenging for all of us. We have to keep the lights on and have to try alternative energy sources."