NZ power generators say RMA’s replacement will stifle investment

Contact Energy is investing more than $1.1 billion in renewable energy. Photo / Supplied

New Zealand power generators are pushing back over proposed legislation aimed at replacing the much-maligned, 30-year-old Resource Management Act.

Representatives of the generators have appeared before Parliament’s Environment Committee, saying the new legislation would act as a disincentive for new generation at a time when investment was needed in order for the country to meet its decarbonisation goals.

The Natural and Built Environment Bill, currently before the Environment Committee, allows major hydro schemes connected to the national grid to have 35-year water take consents.

However, it cuts this to 10 years for these smaller schemes simply because they are connected to local lines company networks instead of the national grid.

Warren McNabb, chairman of the Independent Electricity Generators Association (IEGA), said the proposed legislation was aimed at streamlining the RMA by reducing costs and complexity, yet it would make life harder for small generators as it would cut the water consents period.

“Our members have got 43 hydro schemes throughout New Zealand and they are going to have to re-consent them every 10 years,” he told the Herald after appearing before the committee on Friday.

“If they want to do a new scheme, or to improve an existing one, you can’t expect to see long-term investment with only 10 years.”

McNabb said small schemes were important to New Zealand.

Small hydro generators will have to renew their water consents every 10 years. Photo / File

IEGA’s members, taken together, would count as New Zealand’s sixth-largest generator, providing power for 130,000 households.

The 43 schemes are scattered throughout the country, owned by lines companies, trusts and private companies.

McNabb told the committee there would be a transition period of 7-10 years for the bill to take effect.

“Any small hydro consents that expire during that time will be cancelled, and once the transition is over, the owners must reapply within three years.

“Banks and other investors won’t put money into an asset that is built to last 75 to 100 years when the right to use the water to make electricity only lasts for 10 or fewer years.

“This means investment in improving the efficiency or expanding capacity of existing schemes is unlikely,” he said.

“It also means new hydro capacity will not be built, and will dry up funds for many of the 20 other renewable projects members are currently investigating.”

McNabb said locally connected power stations can provide crucial back-up if grid supply fails, as it did in Hawke’s Bay during Cyclone Gabrielle.

He urged the committee to treat all hydro-generation the same, regardless of its size or location.

The proposed legislation has found little support among the major power generators either.

Contact Energy CEO Mike Fuge. Photo / Supplied

Contact Energy chief executive Mike Fuge did not mince his words when he appeared before the committee earlier in the week.

NZX-listed Contact has more than $1.1 billion of renewable electricity projects under construction.

“Beyond that we have the most robust development pipeline ever in our history as a company across wind, solar and geothermal.

“The rest of the sector is the same. We have geared ourselves up to build on a massive scale so we can decarbonise.

“But right now, this bill poses the single biggest threat to that work programme, to those people being able to get on and do their jobs.

“It is a boon to consultants and lawyers; it is what they would call a dripping roast with bookable hours written all over it,” he said.

If the legislation passed in its current form it would put an end to New Zealand’s decarbonisation goals, Fuge said.

“It is as simple as that.”