Energy crisis: What NZ needs to deliver cheaper power for Kiwi families - Shane Te Pou

THREE KEY FACTS

• The energy sector is discussing how to avoid potential electricity blackouts in the coming months as the country grapples with an energy shortfall.
• Transpower is consulting on changing the rules to allow hydro generators to access their contingent storage.
• Energy Minister Simeon Brown says the Government is seriously considering importing liquefied natural gas to fill the energy shortfall.

Shane Te Pou (Ngāi Tūhoe) is a commentator, blogger and former Labour Party activist.

OPINION

Another dry winter, another electricity crisis. This one has been particularly bad because hydroelectricity generation has been limited at the same time as the wind hasn’t been blowing and natural gas wells have been coming up dry.

A perfect storm for our electricity network caused prices so high that many of our main manufacturers have been cutting back on production and some have closed altogether.

That adds up to job losses in communities across Aotearoa and a further weakening of our economy. In the 21st century, affordable energy is key to a growing economy and our current energy policies aren’t delivering.

And yet, the big electricity producers are sitting pretty, raking in megaprofits. Meridian, which basically operates by letting free water run through dams built and paid for by the taxpayer decades ago, reported a jump in profits from $95 million last year to $429m this year.

The Government’s plan – pray someone finds new natural gas and hope someone will build a terminal to import it in the meantime – won’t cut it. Apart from the emissions, locking ourselves into importing expensive natural gas would be a multibillion drain on the economy that would make us poorer and more at risk from international supply disruptions. And good luck getting a company to speculate on a billion-dollar exploration programme for natural gas when the last billion dollars of drilling found nothing.

The fact is, our electricity system is broken.

The gentailers are meant to be supplying the lifeblood of our economy. Problem is, the gentailers don’t want cheap power. Their job isn’t to supply affordable and reliable electricity to the country. Their job is to make profits for their shareholders. They’re focused on how much profit they can make – even if that hurts our manufacturers.

The partial privatisation has only made it worse. Winter energy crises and sky-high power prices used to be few and far between; now they’re every other year. The gentailers are accountable to no one. Associate Energy Minister Shane Jones has huffed and puffed about profiteering, but has the Government actually done anything about it? No.

Meridian's Benmore power station is NZ's second-largest hydro station.

And there are things they could do.

There’s no shortage of potential electricity generation in this country – plenty of wind, plenty of sunshine.

The gentailers are sitting on consents for projects all over the country, which they have chosen not to build. As the price of solar panels, wind turbines and grid-scale batteries have fallen sharply in the last few years, the opportunities for cheap electricity have grown. We’re now falling far behind other countries in adopting these breakthrough technologies.

The gentailers have carefully maintained a shortage of electricity generation because it helps their bottom lines. Even if most of our power is coming from renewables for next to zero cost, they get paid at the price of the most expensive unit of electricity produced in each 15-minute block. So it’s in their interests to have expensive gas and coal plants running.

If all our power was coming from cheap renewables, their profit margins would evaporate. That already happens at night, when wind and hydro can meet demand alone: the price of power falls to nearly nothing.

So the gentailers aren’t going to choose to flood the market with cheap renewables and displace the fossil fuel plants that make them their money. Not only does that make electricity more expensive, but it also makes power shortages and blackouts more likely because the system lacks spare capacity. And the electricity regulations we have let them do it.

Time to change things up.

I’ve talked before about a KiwiPower idea – a publicly owned power generator that’s not out for profit but to reduce energy costs for our economy and households. It would be empowered to take over those consented projects that the gentailers refuse to build and do it for them. It would enter into long-term deals with companies that want to build offshore wind and large-scale solar farms but need to know they’ll get a steady return on investment to make it worthwhile.

An avalanche of new generation would bring the price of electricity down, allowing power-hungry manufacturers to expand their operations. More supply from a variety of renewable sources, with batteries for back-up and demand-shifting, would help prevent shortages in dry years. It would also mean we have enough electricity to fuel the transition to electric transport.

Fiddling around the edges of the broken electricity market won’t fix its fundamental problems. Nor would importing expensive liquefied natural gas. We need the Government to disrupt the cosy gentailer status quo. We need a white knight in the electricity market whose goal is cheap power for Kiwi families and Kiwi businesses.

Is this Government bold enough to do something like that? Or will they just tinker ineffectually while the gentailers bleed the country for every cent they can?