Contact’s general manager of corporate affairs, David Hunt, says the experience of this winter has highlighted that investment in transmission and generation are higher on the agenda that most people thought six months ago.
“It was assumed it would be quite some time before there was further investment required. This winter indicates we’re actually further through the cycle than anyone perceived.”
Environment Waikato has just given approval for Genesis to start a $400 million extension to its Huntly power station. The new station will generate 400 megawatts of electricity alongside the existing gas and coal plant which produces 1400 megawatts.
Due for completion in 2005, Genesis says the plant will be 50 per cent more efficient and less polluting. Wind power and “mini-hydro” schemes are also planned.
Meridian has spent $200 million building a new “tailrace” tunnel at its Manapouri hydro station. Meridian is New Zealand’s largest generator and has the capacity to produce 2323 megawatts of power. When commissioned in April next year, the tunnel will help generate a further 170 megawatts of electricity.
Further down the track, Meridian is planning Project Aqua for the Waitaki River. Water not currently used by the eight power stations on the river would race along canals feeding into a sequence of six small power stations. The stations would supply around 8 per cent of New Zealand’s entire electricity needs. At 570 megawatts, this is the biggest single-generation project planned for the next few years.
Trustpower community relations manager Graeme Purches says the company is keen to double the size of its existing wind farm at Tararua, already the biggest in the Southern Hemisphere and supplying the equivalent of 16,100 homes.
“Until the Government has some financial instruments in place to encourage sustainable generation, rather than pumping more CO2 into the atmosphere, it’s not a goer financially.
“The costs of generating from wind is currently higher than from gas and any prudent company director would not decide to invest further in wind energy.”
Wind energy requires a lot of little turbines that require more maintenance and their life expectancy is shorter. The recent crisis was a one-in-10-year event and the 1992 crisis was a one-in-60-year event.
“The difference is the structure of the generation and wholesale market and the way in which resources have been used in New Zealand. A lot of this is about someone taking a helicopter view of how our resources are used.”
Major Electricity Users’ Group executive director Ralph Matthes says this winter had been a wake-up call that New Zealand will need additional capacity in the future.
“If the economy grows, electricity demand grows and there will be a need for additional supply.”
He says the extra supply needs to come from conventional gas-fired thermal plants like Contact’s existing Otahuhu plant, which will gradually replace the older, less efficient New Plymouth and Huntly power stations.
“This will be ongoing. There’s a lot of talk about what will be the next thermal station in 2005, but there will need to be another one built two or three years after that, and two or three years after that again. It’s just a matter of the economy and the population growing.”
New Zealand also has to “think smarter” by strategically investing in transmission and working the existing transmission grid harder.
“Full marks to Transpower for doing that this winter, but you have to ask the question, ‘why haven’t we been doing that in previous years and why does it need a crisis for that to happen’.”
A spokeswoman for Transpower says there are constant efforts to increase the efficiency and capacity of the national grid, while recognising that there are limits.
“We don’t have an incentive not to. We’re always prepared to work with the industry in looking at ways we can work the grid.”
But she says there is no necessity to drive the grid to its full capacity unless demand requires it. No grid is “constraint-less”.
“In New Zealand we have a grid that we estimate operates without constraint between 80 and 90 per cent of the time and that’s pretty good.”
She says Transpower will always look at investment “as long as someone pays. Sure, we’ll step if there are little easy fixes we can do. But when you talk about major investment, we are happy to do it as long as someone pays.”
Power to the People Supplement
