We’re getting close to an energy crisis - Heather du Plessis-Allan

Building new power generation will take years. Finding more gas – which we desperately need – will take years, if anyone wants to look for it, which they don’t. Even the quickest fix of importing LNG from Australia is at least a year away, writes Heather du Plessis-Allan. Photo / Getty Images

THREE KEY FACTS

• Wholesale electricity prices last week traded up to about $500 per megawatt hour (MWh), from $280/MWh a month ago.
• The Electricity Authority says this reflects tight supply conditions and is not uncommon in the winter months, when power consumption rises and the “fuel” – water – available for generation can be constrained.
• Declining gas availability and high gas prices have also driven high electricity spot prices, especially during periods of low wind.

Heather du Plessis-Allan hosts Drive on Newstalk ZB, weekdays 4pm-7pm.

OPINION

Those who work in the energy sector apparently don’t like using the term crisis. But even they admit we’re getting close to one.

Our electricity prices, at one point last week, were said to be the highest in the world.

The cost of wholesale power has more than doubled in the last two months. This week it is more than five times higher than last year. Gas prices have tripled in three years for some businesses.

There is no end in sight to this.

Workers at two of Winstone’s mills near Ohakune have been told to down tools for a fortnight. The cost of power has made it just too expensive to do business. Those mills might yet shut for good. Three-hundred jobs are on the line.

A paper recycling mill in Penrose, Auckland may close at the end of the year, staff have been told. Power, again, is too expensive. Seventy-five jobs are on the line.

Pan Pac has shuttered its pulp mill until power prices fall.

There are industry rumours of more potential closures being considered.

Methanex is running at half capacity because the country’s running out of gas.

Consumers aren’t paying these prices just yet, but we will. Our power is fixed until April next year and then it’s game on.

And the worst bit is that this won’t change for years. Any fix is years away yet.

Building new power generation will take years. Finding more gas – which we desperately need – will take years, if anyone wants to look for it, which they don’t. Even the quickest fix of importing LNG from Australia is at least a year away.

This means all of the above needs to get started now.

But there is another key thing that needs to happen. It’s something no one in the industry can do, nor can the Government. Only Labour can.

Labour must abandon two of its extremely problematic energy policies: its goal of 100% renewables and its promise to again repeal offshore oil and gas exploration.

Those two policies are strangling NZ’s energy and manufacturing sector.

It works like this: New Zealand is running out of gas faster than we thought we would. The solution to that is for our existing gas investors to restart exploring for gas in places where we have a fair idea some might be. But they refuse to.

No matter how much the coalition Government begs those investors and promises things will be fine, it cannot change the investors’ minds. And that’s because those investors know Labour will be back. Be it in two years, five years, eight years or even longer. And when Labour’s back, it will once again ban oil and gas exploration. Why would any investor sink billions into this country knowing it’ll be wasted as soon as the government changes?

Also, why would any investor build a gas-fired plant when Labour continues to insist on getting rid of those plants in its deluded quest to attain the impossible target of 100% of our electricity coming from solar panels, wind farms and water.

As obvious as it is that Labour’s policy threats are screwing us, the party shows no sign of doing the right thing by New Zealand. The party has threatened to revoke exploration consents once it’s back. It is still telling industry the oil and gas ban will be back.

Labour has no personal motivation to give up the policies. Doing that would be tantamount to admitting they got it wrong and, yes, may be partly responsible for the situation we find ourselves in.

But Labour might want to do it for the country. New Zealand cannot afford to lose this much money and businesses, and these many jobs. This is pretty close to a crisis.