Genesis calls time on NZ's last big coal-fired power station

Thursday 6th August 2015

Genesis Energy, the country's biggest electricity retailer, will close New Zealand's only large scale coal fired power station, at Huntly, by the end of 2018.

Once the country's largest power station and built in the Think Big era of the late 1970s and early 1980s, Huntly had four coal fired units capable of generating 1,000 Megawatts of electricity, but Genesis had already withdrawn two units from regular operation as cheaper gas fired and renewable power plants came on stream.

The Huntly plant was important to meet demand during dry winters in the 1990s and 2000s, but that role has fallen away with the entry of new power stations, especially units providing baseload electricity, using geothermal steam, an upgrade to the Cook Strait cable and static demand for electricity.

"By 2018 the two coal units will no longer be required unless market conditions change significantly," said Genesis chair, Jenny Shipley, in a statement.

The Auckland based company will permanently withdraw the two remaining Rankine units at Huntly by December 2018 and expects to generate annual operational and capital cost savings of between $20 million and $25 million, it said in a statement. The closure will have a positive impact on the nation's overall carbon emissions. At their peak, the Huntly units emitted around 5,000 kilotonnes of carbon dioxide annually, close to 5 percent of total national CO2 emissions. That had already dropped to about 2,300 kilotonnes of CO2 in the 2015 financial yea, or 5 percent of New Zealand's total emissions.

"The decision to close the Rankines has been taken after significant assessment of the company's generation position, our ability to meet our ongoing commitments to our customers, and the impact on our loyal employees who have skilfully run these units for many years, as well as external stakeholders," chief executive Albert Brantley said. "These units have largely been operating at the margin of the market for a number of years, at very low utilisation rates."

In June, Genesis decided to retire a second Rankine unit as it wasn't needed when a dry spell kept hydro electricity storage lake levels low. It mothballed its first coal fired unit in 2012.

Brantley said Huntly will continue to generate electricity from two more modern gas fired units at the site and is well positioned to develop extra thermal capacity if needed.

Genesis's coal supply contract with ailing state owned miner Solid Energy ends in June 2017, and with 700,000 tonnes of coal already stockpiled, the power company doesn't anticipate supply issues.

This week Genesis entered into a two year 50 megawatt hedge contract with Meridian Energy as part of its rival's deal to continue supplying the Tiwai Point aluminium smelter until at least the end of 2017.

Genesis shares rose 1.7 percent to $1.76 in early trading on the NZX today.

BusinessDesk.co.nz

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