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Policy needed to speed re-consenting of wind sites - Meridian

Wednesday 22nd August 2018

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Stronger policy direction favouring renewables is needed if the country is to meet its target for net-zero carbon emissions by 2050, Meridian Energy chief executive Neal Barclay says.

While electricity demand growth has been limited in recent years, that could change quickly from the middle of the next decade depending on the uptake of electric vehicles and the use of more electricity in heavy industry.

That could require the equivalent of two or more mid-sized wind farms annually to meet that demand growth, Barclay said.

The country has projects consented capable of delivering 9,000 gigawatt-hours of renewable energy but most of those consents lapse by 2026 – long before they will be needed.

While they can be re-consented, Barclay said most will also have to be changed to take advantage of new technology. That could become a time-consuming and costly task under the Resource Management Act.

“We do need more pro-renewables policies as part of the RMA framework than we have today,” Barclay told analysts and journalists in Wellington today.

“Most existing consents are going to have to be extended and in many cases modified as the technology has improved since they were originally consented.”

Electrifying industry and transport to meet the country’s emission reduction targets will require massive investment, with most of that expected to be in geothermal, wind and solar.

But firms including Meridian and Contact Energy have let some wind consents lapse in recent years due to the lack of demand growth. On-going solar growth and efficiency gains from hydro and geothermal upgrades are also providing additional incremental capacity and making it harder for major generators to time their next investment at scale.

Contact earlier this month said it can look at modular development at its Wairakei and Tauhara geothermal fields to help time an efficient investment, although that wasn’t likely any time soon. Mercury NZ this week said its Turitea wind site near Palmerston North is also among the country’s best. Nova Energy expects to start generating from a new 100 MW gas-fired plant near New Plymouth late 2020.

Meridian today announced a $2 million write-down on the value of consents it has for the 130 MW Central Wind project near Waiouru. It says it won’t be able to proceed with the project based on the existing consents, which lapse in 2020.

Barclay said the company will seek extensions and modifications to the consent there and for the up to 140 MW Maungaharuru wind project it plans north-west of Napier. That consent lapses in 2023.

The firm is not in a hurry and needs to take all the affected stakeholders with it. But he said a decision to proceed with Maungaharuru – its best project - could be possible late next year.

Wind turbine and blade technology has improved dramatically in recent years, with bigger machines now able to deliver yields previously only thought possible from the very best wind sites.

Barclay said the firm is looking at moving to bigger rotors – up from 82 metres in diameter to 150 metres. It may be able to do that within the current consented blade-tip heights, but is also looking at higher towers.

“The economics get a lot better with the bigger machines,” he said, adding that Maungaharuru may deliver a levelised cost of energy at less than $60/MWh.

“We think we’ve got the best option on the books. Maungaharuru wind farm looks pretty attractive and compelling,” he said.

“A decision maybe late next year could be on the cards. At the same time, that decision could be to delay for another year.

“We’re not in a hurry.”

Meridian is working hard to encourage EV take-up and said it has recently sold an Auckland commercial customer what will be the country’s largest solar installation.

Barclay said the potential “sales hopper” for commercial-scale solar is increasing rapidly and Meridian will do more work in that space.

The company is also working with heavy industry on possible conversion of processing from coal to electricity. Chief financial officer Paul Chambers noted that is “slow-going” and that the cost of increased transmission capacity in what are often isolated rural areas can be challenging.

The Labour-led government has tasked the Interim Climate Change Committee with identifying ways to make power generation 100 percent renewable – in a year of average hydrology - by 2035. It has also banned the granting of new offshore exploration permits and halted onshore exploration outside of Taranaki.

Barclay reiterated the country should be focusing on a renewable energy target for the economy, rather than focusing on the electricity sector.

He said 95 percent renewable generation is probably do-able and will largely happen naturally. But pushing to 100 percent could be costly and trying to do it without gas-fired back up would also bring significant reliability risk.

While batteries will help meet daily peaks, they are not an option for deep seasonal and dry-year storage, he said. Electrifying the economy while trying to provide dry-year cover without gas would require the equivalent of another one or two Lake Pukakis, he said.

Lake Pukaki, which Meridian operates, can hold more than 1,700 GWh of storage and typically accounts for about half the country’s storage.

“It’s not that clear to me where we would squeeze another two of those in around the country,” Barclay said.


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