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Genesis-Tilt relationship may extend beyond Waverley

Thursday 28th February 2019

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Genesis Energy says it is “rapidly progressing” work on the Waverley wind farm with Tilt Renewables and is hoping to pursue other projects together.

Chief financial officer Chris Jewell said the partners are hoping to be in a position to make a final investment decision on the 100 MW development on the southern Taranaki coast within three to six months.

He said he was excited by the partnership and had enjoyed working with the Melbourne-based developer.

“We’re hoping that there will be more things to do with them over time – so the conversation is broader than just Waverley,” Jewell told journalists and analysts yesterday.

Genesis is the biggest power retailer in Taranaki and also operates the country’s biggest coal- and gas-fired power plants at Huntly. It has three hydro schemes and a small wind farm and is keen to increase the renewables contribution within its generation portfolio.

Tilt, split out of Trustpower in 2016, also has consent for a 240 MW wind development at Kaiwera Downs near Gore and a 160 MW expansion of its Mahinerangi wind farm west of Dunedin. It may also look to repower the 20-year-old first stage of its Tararua wind farm near Palmerston North.

Genesis has consent for an 860 MW wind farm at Castle Hill south-east of Pahiatua. Those consents lapse in 2023.

Chief executive Marc England said the power price jump late last year – when hydro storage was declining and gas supplies were tight - demonstrated the strategic value of the firm’s multiple fuel types.

Its planned investment at Waverley, and its recent decision to join the country’s hydrogen association, reflects the company’s long-term drive toward a lower-carbon future, he said. Short-term, Genesis is focused on ensuring security of supply in a predominately renewable power market with relatively little hydro shortage.

Longer-term electricity prices have risen during the past nine months, potentially a signal that underlying demand growth may require additional generation capacity in coming years.

While a “structural tightening” of the market may be underway, England cautioned that gas supplies will have to return to a more steady state before anyone can tell whether the firmer prices are a “blip” or part of a long-term trend.

Genesis also owns 46 percent of the Kupe oil and gas field and is preparing for a $30 million, two-year investment in onshore compression to increase production.

Jewell said the venture partners are aiming to make a final investment decision in the September quarter. That would maintain daily gas deliveries at 77 terajoules but would improve oil recoveries.

England said gas remains key to New Zealand maintaining reliable electricity supplies when the hydro lakes are low or the wind isn’t blowing.  

“What has become very clear in the electricity market over the last few months is its dependence on gas supplies and how a shortage of gas and water results in more coal burn,” he said.

“That’s the inconvenient truth that comes from having an 85 percent renewable market that is so dependent on volatile hydro storage.”


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