TrustPower, the country’s fourth largest electricity retailer, has scrapped its plans for a several hundred megawatt wind farm after the NZ Electricity Commission ruled power generators in the South Island must bear the operating and maintenance costs of an existing high-voltage direct-current (HVDC) link between the islands.
The decision has concerned power generators and retailers, who say the ruling acts as a strong disincentive to establishing new energy projects in the South Island.
NZ National Party energy spokesperson Nick Smith said the cancellation highlighted inherent problems in the NZ Government’s energy policies.
Smith said New Zealand’s emissions from electricity generation were at record levels, and the HVDC ruling was at odds with the emphasis placed on developing renewable projects under the Kyoto Protocol.
“New Zealand needs more power, and we particularly need more generation in the top of the South Island, but the Government's Kyoto and transmission policies need revising if we are to get new investment,” Smith said.
“The Kyoto policies are a mess, with nobody knowing what the Government is intending to do and emissions from electricity generation at record levels. The sector urgently needs certainty.”
Although the HVDC ruling is of ongoing concern to TrustPower, the company said its decision to cancel the Marlborough wind farm was based on several factors, each of which contributed to a scenario in which the wind farm would not be economically viable.
As global demand for wind energy increases, turbine manufacturers have started to try to increase their profit margins. However, the rising price of steel has also increased the cost of turbine manufacturing.
The falling value of the NZ dollar, particularly against the currencies used by wind turbine manufacturers such as the Euro, makes the economics of wind energy more difficult in the near term, TrustPower said.
In addition, feasibility studies into the Marlborough project across four proposed site locations were less promising than originally hoped, with the construction of turbines at optimal wind sites likely to interfere with broadcast radio and microwave transmissions.
But TrustPower chief executive Keith Tempest maintained that the cancellation was based on short-term conditions.
“In the long term, those factors may well change, and as the increasing cost of fossil fuel and delays and difficulties gaining resource consent for renewable generation drives electricity prices higher, wind generation in Marlborough may well become viable again,” Tempest said yesterday.
