Renewable energy investment threatened

HAMISH RUTHERFORD
Last updated 13:31 13/02/2014
Gareth Morgan
NOT CONVINCED: Gareth Morgan doesn't think the people most in need with benefit from Opposition plans for electricity.

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The head of New Zealand's largest electricity generator says the Opposition owes it to New Zealand to give more details of its power plans.

And he warned the plan could undermine investment in renewable energy.

Labour and the Greens have jointly proposed scrapping the wholesale energy market in favour of a single state-operated buyer of electricity, called NZ Power, claiming the move would save hundreds of millions of dollars on consumer power bills.

Today Mark Binns, chief executive of Meridian Energy, told the commerce select committee that while a lack of detail meant it was hard to properly analyse the plan, Meridian believed it would favour thermal generation over renewable plants such as wind farms.

"Our view is it would potentially impact on renewables because it would make thermals, particularly gas plants - which are easier to consent and easier to put in place quickly - more viable in that environment," Binns told MPs..

"If you have a central buyer, the Crown has the responsibility for deciding the next wind farm or other power that is required, and wind farms take between five and 10 years to consent.

"Why would we keep investing in developing renewable options, given the uncertainty around central buyer?

"The reality is it's much easier for someone like Todd Energy to basically get a piece of land with gas to the front door, and strap on a jet engine to a lump of concrete and generate electricity."

Afterwards Binns said he saw "a little bit of irony . . . from a green perspective" that the proposal might favour thermal energy, but admitted the fears were based on what limited detail the two parties had provided.

"I think probably they [Labour and the Greens] owe it to the electorate to provide some details as to how this would actually operate," he said.

Green MP Gareth Hughes, who is on the commerce select committee, tweeted the claims were "ridiculous" given the amount of renewable projects that already had resource consent.

Labour's David Parker has previously said there was a reasonable debate to be had over whether the plan would make thermal plants viable for longer.

In recent weeks the Opposition plans have come under multiple attacks, with a report commissioned by Business New Zealand this week saying that the plan would do little to alleviate fuel poverty.

Today economist Gareth Morgan waded in to the debate, saying the issue of poverty was linked more to tax and welfare than the electricity market.

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"There is little reason to think that the benefits from the Labour-Greens proposal would go to the people that actually need it," Morgan blogged today.

He also dismissed the idea that the plan was a way to solve the problem that owners of hydro plants get to use water, a public resource, for free.

"If it is now deemed unfair that hydro generators can use water for free, then charging generators for water use would be a better remedy than tinkering with the electricity market," Morgan wrote.

He added there was "no evidence of price gouging" in the wholesale electricity market, and the problem, if there was one, was more likely in the retail market.

- Fairfax Media

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