New Zealand

New Zealand

Fivefold growth for wind?

NEW ZEALAND: The land of the long white cloud is renowned for its clean and green image, with a staggering 79% of electricity produced through renewables. But it is almost entirely hydropower, with wind contributing just 4% of the electricity share. However, the sector's fortunes could change, as several new policies take effect.

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The latest is an energy strategy published at the end of August that commits New Zealand to a target of 90% renewable energy by 2025. In it, the government says it "welcomes and expects" considerably more investment in renewable-electricity generation, particularly from geothermal and wind resources.

The strategy stops short of specific measures to boost investment, merely stating that there will be a focus on minimising regulatory barriers. However, the New Zealand Wind Energy Association (NZWEA) predicts it could see wind generating as much as 20% of electricity by 2025. As of November 2011, the country has 3.47GW of wind capacity consented or in the pipeline.

NZWEA chief executive Eric Pyle says that with the forecast growth in electricity demand and the proposed scaling back of older thermal power stations, wind is "poised to take up a significant slice of that demand".

"It is unlikely there will be any very large new hydro schemes in New Zealand in the near future," he says.

High capacity factors

Pyle adds that although geothermal "may be the next cab off the rank", it is a more expensive option than wind. "There is, however, substantial room for growth in New Zealand's wind energy as it is relatively cost-competitive due to our very high capacity factors."

The country is located in a part of the Southern Hemisphere known as the Roaring Forties because of its strong westerly winds. Capacity factors for onshore wind farms are generally around 40-50%. Pyle says the sector is becoming more skilled in making the most of the wind resource, with the 64MW Te Uku wind farm in the Waikato region of the North Island, completed in March, achieving a capacity factor of more than 60% in July. Wind power could grow from 615MW capacity now to around 3GW over the next 14 years, Pyle says. Although the energy strategy did not specifically pick out wind for support, he explains that existing policies, such as the country's emissions trading scheme, have created a framework that helps bolster the industry.

A government-commissioned review panel's recent recommendation to increase the carbon price through the scheme from NZ$12.50 ($10.16) per tonne to NZ$25/tonne from 2013 and then by NZ$5 every year to 2017 also makes renewables a more attractive investment, Pyle says.

But challenges remain, he warns - not least the time projects take to gain consent, typically several years, which has been a major obstacle to growth.

The recent go-ahead for the 180MW Turitea wind farm, in the Manawatu-Wanganui region, came three years after Mighty River Power Ltd's application. The project was finally permitted at roughly half the planned size. The company will now reassess its viability.

The National Policy Statement on Renewable Electricity Generation, launched in April, should help speed up the process up by requiring councils to take into account the national requirement for renewable energy when making their decisions, says Pyle.

NZWEA is also working on comprehensive consenting and developing guidelines. "The aim is for councils and developers to become more 'wind savvy' and follow best practice, giving us better wind farms and a faster development path," he says.

He warns that grid restrictions in some parts of the country could limit wind development in those areas. "But the grid operator is well aware of potential increases in wind capacity and that is being considered in future investment plans."

Another issue to be addressed is that generators on the South Island are charged for the cost of the HVDC link that joins the two islands, while those on the North Island are not. "The independent regulator, the Electricity Authority, is currently reviewing this charge and it may be phased out, which will affect the financial viability of South Island schemes and help some to get over the line," Pyle says.

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