New Zealand

New Zealand

New Zealand - Electricity demand drop hits wind projects

NEW ZEALAND: The New Zealand industry has hit the doldrums and there are no new wind farms planned to start construction this year.

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Although 60MW is underway, developers are mainly holding or seeking consents for the longer term due to depressed demand for electricity.

new zealand capacity pieThere has been little construction activity and the overall capacity of wind generation in New Zealand stayed at 622MW in 2012.

The year started with developer Meridian Energy pulling out of the consent battle for the Project Hayes wind farm in Otago, in the lower half of South Island. The largest wind energy operator, which is also the largest generator in New Zealand, cited more attractive wind projects as the main reason for dropping the 633MW scheme after lengthy planning and environment court appeals.

Those other projects are on a smaller scale and only one, Mill Creek, had the go ahead in 2012. The 60MW, 26 turbine project near Wellington started construction in September and should be complete by the end of 2014.

Eric Pyle, CEO of the New Zealand Wind Energy Association, sees the green light for Mill Creek as encouraging for the wind industry in the face of sluggish electricity demand. "All generators have substantially slowed building projects," he says. "That covers every form of generation, not just wind."

Some major industrial electricity users are cutting production or renegotiating supply contracts. There is also uncertainty over costs, with a long-running review of transmission pricing not due to reach a conclusion until later this year at the earliest.

Graeme Purches, community relations manager at operator TrustPower, pulls no punches. "The market for new generation is stuffed at the moment. There's not enough demand, too much uncertainty."

TrustPower sees better immediate prospects across the Tasman region, and last year announced investment in the 270MW Snowtown 2 in South Australia. "We are not planning anything in New Zealand at the moment, all our investment is in Australia," Purches says.

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