Although the cost of electricity was identified in the range of NZ$0.05-0.065/kWh, the report concludes that electricity prices would still have to rise by NZ$0.0006-0.021/kWh for wind power to be attractive as a private sector investment. However, it notes there is "some uncertainty" with these estimates -- especially when considering operation and maintenance expenses and the current restructuring of New Zealand's electricity market.
The latest generation of wind turbines, continues the report, incorporates features that have yet to be tested during prolonged operation in New Zealand's blustery climate. In addition, the country's relatively high wind speeds and lack of operating experience means that a "risk premium" would have to be paid which would drive up maintenance costs to NZ$0.015/kWh. These costs should fall as wind farm operators gained experience.
Demand for electricity in New Zealand is currently "increasing at a rate that could lead to a period of price volatility or supply constraint before the end of the decade," according to the report. It adds that wind resource studies there have shown that about 30% of New Zealand's electricity needs could be generated from wind power. Currently about 150 MW of capacity are under feasibility studies.
EECA's Martin Gummer says the report reinforces "a growing awareness that wind technology is developing and suitable for New Zealand."