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New Zealand

Cumbersome consents process kills projects -- Hopes pinned on new government

New Zealand's wind industry is hunkering down somewhat under the global economic crisis. At least some projects are marking time in response to reduced money flows, a huge drop in the NZ dollar's exchange rate and the trials of dealing with a resource consents process so cumbersome that costs often spiral even before a wind farm is approved for construction. Just one large project went on line last year, Meridian's 142.6 MW West Wind development of Siemens 2.3 MW turbines, the costs of which allegedly rose by NZ$100 million as a result of consenting delays. Combined wind power capacity in New Zealand now stands at 468 MW, up from 325 MW a year ago. Wind power meets 2.5% of New Zealand's electricity needs.

Expectations are high that the new government, which took office in November, will smooth the consenting process for high profile projects, with more applications put directly on the fast-track to a board of inquiry. Utility Contact Energy's 540 MW Hauauru Ma Raki wind farm proposal has followed this route, with final public hearings expected to start by mid-year. Energy company Mighty River Power's Turitea 360 MW project has also gone to a board of inquiry, primarily because of the scale of the NZ$300 million project -- 122 turbines -- and a mix of public and private land ownership. The process is seen as more efficient and cost effective than the usual consent-and-appeal path.

This year, an additional 2.25 MW is due online, with three second-hand NEG 750 kW machines installed by Pioneer Generation to supplement its hydro operations at Horseshoe Bend. At the other end of the size scale lies Meridian's 630 MW, NZ$2 billion development planned for Project Hayes, but it is still mired in Environment Court appeals three years after applying for consent. A decision could be months away. Such lengthy delays, says the New Zealand Wind Energy Association (NZWEA), has led to a number of other projects being mothballed.

Viability has become an issue. Allco's proposed Motorimu wind farm sought consent in 2007 for 132 turbines, but only gained approval for 75. In September, after the company argued on appeal that at least 38 more units would be necessary to make ends meet, the Environment Court allowed only an additional five. The company sought buyers for the project and put the consent process for its Waverley wind farm on hold. There were no takers for either, even when both projects were offered as a block. Receivership looms. Agreements with the land owners will likely lapse soon, effectively killing the projects.

Even with the resource consent process successfully negotiated, economic hurdles loom. Trustpower's 240 MW, NZ$400 million Kaiwera Downs wind farm won through on appeal, but it says the next step depends on more favourable exchange rates, wind turbine availability and pricing. Trustpower has designed the wind farm to enable it to use either 2 MW or 3 MW units. Its 200 MW Mahinerangi project stalled after becoming unprofitable during the consent and appeal process.

From NZWEA, Fraser Clark sees "churn" in the industry likely, with more partnerships among smaller companies seeking economies of scale and niche business. WEL Networks has gained access to Meridian's expertise for its 87 MW Te Uku project that is now post-appeal and in a position to go. Operators outside the traditional generation area are also working away, with the likes of Taharoa C and Power Coast still in the running. Clark has seen more business move into assisting independents into the market, such as consultants Strata Energy and Simply Energy. But any near future development is likely to come from the bigger operations.

Dominant player

Clark expects Meridian to remain New Zealand's dominant developer, with wind providing an attractive alternative to its hydro business. In addition to West Wind and Project Hayes, Meridian has cleared the first resource consent hurdle for its 120-130 MW Central Wind project. Its 71 MW Mill Creek development is waiting for a council decision, likely in the next few months. For Trustpower there is less urgency in following through on its wind development plans, believes Clark, as the company is more diversified than Meridian. Another large generator, Contact Energy, has geothermal development as an alternative option, considered a "low-hanging fruit" when compared to wind.

In some positive news, New Zealand's Energy Efficiency and Conservation Authority is supporting feasibility studies into small generation projects that can connect into the grid at the level of the distribution network, hoping to identify sites ripe for development. Clark calls it an opportunity for wind. "There will be more built, it's just a matter of who and when," he says.

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