New Zealand

New Zealand

Monopoly break up creates uncertainty

The Electricity Corporation of New Zealand (ECNZ) plans to sell its wholly owned subsidiary DesignPower, which has been a strong player and advocate in the country's nascent wind energy scene. The sale is seen as a forerunner to further possible disintegration of ECNZ following the ongoing government review of the country's power market.

Uncertainty in the New Zealand wind industry has grown with the announcement by the Electricity Corporation of New Zealand (ECNZ) that it plans to sell its wholly owned subsidiary DesignPower, which has been a strong player and advocate in the country's nascent wind energy scene.

With a staff of about 200, DesignPower provides professional engineering services for electricity projects, both in New Zealand and overseas. It has operated as a stand alone agency for some time, but possible changes in its future direction and management have led to concern that its wind energy design and consultancy team may shift to other areas.

Shaking free of ECNZ's apron strings could be an advantage in a sector where distrust of the large state owned enterprise remains a factor in the energy scene. "There is now no strategic reason for ECNZ to own an engineering consulting company," says the utility's Dave Frow of ECNZ.

The sale is seen as a forerunner to further possible disintegration of ECNZ following the ongoing government review of the country's power market. Recent market deregulation has seen challenges to ECNZ's monopoly and competitive pressure is starting to build. The fall in prices which is likely to result could make wind an unrealistic alternative to relatively cheap hydro, thermal and gas systems. In its new annual report, ECNZ notes: "With 1000 MW of new plant committed and an equal amount under active investigation, New Zealand is now facing a surplus of generation."

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