Sat, Jun 02, 2018 - Page 5 News List

NZ clean power push has political, economic risks

Reuters, WELLINGTON and MELBOURNE

New Zealand has set out to burnish its clean, green image by becoming the Asia-Pacific region’s first developed economy to stop using fossil fuels to generate electricity, although the pitfalls encountered by a Maori iwi (tribe) might signal trouble ahead.

The 3,000-member Ngaati Kea Ngaati Tuara iwi in Rotorua, when switching to renewables, found that local geothermal sources were not hot enough to generate electricity.

The tribe consequently set up small hydropower generators for its meeting ground and dairy farm, but the units struggle to operate during floods and to produce enough power at peak demand, project manager Eugene Berryman-Kamp said.

A battery could store energy for periods of high use, but there is “no appetite” to invest the more than NZ$10,000 (US$6,970) needed, he said.

In its push to be free of electricity generated from coal and natural gas, New Zealand would likely face similar problems as the tribe scaled to national size and potentially billions of dollars in costs.

“If we move too quickly, the risk is to the New Zealand consumer having to pay more for their energy and [that] could make New Zealand less competitive as a market,” said Marc England, chief executive of Genesis Energy, New Zealand’s biggest energy retailer and fourth-biggest generator.

Other countries that have turned fully to renewables for power — such as Norway and Denmark — are connected to regional grids that can help back up shortages. New Zealand, in the remote South Pacific, would not have that option.

New Zealand would need large batteries, extra wind and solar power, and might still need to use gas or coal to prevent blackouts. Such investments would send costs soaring and could alienate voters who elected New Zealand Prime Minister Jacinda Ardern last year, in part due to her pledge to counter climate change.

Ardern in April said that the government is also halting new offshore oil and gas exploration permits as part of efforts to convert the country to renewable energy by 2035.

HUGE INVESTMENTS

Critics have said that Ardern’s goals would require huge investments in renewable energy sources and grid expansion, and an overhaul of New Zealand’s biggest export industry, dairy, which relies heavily on coal, driving up power prices.

Sapere Research Group advised Wellington that its goals would require wholesale electricity prices to rise by up to 60 percent to about NZ$100 per megawatt-hour (MWh), making them some of the highest in the world.

That would destroy a key advantage for agriculture and industry in New Zealand, where baseload power futures are currently running about 25 percent less than in the Australian states of New South Wales and Victoria, where soaring electricity costs have forced some manufacturers to shut.

A backlash from industry and politicians has deepened partisan fault lines that Ardern’s center-left government, installed in October last year, is trying so smooth over, but the criticism has not stopped her from looking to establish a legacy by combating climate change.

Ardern’s government has set a goal for the country to be carbon neutral by 2050 — emitting no more carbon dioxide than its biosphere can absorb — an effort she has compared to an earlier generation standing against nuclear warfare and declaring New Zealand a “nuclear free” zone.

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