Outlook bright for New Zealand wind despite Hayes setback

Despite news that a wind project capable of powering every home on New Zealand’s South Island has been scrapped, the industry is confident it can surpass government expectations and increase capa­city more than fourfold over the next 18 years.

The Ministry of Economic Development estimates that capa­city will increase from the current 622MW to about 1.41GW, and produce close to 10% of the country’s electricity by 2030.

But Eric Pyle, chief executive of the New Zealand Wind Energy Association (NZWEA), says the official estimate undershoots the number of wind farms that will be built.

“[Government estimates] are great news for New Zealanders, as wind-generated electri­city keeps power bills down and helps with hydro-lake levels,” says Pyle. “But our analysis suggests that wind will be even more important than that, producing 20% of our electricity by then.”

In January, Meridian Energy scrapped plans for a 633MW wind farm after a five-year planning battle. It withdrew consent applications for the NZ$2bn ($1.6bn) Project Hayes after a review of its renewables development portfolio. The 176-turbine proposal encountered fierce opposition because of its location in an area of natural beauty.

Meridian, New Zealand’s biggest power generator, operates four wind farms domestically and one in Australia. Its main competitor, Contact Energy, has consent for a 504MW projecton the North Island.

The nation of 4.4 million people has 16 wind farms, according to the NZWEA.

Pyle says the government’s energy outlook ignores the rapidly decreasing costs of wind power.

“Investigation of wind farms in New Zealand shows that recent installations are already among the lowest-cost form of new generation, and international studies reveal that the cost of wind is continuing to fall,” he says.

“We are also a relatively young industry, and increasing our understanding of how to make the most of our abundant wind resource. We are developing better wind farms that can generate even cheaper renewable electricity.”

Last year, the association ­commissioned a survey from Deloitte, which found that ­average wholesale electricity prices are well below the level required to justify investment in wind ­generation.

Yet developers continue to pursue projects on the assumption that prices will eventually rise.

“The yield from this high-­quality wind resource, to a large extent, offsets the high capital cost of wind plants and reduces the electricity price at which ­generation can be economically justified, when compared to other countries with less-productive wind resources,” Deloitte says.

New Zealand has a number of sites with wind speeds greater than 8.5 metres per second (m/s), with a further large resource in the 7.5-8.5m/s band. Some wind farms have among the world’s highest onshore capacity factors.

The sector appears to have solid government backing.

Unlike in Australia, right-­leaning politicians support the industry. As Environment Minister Nick Smith told a NZWEA conference last year: “You will know better than anyone just what a clean, cost-effective and renewable resource we have in wind. It is one... that this Government would like to see New Zealand harness further.”