Forum Archive Index - February 2003

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

My attendance at the Contact Energy AGM provided a forum where I was 
able to gain insight into where our largest energy retailer stands on 
renewable energy.  

Say 'renewable energy' to Contact and they immediately think of the 
Clyde Dam.  Wind energy is merely an inconsequential blip on the 
outer rings of the radar screen.  Why is this?

It is not that there isn't good technology available to produce wind 
energy (there is), nor that resource consents for windfarms are hard 
to get (they are but not impossibly so).   Of course I have never 
heard of a public company that didn't want planning procedures to 
move more quickly!  The main problem, as perceived by 'Contact', is 
matching power generation and power demand.  

Unlike hydro energy, wind energy is not easily stored.  When the wind 
blows the windmills get power.  If the wind blows most in the middle 
of the night then that power is wasted unless there is a demand for 
it in the middle of the night.  The spot price market regime we have 
for power in New Zealand makes it difficult for windmills.  Unless 
they can generate power at peak times to cover their higher overall 
unit generation costs (compared with thermal or hydro),then the 
overall economics of a windfarm can be called into question.  Wind 
being fickle, the ability to generate power at peak times from a 
windmill cannot be guaranteed.  The big picture is gradually 
changing.  Gas is getting scarcer while demand for power continues 
to grow.  At some stage in the future there will be a crossover point 
where wind power does become very economical.  However, if you 
compare the marginal cost of developing a brand new gas powered 
station today with a new windmill farm, electric power generation by 
gas costs only half as much per unit.  Until this changes we can 
expect windmills to remain an outer blip on the radar screen in the 
southern outpost of (Edison) Mission control.  My impression is that 
if there were some sort of battery storage technology that could be 
coupled to the windmills, then the whole economics of windmills could 
change rather quickly.

In the meantime, Contact's renewable energy program is based around 
optimizing the performance of the Clyde and Roxborough dams.  There 
is a plan to increase the flow through Clyde.   But when you consider 
that of all the hydro storage available in the South Island, 
Contact's capacity represents only around 10%, then you can see that 
Contact are not calling the shots in this game.   It is 
principally the decisions made by rival Meridian that determines the 
levels of the southern hydro lakes.

SNOOPY




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"Sometimes to see the wood from the trees, 
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