Contact looking again at wind

Wednesday 14th November 2018

Contact Energy is looking again at wind generation and may carry out some preliminary investigations during the next two years.

Shareholders heard today that improving technology and falling costs have the company looking again at wind – five years after it formally halted its earlier developments amid flat demand.

The company has consent to build a 250 MW geothermal plant on its Tauhara field near Taupo and has the potential to almost double its geothermal output – depending on demand growth.

Chief executive Dennis Barnes suspects wind will “come back on the radar” for the company. But picking the likely timing is harder given the range and scale of options the company has at its Wairakei and Tauhara geothermal fields.

“At what point do we run out of options on geothermal?” he said after the company’s annual meeting in Wellington today.

“If demand does take off in line with some predictions, then I think we will actively re-engage with wind,” he told BusinessDesk.

“We will probably do a little bit of investigative work in the next year or two.”

Contact shares rose 3 cents to $5.83, taking their gain so far this year to 5 percent.

Solar, wind and geothermal developments are considered key to help New Zealand meet its climate change commitments by making more renewable energy available for the electrification of industry and transport.

But flat demand in recent years has limited development to smaller regional projects, during which time the consents for some long-standing wind projects have been overtaken by new technology.

Tilt Renewables and Genesis Energy are advancing a 100 MW wind farm on the southern Taranaki coast at Waverley, but Meridian Energy has said it will have to seek new consents for two major wind projects on the North Island so that it can use larger, more efficient turbines.

Contact previously had consents for about 900 MW of wind capacity. It quit the large Hauauru ma raki project on the Waikato coast in 2013 and let the consents for its Waitahora project on the Puketoi Range in northern Wairarapa lapse three years later.

Barnes said geothermal development is a core competency of the company, and it has immediate brownfield options it could move on.

But he said wind development is largely a consenting activity, which is strong skill set within the company. It also has relationships with landowners and consenting bodies and, as an example, could look to “restart” work on the Waitahora project near Dannevirke.

Barnes said the firm may spend the next couple of years mapping wind resources and coming up to speed on the latest technology.

If the firm was to get back into wind, he said it would likely do that as a developer, rather than as a purchaser, to ensure it captured the full value of the resource.

Earlier in the meeting, chair Rob McDonald told shareholders the New Zealand electricity market has provided generation at the right time, and at the least cost, for the past two decades.

He warned that any major changes by government should only be considered “with great caution.”

Questioned by shareholders on the demand outlook from the potential take-up of electric vehicles, or the potential for climate change to result in cooler temperatures, Barnes said the company and the broader industry had sufficient options and time to develop capacity to meet that need.

He also noted that the firm’s gas-fired peakers at Stratford are likely to have a long life, given the intermittency of renewables, and he was confident there is sufficient domestic gas available to keep them supplied.

(BusinessDesk)

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