At Last – Energy Provides A Real Election Policy Difference
October 8th, 2008
• Parties differ widely on energy.
• Labour opposed to thermal plants.
• National silent on price increases.
Energy policy is one of the few areas of sharp policy difference between the National and Labour parties at this election. Labour is committed to 90% renewable energy by 2025, and expects most of it to come from geothermal steam and wind farms. While geothermal resources are abundant and a lot of new capacity is either being built or is on the books, there’s nothing like enough geothermal energy to get us to 90%.
Energy Minister David Parker also waved a shroud recently at hydro developments because of their likely environmental impact, significantly reducing the options for renewable energy development. At the same time, the national grid operator Transpower says major problems with the grid will be all the more expensive to fix because most renewable developments occur far from major population centres. As a result, there are a lot of expensive grid upgrades to come, as well as fights with landowners for new transmission corridors.
A sudden explosion in embedded generation investment – where new renewable generation is built close to load – would alleviate this, but it wouldn’t completely solve it and will bring headaches of its own. And in Wellington last week, just such a development at Belmont was abandoned because of fears the capital’s skyline could become choked with turbines. This, less than a month since legislation intended to encourage localised renewable development passed through the House.
Meanwhile, Labour has banned all new base-load thermal generation for a decade, making it impossible to build large, new base-load generation right inside Auckland. These are highly efficient, relatively low-carbon stations, requiring little in the way of new grid, but they are off the agenda under Labour. Compare this with National’s stance: a goal of halving carbon emissions from 1990 levels by 2050 and removal of the ban on base-load thermal generation.
In simple terms, National’s policy takes a pragmatic view about natural gas – an uncontroversial, even praised alternative to coal-fired generation in many other countries, especially Aust. It may also help the grid by ensuring the investment focus remains on the backbone, rather than new ribs. And if a National-led Govt changes the economics in favour of baseload, gas-fired stations, this is likely to see Contact’s consented Otahuhu-C station kicked back into life, and Genesis’ Rodney proposal returning to a combined-cyle baseload plant. At present, it proposes only to build a fast-starting peak load plant on the site – less efficient, but also far less used than a baseload plant.
The $64m question, however, is whether National will be provoked on retail electricity market competition. Amongst the howls of outrage at Contact’s price increases, the National Party has been all but silent.
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