Huntly E3P Station Will Be State-Of-The-Art
Genesis Energy’s planned E3P (Energy Efficiency Enhancement Project) at Huntly will generate 385MW – enough power to meet three years of national demand growth.
The combined-cycle gas turbine plant will employ cutting-edge technology, using a gas turbine initially, then recycling what would otherwise be waste heat to generate more electricity with a steam turbine.
This is regarded as the most advanced system for converting gas into electricity. It will make E3P about 50% more efficient than the existing Huntly power station. The plant already has the necessary resource consents, and construction is expected to start in a few weeks, with commissioning scheduled for late 2006.
Energy Minister Pete Hodgson believes the decision to proceed with E3P won’t affect plans for renewable energy, because E3P was widely expected to proceed and investors will have already factored it in.
He adds the Govt’s advice was it was desirable for E3P to proceed, and other alternatives would not provide the same certainty and capacity to generate electricity. Once E3P is up and running, the Govt expects most new generation during the next 15 years to come from renewable sources such as wind, hydro and geothermal.
He says the fact Genesis is an SOE is irrelevant. Had a similar project been proposed by a private company, the Govt would have been open to a similar approach. Hodgson notes Genesis has secured most of the gas it needs to operate E3P for the first 10 years, with contracts from the new Kupe and Pohokura fields.
“Advice is that the risk of insufficient gas being available is slim, but outside the commercial comfort levels of the company.” He says in the unlikely event Kupe, Pohokura and other fields don’t deliver enough gas to run E3P, liquefied natural gas (LNG) may be imported.
Analyst Says Huntly Move No Surprise
The Govt’s involvement in the Genesis Power gas expansions at Huntly is not a surprise, says ratings agency Standard and Poor’s. The agency’s energy analyst of corporate & infrastructure finance ratings Mark Legge says the Govt’s move to underwrite the new gas fired power plant is in line with its policy of encouraging new generation capacity.
Legge says “Huntly E3p is expected to enhance Genesis’s business profile because of its superior efficiency and the diversification it will provide to the company’s generation portfolio.” The long period without significant new generation plant, the expected continued growth in demand, plus the increasing exposure of NZ’s hydro plants to climate change risk make the investment a necessary one.
S&P is not adjusting Genesis’s current stable A –2 credit rating and is sticking to its “no change” outlook.
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