Rising costs are threatening to scuttle Meridian Energy’s West Wind power project near Wellington.
The estimated cost of building the wind farm is now $500 million, $120 million more than just two years ago, because of higher steel, transport and construction costs.
Meridian chief executive Keith Turner says this has made the project at Makara – considered “the best wind site in the world” – marginally viable.
The plan to build a 70-turbine wind farm has drawn protests, including from residents of the seaside community, some of whom would be living less than a kilometre from the turbines.
Dr Turner said it was a “travesty” that a very good project two or three years ago was now marginal.
“If the exchange rate were to dive, we may well not be able to make it work.”
The project could provide power for 110,000 homes.
Its axing would deal a blow to Government plans to draw as much new generation as possible from wind and other renewable sources.
Hundreds of construction jobs would also not eventuate.
State-owned Meridian has spent about $10 million to get a consent, though the project is still being considered by the Environment Court.
After the court asked Meridian to undertake extra “mediation” with objectors, the company had “adjusted the project as far as possible to meet concerns of other appellants”, Dr Turner said.
That work has gone back to the court, and a decision is expected late next month or in early May.
During earlier resource consent hearings, Meridian had said the project was “indivisible” and the number of turbines could not simply be reduced.
The company would not say how the project had been altered to address concerns.
Other sources said the court had asked for 16 turbines to be moved, implying 54 would be approved. The turbines may also be 110 metres high, rather than the original 125m.
Sources said it was doubtful Meridian could move or omit many turbines without significantly reducing the project’s commercial viability.
If the court demanded that, it had “the potential to scuttle the whole thing”, a Wellington source said yesterday.
Despite rising costs for turbines, Dr Turner said that he expected to announce plans this year for three more wind farms and one hydro power plant. Consent would be sought this year, but he would not say where the projects were. “We have advanced plans for a number of sites.”
In December, the Government made public a draft energy strategy that said ideally all new power generation should be from renewable sources such as wind power, geothermal and hydro power.
If higher costs make wind power projects uneconomic, the alternatives are geothermal plants or gas-fired power stations – which would add to greenhouse gas emissions.
Contact Energy has announced plans to build two geothermal stations worth$1 billion in coming years.
Wind Energy Association chief executive Fraser Clark said international figures indicated turbine prices had risen by about 20 per cent in the past year, because of rising demand in a “seller’s market”.
But the rise was not so dramatic that it would “push wind out of the picture”.
Operators with a serious long-term view on wind would carry on.
By James Weir
The Dominion Post
29 March 2007
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