The Government’s 10-year ban on building new fossil fuel power stations is “crazy” and could cause electricity prices to jump 30 per cent to 40 per cent within a few years, electricity consultant Bryan Leyland says.
Widespread use of wind turbines would also raise the risk of power shortages and blackouts if there was calm weather, he said.
The Wind Energy Association, however, said wind power would have to be creating 20 per cent of all electricity – from 1.5 per cent now – for this to become an issue.
The Employers and Manufacturers Association said the moratorium on gas-fired stations, included in legislation introduced on Tuesday, could restrict growth and lead to power shortages in the Auckland region.
“The bill is a further negative signal to investment,” said EMA’s acting chief executive, Bruce Goldsworthy.
“It will limit growth, particularly in the Auckland region.”
On the other hand, the Wind Energy Association sees the bill’s emissions trading scheme and ban on gas- and coal-fired plants as “good news”.
However, “there is a lot of uncertainty”, the association’s chief executive, Fraser Clarke, said.
“I wouldn’t expect some sudden [wind power] bonanza.”
Nor would companies want to invest huge amounts of money until they were more confident, especially about the future price of power and the shape of the emissions trading scheme, he said.
The association nevertheless hopes to see 2000 megawatts of wind power by 2020 – a huge leap from 320 megawatts now.
Contact Energy and Mighty River Power, however, have big plans for geothermal steam power stations in the central North Island and they could delay more expensive wind power projects.
Mr Leyland said that at around 11c a unit, according to Electricity Commission figures, wind power would be about twice as expensive as gas, coal or nuclear power.
“The Government claims [wind] is our cheapest option, which is just not true,” Mr Leyland said.
The Wind Energy Association says wind power could cost between 7c and 10c a unit.
But Mr Leyland said another 2c a unit must be factored in for the generation of back-up power when the wind is not blowing and for hundreds of millions of dollars for extra investment in the power grid.
As a result, there could be a steep increase in power prices to pay for the cost of wind power.
“It is crazier than anything I have seen in 50 years in the industry,” he said.
An emissions trading scheme – effectively a tax with an uncertain price tag – could push power prices up another 20 per cent, providing big profits for hydro power generators, Mr Leyland said.
“The price will also go up because we will have regular power shortages when the wind doesn’t blow, and that will force the Government to regulate the industry.”
The Wind Energy Association said some existing turbines were producing power about 90 per cent of the time, though they produced at full capacity only around 40 per cent of the time.
Wind produces 1.5 per cent of New Zealand’s power now. This is about 320 megawatts and equal to one large power station’s output – not enough to pose a blackout risk.
“There is a rule of thumb that up to 20 per cent of electricity generation can come from wind before any significant impact [on the system] is experienced,” the association’s chief executive, Fraser Clarke, said.
Weather forecasters could tell when calm spells were coming and advise power companies to bring more hydro stations online.
In fact, more hydro and fast-response power stations might be required to provide back-up.
And with more wind power being generated countrywide, the system would be more robust because the wind would be blowing somewhere.
By James Weir
6 December 2007
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