April 11, 2011
New Zealand

Fair winds for turbines if geothermal subsides

BusinessDay.co.nz James Weir, www.stuff.co.nz 11 April 2011BusinessDay.co.nz James Weir, www.stuff.co.nz 11 April 2011

More than $300 million has been spent on wind farms in the past 18 months, and a dozen more projects – more than 200 megawatts of potential capacity – wait in the wings as turbine prices have fallen as much as 20 per cent in the past couple of years.

But as the Wind Energy conference opens in Wellington tomorrow, it remains unclear how many will be built, with cheaper, large geothermal projects underway or planned.

State-owned Meridian Energy’s already-consented Central Wind project north of Taihape may be top of the potential projects list, with another option at Mill Creek, near Wellington’s existing West Wind farm at Makara, which is one of the best sites in the world.

The costs of wind power range from $75 to $100 a megawatt hour. The costs of known geothermal fields are at the lower end of that price range, though new geothermal projects may be costlier.

Wind Energy Association chief executive Fraser Clark said there was increasing competition from turbine makers to keep the orders coming in.

World demand for turbines has fallen in the past couple of years, and it is harder to get finance since the global financial crisis. Globally, prices have fallen 15 to 20 per cent since 2008. At the same time turbine production capacity has risen, especially in China.

New Zealand projects typically got off the ground when the New Zealand dollar was high, as it is now – about US78c – when a good wind site was available and turbine prices were good, Mr Clark said. The picture now was “still reasonably good” for new wind farms, but a lot of wind and geothermal power plants have been built in recent years.

The big power projects recently have been geothermal, though Mr Clark said the “easy” ones had been consented and future projects may be riskier and costlier.

NZX-listed company Contact Energy is going ahead with the $623m Te Mihi geothermal power project near Taupo, the only big committed power project.

State-owned Mighty River Power recently commissioned the $430m, 140MW Nga Awa Purua joint-venture geothermal plant. MRP also has consent to build another 110MW geothermal station, Ngtamariki, but is still working on the plans.

Meanwhile, there are 15 proposed wind farms, from large to small, that have either been consented or are seeking consent.

They include Meridian’s 71MW Mill Creek near Wellington, which is under appeal to the Environment Court, and its consented 130MW Central Wind project between Waiouru and Taihape.

A potential site for Meridian near Martinborough is on the back burner, pending a study into Wairarapa landscapes.

The 45-turbine Nga Waka a Kupe proposal near the town struck strong local opposition last year.

Genesis Energy plans to seek consent later this year for almost 300 turbines at Castle Hill, 20km northeast of Masterton. Mighty River Power’s 183MW Turitea project in Manawatu is awaiting comments on a draft decision in May.

The 2009 rejection of Meridian’s $2 billion Project Hayes wind farm proposal in the South Island is to be reconsidered by the court.