March 7, 2012
New Zealand

Energy firms defer big wind-farm projects

Hamish Rutherford, The Southland Times, 7 March 2012

New Zealand’s largest energy companies are pushing back plans for wind farms, with some predicting it could be a decade before significant projects are built.

Flat demand for electricity and improving expertise in geothermal generation is stalling developments, despite falling prices for turbines from European manufacturers as the dollar trades near record levels against the euro.

Genesis Energy, which is awaiting the outcome of a resource consent hearing for the giant Castle Hill wind farm in Wairarapa, said last week it would probably be four or five years before it built any new projects, and when it did wind may not be favoured.

In January, Meridian pulled out of the giant Project Hayes wind farm in Otago.

Dennis Barnes, chief executive of Contact Energy, said he believed it would be five to 10 years “before wind finds a significant place in the gap” between supply and demand.

“The market outlook for me has wind pushed back in our portfolio quite a few years.”

Currently New Zealand has 622 megawatts of built wind energy capacity in 15 wind farms, although two wind farms, Tararua in Manawatu and West Wind near Wellington, make up half of this.

Another 1700 megawatts of wind capacity has been granted resource consent, although almost all of this has been approved for three years or longer. Three major geothermal stations are being built over the next two years, saturating demand.

Energy consultant Bryan Leyland said generators were discovering that wind was often uneconomic, with high capital costs compared to other new generation. In New Zealand wind tended to blow most during spring, when demand was lowest, and less during winter, when demand was high.

“Personally I wouldn’t be surprised if we don’t build any more wind farms, forever,” Leyland said. Goldman Sachs analyst Matt Henry said a prolonged economic downturn meant there had been little growth in demand for five years, however, several new projects had been built and three more geothermal projects would be commissioned in the next 18 months.

Eric Pyle, chief executive of the Wind Energy Association, denied wind was falling out of favour, citing a general lack of demand. Wind farms could be built on a small scale, which could be useful in an era of slow economic growth.

URL to article:  https://www.wind-watch.org/news/2012/03/07/energy-firms-defer-big-wind-farm-projects/