Meridian Energy is dropping strong hints it is close to making a final decision to build the Mill Creek wind farm, saying the “stars are aligned” for the investment.
Chief executive Mark Binns, speaking after his appearance in front of the commerce select committee in Parliament, said though the board had not made a final decision, Mill Creek “certainly is the next cab off the rank”.
“It looks like it is a very good project, it’s in a wind regime up there right beside Makara that we understand very well, and we think at the moment, time is right.”
Last August the state-owned company was granted consent for 26 turbines in Ohariu Valley, northwest of Wellington city, enough to generate up to 60 megawatts. The 111-metre-high turbines would be the same as those used at Meridian’s West Wind, a few kilometres to the south.
Binns, who joined Meridian from Fletcher Building in January, made his first presentation to investment analysts on Wednesday, describing the economic of Mill Creek as “extremely competitive” with some of the best wind yield of any site in the country. The board was expected to make a decision within six months.
After the select committee hearing, Binns said the viability of the project was being boosted by the strong Kiwi dollar, an international oversupply of wind turbines and easing steel prices. Locally, a lack of domestic building activity meant “you’re getting very competitive construction prices”, Binns said.
“It’s going to be unlikely that you’re going to get all those stars in alignment into the future”.
Meridian’s rivals have said a combination of no demand growth and a backlog of committed projects coming on stream, mean new projects will not generate sufficient return on investment.
Contact, Mighty River Power and Genesis Energy have all said that aside from projects already committed to construction, it is likely to be several years before they seriously consider committing to new projects.
Binns said the size of Mill Creek meant it may be able to be connected directly to the local electricity network, cutting transmission prices. “New Zealand has to start growing at some point, and this is 60 megawatts, this isn’t a 400 or 500 megawatt project, it’s going to be lost under the radar. And it depends on your view of the future. If we all think New Zealand’s not going to grow, we may as well pack up and go home.”
Mill Creek was conceived a decade ago by a group of landowners who wanted to use income from the project to subsidise their farms. Other locals had strong objections, unsuccessfully appealing against Meridian’s resource consent to the Environment Court.
Ohariu Valley Preservation Society president Siobhan Lilley said the group had exhausted its legal options, but continued to doubt the project’s economics.
“We’ve got a beautiful rural valley. The majority of people are here for the peace and tranquility. These turbines are very, very close to the community and we strongly believe it is not an appropriate place for a wind turbine project.”
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