Government Inaction Fuels Power Crisis?

The National party is attempting to blame the government for this year's power crisis:

"The issue here is not the market but a lack of generation, and this Government has done nothing to progress electricity generation or gas exploration," says National Leader Bill English.

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"Instead, the Government has failed to speed up the resource consents process and reform the Resource Management Act. Right now, two hydro projects can't progress because they can't get consent.

And the reason those two hydro projects can't get resource consent is because they are dumb projects. The Dobson scheme involves flooding a piece of prime conservation land, while the lower Waitaki scheme would reduce the river to a mere trickle and destroy it for recreational users. Neither would improve security of supply in dry years, the former because it's in an area with lowish rainfall, and the latter because it includes no storage lakes (which is what hydro generation is really good for). So what's the urgency?

The government is blameworthy, but not because it refuses to void the RMA whenever an energy company comes up with a crackpot scheme. The problem is that the market model implemented by the previous National government doesn't exactly encourage investment in new generation capacity, and doesn't provide security of supply in dry years. In fact, it does exactly the opposite, with generators hoping for (and even exacerbating) a shortage so they can cream it on the spot market. The government can do two things: it can reform the market to provide some capacity for long-term planning, or it can encourage new generation which adds security of supply and doesn't compromise our commitments to conservation or the Kyoto protocol.

The government is in fact doing the latter, by using Kyoto credits to encourage the construction of windfarms. While 115MW is a fraction of the size of the proposed lower Waitaki scheme, it's twice the capacity of the Dobson scheme - and it can be built far quicker. This isn't quick enough to save us from problems this year, but it might help in the future.