Energy: the growth of wind

There's an interesting article in the Dominion-Post this morning on the growth of wind power in New Zealand. Between them, TrustPower and Meridian are planning to install 450 - 500 MW of turbines in the next two to three years, and there are many other projects being pursued by smaller players. In all, it looks as if we will be able to meet our energy demand growth from wind alone - which has to be good for our long-term sustainability.

Why such intense interest? One reason is the ease of gaining resource consents. While some object to windfarms on the basis of noise and visual pollution, others find them quite beautiful, and public support for new projects is generally strong. Meridian's Te Apiti windfarm near Palmerston North reportedly took just three days to get its resource consent, and their planned farm near Mossburn took only eight. Compare this with the expensive multiyear struggle over Project Aqua...

But the real reason is even simpler: generating electricity from the wind is now economically viable in New Zealand. Good wind resources mean that New Zealand wind farms are over twice as productive as those in Europe - and almost approach hydro in terms of capacity (Trustpower's Tararua farm generates 45% of the time, Te Apiti approaches 50%. Hydro averages only 58% due to variable rainfall). This means that wind electricity is cheap - Meridian thinks it can generate for less than 6 cents per kWh, even cheaper than gas. And while the government is providing carbon credits to promote clean generation, these are "icing on the cake"; these projects are being pursued because they are commercially viable on their own terms.

It is interesting however to note which of our electricity companies are catching the wind and which are not. Wind seems to be being pursued by generators with most of their assets in hydro, because of the obvious synergy (you can generate with wind and save water for later). Those companies with large sunk investments in gas, OTOH, seem to be ignoring it and betting everything on imported LNG. The latter, I think, are setting themselves up for an expensive fall in the long run. With the price of gas set to rise as Maui runs out, and rise further to pay for LNG infrastructure, there will be a definite incentive to conserve at peak times rather than risk exposure to the spot market. And this is going to decrease the demand for gas even further. It won't disappear, but it will almost certainly play a smaller role in our national grid than it does at present.