Wednesday, August 11, 2021

Market failure

Aotearoa needs to rapidly decarbonise its electricity infrastructure and replace old fossil fuel generation with renewables. Aotearoa also needs to increase its total generation to cover the expected load from the electrification of industrial and process heat, and from EVs. The proposed Castle Hill wind farm could be a core part of the solution to both problems, generating 860 MW of clean power. So you'd expect the big, state-controlled gentailer behind it to be eager to build it, right? Of course not:

Genesis Energy has sat on a granted resource consent for what would be the biggest wind farm in the country for the last eight years, and has no plans to build it.

The Castle Hill Wind Farm, consented on a site north of Masterton, could double Genesis Energy's current annual renewable electricity generation. The annual generation of the farm would be the equivalent of the power generated by at least 850,000 tonnes of coal.


In a response to RNZ, a spokesperson for Genesis Energy recently said: "No construction is currently planned at Castle Hill."

The reason? Genesis (and all the other power companies) make windfall profits from the marginal unit of electricity being generated by gas or coal. Displace those dirty fuels, and they make less money. So they prefer to keep the country perpetually on the edge of a supply crisis to maximise profits (and the closer it is to that crisis, the more money they make).

The government needs to put its foot down over this, and either exert the control of its majority shareholding to force state-controlled power companies to build what is needed, or just forcibly acquire the projects they are hoarding so they can build it themselves. But the current situation, where greedy gentailers effectively conspire to burn coal and create blackouts to maximise profit, is both unsustainable and morally unsupportable.