Genesis’ go-ahead for big solar farm in Canterbury has wider significance than just heating 10,000 homes

One  of New Zealand’s biggest electricity  generators, Genesis Energy, has given the go-ahead for a large solar farm near Lauriston on the Canterbury Plains, an hour’s drive south of Christchurch.

It is part  of Genesis’ strategy of replacing thermal baseload  with renewable generation – a mix of wind and solar.  What it calls its Future-gen strategy will result in the removal of 1.8m tonnes of carbon emissions a year by 2030.

This underlines that  NZ is better placed than most countries not only to be energy independent, but also for nearly all its electricity to be renewable.

Genesis’ analysis of future market scenarios show that by 2030, the existing pipeline of projects will lift NZ from about 85% renewable electricity generation to 96-98% – a remarkable achievement of investment, risk, planning, logistics and flexibility. It is something  critics of the industry  overlook when they call  for the State to re-nationalise the big  generators, to  lower electricity prices to  consumers.

In a broader context, this is the kind of development signalling the real progress  NZ is making  in modernising its infrastructure, and curbing  damaging  discharges into the ozone layers.

Genesis says the solar power plant will generate 80 gigawatt-hours of power a year, or enough to power nearly 10,000 homes, once it is completed next year.

For comparison, the country’s total power demand sits at about 40,000GWh.

The solar farm will be built on a site bought from British-based solar specialist Hive Energy. Australian firm FRV Australia will pay 40% of the development costs and will own 40% of the farm as Genesis’ joint venture partner in the investment.

The project is expected to create more than 50 jobs during the construction phase and employ up to three full-time staff when operational.  It is among the most advanced large-scale solar generation sites in the country being fully consented, with advanced grid connection approvals and ready for the installation of panels to begin.

Genesis  announced its intention to look at solar generation in March 2021.  To have a significant site up and running so quickly under the joint venture underlines the company’s commitment to renewable generation, interim Chief Executive Tracey Hickman said.

“This is another milestone for our Future-gen strategy that is focused on developing 2,650 GWh of new renewable generation by 2030. Solar is a good addition to NZ’s generation mix and when it reaches scale it will play an important role in helping manage dry year risk when hydro levels are low and the wind doesn’t blow,” Hickman said.

“There is plenty of competition for sites and to secure one that is fully consented and ready for installation and commissioning is a strong start to delivering on our ambition to develop up to 500 MW of solar over the next few years. There have been lots of solar announcements but not many have the land, consents and grid connections in place. We’re looking forward to making more announcements on solar through the year.”

Genesis  in 2022  reported a net profit of $222 million, up from $32 million in FY21. This marked increase was due largely to the revaluation of financial contracts, which were impacted by market conditions beyond Genesis’ control.

The full-year dividend was 17.60 cents per share, representing an 8.8% gross dividend yield.

The company said this underlined what Genesis represents today – a business with momentum that is focused, disciplined, and delivers on commitments.

For context, six years ago  it had an EBITDAF of $335 million. It has lifted that more than 30% to $440 million in FY22, while delivering an annualised total shareholder return over the period of 10.3%. The FY23 EBITDAF is expected to be around $500 million..

FRV Australia is one of the largest solar developers, asset owners and renewable energy platforms and the first company to deliver a project-financed, large-scale solar farm in Australia. FRV Australia will bring its international experience to complete the installation and commissioning of the Lauriston development.

FRV Australia CEO, Carlo Frigerio, said the site ticked a lot of boxes and should be up and running relatively quickly.

“FRV Australia and Genesis have developed a very promising pipeline of solar projects expected to be delivered in the coming years. Lauriston solar farm complements our own pipeline and is poised to be the first large scale solar farm reaching operational stage in the country,” Frigerio said.

“We will focus our efforts to complete any pending preparatory activity so we can start construction later this year and connect the project as soon as possible. The solar market is still in its infancy in New Zealand, with no operational utility scale solar generation, so we are thrilled that Lauriston will be one of the first to contribute to the country’s energy market.”

The site developer, Hive Energy, has 200 on-going green projects across 20 countries, with more than £1.3 billion ($NZ2.48bn) of capital deployed to date.

This is the first project sale for Hive in New Zealand, and it  hopes that, once complete, the Lauriston solar park will support the country’s green energy transition and diversify the generation mix.

The solar farm will be connected to EA Networks’ Lauriston zone substation. EA Networks is a locally owned co-operative network company, that owns and operates Mid Canterbury’s electricity distribution network.

The solar farm design specifically allows dual use of the land. It will produce the equivalent to about 13% of Electricity Ashburton’s annual energy needs from using just 0.03% of the land, and sheep will still be able to graze under the panels.

EA Networks Chief Executive, Roger Sutton, said the rural network was built to support the large irrigation load it currently manages.

Sutton said one of the leading opportunities to decarbonise is to electrify, using electricity for commercial heating processes and ensuring there is capacity for increasing numbers of electric vehicles.

“We are ready to play our part in this transition, but for it to work, we will need more renewable generation. It’s great to see a solution being developed in our own backyard.”

The Lauriston development also aligns with the strong community focus EA Networks has built over the years, a key goal being to support the local community in achieving lower electricity costs.

“We’re pleased to have the opportunity to support this development, as we expect it will drive lower energy prices for our customers when they are using the most,” Sutton said.