Thirteen wind farms, each the size of the country’s largest, will need to be built in the next 15 years to power the country’s fleets of electric vehicles, and boilers. That’s what the Climate Change Commission has urged in its recent report to the government.
Whether the country’s power companies will see it the same way as the commission is far less certain. Already Contact, one of the biggest, has stepped up to the plate and says it will invest $580m to build a new geothermal station at Tauhara.
Contact’s chairman, Rob McDonald, says:
“We believe the Tauhara geothermal project is NZ’s best low-carbon ren ewable electricity opportunity. It will operate 24/7, is not reliant on the weather and is ideal for displacing baseload fossil fuel generation from the national grid which will significantly reduce NZ’s carbon emissions”.
Construction is expected to be completed by mid-2023. Japan’s Sumitomo Corporation is leading the build, in partnership with Naylor Love and Fuiji Electric.
Meanwhile Genesis Energy is reviewing whether it should keep its investment in the offshore Kupe oil and gas field, or look at “better investment opportunities”.
It says the field has “attractive” cash flow and a strong growth outlook, and its operators are looking at further development, including further exploration and drilling another well.
Kupe provides around 15% of the country’s natural gas and half of LPG demand.
Last August its gas reserves were revised upwards by more than 20%. Its importance to the country has risen after Beach Energy and NZ Oil and Gas (Genesis’ other partners in Kupe) relinquished PEP 52717 (Clipper) which contained the promising Barque prospect off the Canterbury coast this week.
NZ Oil and Gas said it was with “much regret” they gave up the permit after years of work to mature it and bring in appropriate partners. CEO Andrew Jefferies says he expects it will not be the last offshore acreage to suffer the same fate.
He points to a confluence of events including adverse regulatory settings, the dry hole in OMV’s Tawhilki permit,the recent announcement
Terminating the Wherry-1 drilling, and the effects of Covid drill costs having formed a perfect storm, making the task of finding suitable drill partners in the required timeline impossible.
Both Beach and NZOG reaffirm their commitment to NZ with Kupe which they say “remains a key supplier to the country’s energy needs”.
At Kupe they are halfway through a major compression project to maintain production, and say the offshore permit has both development and near-field exploration potential.
Their enthusiasm for Kupe suggests both could be interested in channelling more of their capital, now they will be no longer funnelling any towards the Barque prospect, into Kupe. They might also be interested in snapping up Genesis’ stake if it comes on the market.
However that works out, there are other interesting moves in the energy field which makes some of the Climate Change Commission’s scenarios look out of date even before they reach the government.
Energy consultants report keen interest by overseas interests in investing in large-scale solar projects in NZ, now that the price of solar equipment is falling. Where big solar farms can be located adjacent to large sources of demand, the lower transmission costs are said to make the economics look very attractive.
With the government moving last week to stiffen up the Emissions Trading Scheme, incentives in the energy sector are changing rapidly. Climate Change Minister James Shaw claims the government had to lift the price to emit because the scheme had failed to deliver on its primary purpose of bring down carbon emissions.
The Climate Change Commission will have to bring these developments into consideration before its final report reaches the government for action next December.