29 March 2004 Media Statement
Meridian’s Early Decision Allows Adjustment
Meridian’s announcement today that it will not proceed with its planned Project Aqua hydroelectric development will
cause a major realignment of generators’ plans for new capacity, says Minister Pete Hodgson.
“Project Aqua would have added a significant 570 MW to NZ’s generation capacity at a moderate price,” Mr Hodgson said.
“Its cancellation will cause all generators to revise their expectations of the opportunities they have for investment
in new generation over the next decade.”
Mr Hodgson said the decision to abandon Project Aqua had come early enough for investors in generation, including
Meridian, to adjust their plan for the future. New Zealanders should not be concerned that the country might run out of
electricity, though the future price of electricity may well be higher without Project Aqua and some future increase in
the use of fossil fuels was also likely.
“The Government’s position on Aqua has always been that if it is to proceed it should proceed on time, and if it is not
to proceed the country needs to know that sooner rather than later. Meridian’s announcement today gives time for other
generation options to be rescheduled and for new proposals to be developed. We can anticipate that various investors
will bring forward alternative projects over the next year or so.
“Better demand management will progressively reduce the need for new generation as implementation of the National Energy
Efficiency and Conservation Strategy continues. So far that strategy is on course to improve the country’s energy
efficiency by 20% by 2012.
“However there will always be a need for extra generation capacity, and price will determine what generation is built
first. The second main determinant will be the availability and price of gas ten years from now. The Government is
reviewing current settings for gas exploration to see whether or not any adjustment is appropriate and will conclude
that work within the next few months.”
Attached: MED assessment of the main generation options open to the industry, along with quantity and price.
Cost of Additional Electricity Generation Capacity Cost
Generation Type
Total
Cost
c/kWh
Potential Capacity
MW
Potential Supply
GWh pa
Potential
Avg. Load
%
Gas Combined Cycle (GCC)
2005-2025 2008-2025 (incl. C charge)
5.7 to 7.7
6.5 to 8.5
800
800
5000
5000
71
71
Wind 2006-2010 2011-2020 2021-2025 2006-2025
6.2
6.2
6.5
8.5
190
240
250
600
750
840
750
1800
45
40
35
35
Geothermal 2006-2010 2011-2020 2021-2025 2006-2025
4.0
6.2
6.2
8.5
25
225
380
60
200
1800
3000
475
90
90
90
90
Project Aqua Stage 1 (from 2009) Stage 2 (from 2012)
4.5
4.5
285
285
1600
1600
64
64
Other Hydro Medium Cost: 2006-2025 High Cost: 2006-2025
7.0
8.5
50
280
250
1350
55
55
Coal South Island:
2005-2025
2008-2025 (incl. C charge) North Island:
2005-2025
2008-2025 (incl. C charge)
6.1 to 7.1
7.6 to 8.6
8.3 to 9.4
9.8 to 10.9
very large
very large
no limit
no limit
very large
very large
no limit
no limit
80
80
80
80
Cogeneration
4.6
350
1700
55
Liquefied Natural Gas (LNG)
2005-2025 2008-2025 (incl. C charge)
8.5 to 10.6
9.3 to 11.6
no limit
no limit
no limit
no limit
71
71
Fuel Oil 2005-2025 2008-2025 (incl. C charge)
11.3
12.0
no limit
no limit
no limit
no limit
75
75
Distillate 2005-2025 2008-2025 (incl. C charge)
16.0
17.0
no limit
no limit
no limit
no limit
75
75
SOURCE: Energy Outlook to 2025, Ministry of Economic Development, October 2003