Thu, 15 July 2004
New Zealand Wind Energy Association conference
Hon Pete Hodgson - Keynote address to the NZWEA conference 2004
Alistair, thank you for the opportunity to speak at this conference and congratulations to James Glennie on his
appointment as your Association's first fulltime Chief Executive.
I am delighted by the growing contribution wind energy is making in New Zealand. It will have grown four-fold from 40 to
160 MW by the end of the year to April. However, we must see this as just the start.
New Zealand is blessed with natural renewable energy resources, particularly wind and hydro. Indeed, wind has the
potential to provide over 20 per cent of our electricity needs.
The question is, what can we do to make the most of this opportunity?
Well, that is largely up to you and partly up to the government. In rising to the challenge, there are many factors to
take into account, and I'd like to address some of those today.
New Zealand offers an abundant, high quality wind resource. The price of power is rising at the same time as the price
of wind technology is falling, making more and more developments economically viable. The forthcoming emissions charge
will require fossil fuel users to better account for its environmental cost, further improving the economics of wind.
Wind energy has been the stand out success so far in the government's projects to reduce emissions programme.
Wind also enjoys the highest levels of public support for any type of generation.
The size and flexibility of our hydro base also offers advantages to wind development, since when the wind does not
blow, we have power in reserve in our hydro lakes.
While this is great news for expanding the contribution of renewable energy, we must not forget our needs for peaking
capacity or dry year cover. We need an overall national energy portfolio that is not only adequate in terms of total
size, but one that offers enough flexibility to meet peak demand. Thermal generation will continue to have an important
contribution to make in this regard.
Just two weeks ago, EECA released its survey of the public's attitudes towards different types of generation. I am sure
that many of you were delighted by the results with wind coming out most preferred with an approval rating of 82 per
cent.
The general public are often the silent majority when it comes to all sorts of developments. Now their views are known.
It is up to the electricity industry to take these views into account and plan accordingly.
Whenever any developer puts forward a proposal, often only a minority of people with a particular angle get involved in
public debate on both sides. It is my hope that this survey will be seen as an accurate reflection of public sentiment
whenever a wind development is considered by consenting authorities.
The report also points out what the public perceive to be the down sides to wind power. This is valuable insight.
Take noise for example. We all know that in reality, noise is not a significant problem. I have been close enough to
turbines of all sorts, here and overseas, to know that for myself. However, if the public think noise is a problem, then
it is your problem. You must address it even if this is only a matter of correcting misconceptions. The same is true
when it comes to explaining reliability and availability. It is part of your job and mine to address the public's
concerns; perceived or actual it makes no difference to the need to take them seriously.
Your Association has a key role to play in achieving the 30PJ renewable energy target announced as part of the National
Energy Efficiency and Conservation Strategy. I know EECA is working with you on the development of an action plan to
meet, and hopefully exceed this target. EECA is also publishing guidelines around renewables developments to be used by
consenting authorities.
It is never too long before any mention of consent leads to a discussion around the RMA. As with the public's beliefs
around wind farms, there are a number of issues, both perceived and real that need to be addressed.
The RMA is fundamentally a sound piece of legislation that has generally worked well in protecting the environment,
facilitating consultation and allowing sensible developments to go ahead. The RMA has no difficulty in handling a well
researched wind energy project. Take Meridian's applications for the Te Apiti windfarm as an example. It took just one
week from the start of hearings to granting of consents.
It is sensible though to keep such legislation under review and to improve it where necessary. That's exactly what we're
doing.
Earlier this year we amended the RMA to require councils to have particular regard for the benefits of renewable energy.
Another review has since been initiated and is on track to be in the House this year. Through this process we want to
deliver greater certainty and clarity in the way the legislation operates and is applied, to improve the quality of
decision-making, and to further reduce delays and uncertainty about costs. We are also keen to reduce the scope for
vexatious objections. It will not however, compromise environmental standards.
On now to the Projects to Reduce Emissions programme that I mentioned earlier. We started with one million carbon
credits in a negotiated round. Trust Power's Tararua stage two and Meridian's Te Apiti schemes were the result. Then,
last year, we awarded four million carbon credits to projects that would otherwise have not gone ahead. Successful wind
projects included: New Zealand Windfarms' Te Rere Hau scheme, the Wainui Hills Wind Farm company's Wellington
development and Genesis' Hau Nui extension and Awhitu projects.
The programme has been successful in starting to make New Zealanders more aware of the enormous potential for business
opportunities arising from climate change policy.
Today I can announce the timetable for the next round of the programme under which six million credits will be made
available. The tender round is expected to take place from late August until mid October 2004. Tenders will be evaluated
in November with the results announced in December.
This is a great scheme made successful through your participation. I know I won't have to say too much to spur your
involvement in it once again.
I'd also like to update you on the development of regulations for the connection of new generation to local lines -
distributed generation. We want to encourage this. Our aim is to introduce regulations that will restrict connection
charges to the incremental cost incurred by lines companies and to give greater certainty and clarity around this
process and how long it will take.
It's time to think forward to the next step, the manufacture of wind turbines or of turbine components. Geoff Henderson
has already established himself as the pioneer in this country and I had the pleasure of being on Banks Peninsular last
year when the first New Zealand built machine got underway. He is a man of remarkable tenacity.
But it is an open question as to whether this industry will grow quickly or slowly. Whether or not we will move over the
next several years from being importers to being manufacturers, and to what extent the underlying technology will be
offshore, home-grown or a mixture.
I won't dwell on this further except to acknowledge that there is a lot of thinking going on around the place and many
people are exploring this emerging opportunity. They should.
So, in summary, you have a lot going for you.
The appointment of your first full time Chief Executive, particularly one with such a good track record, shows you mean
business.
You are benefiting from long term cost reductions and efficiency gains in turbines.
You are taking advantage of the Projects to Reduce Emmisions programme to get marginal developments off the ground.
You are gaining more and more data on the wind resource available to you every day.
Meridian and Transpower have already put in place a groundbreaking new agreement around grid access and much improved
regulation is on the way for connection to local lines.
In the Electricity Commission you have a regulator who can help you manage expansion in a manner that addresses any
issues around grid stability and security of supply.
You have an excellent track record in gaining consents, which I hope to see improved further with the fine tuning of the
RMA.
The public is on your side, as demonstrated by the EECA opinion research.
The market is demanding more generation.
The price is right, you are proving through what you build now that you don't need subsidies.
There has never been a better time to be in this sector in New Zealand than now. It is up to you to make the most of it.
ENDS