Monday, 22 April 2013

BLUESKIN ENERGY PROJECT

What happens if the aluminium smelter at Tiwai Point closes? What are the implications for the development of the Blueskin wind cluster?

These are big questions, and I'll give you my perspective as concisely as possible. Rationally, we could assume that if a big chunk of electricity (the smelter's share) could be switched on to everyone else, our electricity would get cheaper. But things are not quite so simple. As we all know, electricity price isn't just about the cost of generation. It is also about how it gets about, how it is stored, how available it is when we need it, and who owns it. If Tiwai Point closes in the next few years, as is very possible, it is likely that some of NZ's expensive thermal electricity generation will close. More capacity in the system will change the flavour of our electricity. (All of a sudden we will have much more renewable generation).

This is big picture stuff, and into that we have to consider other changes taking place, such as Electricity Commission work on changing transmission pricing, the capacity of the Cook Strait cable, lower South Island transmission and risk of peak demand. The short summary of all these elements is that the many new risks that the big generators are facing will offset most if not all the benefit of increased renewable electricity capacity after the closure of the smelter. Another big picture element we also have to take into account is the privatisation of our electricity generators. Privatisation has always brought higher electricity prices for consumers.

What about the Blueskin wind cluster implications then? Our generation project is tiny in comparison to Manapouri (hydro generation for the smelter at present), and as has been explained before, we can't use it directly to get cheaper electricity. The Blueskin Energy Project is looking at generating enough for 1000 households and building a social business, which will help with all those other things that build warm cosy homes. One of the key elements we'd like and are discussing with partners is a long-term power purchase agreement to de-risk the project. No-one expects the uncertainty over Tiwai Point, and associated risk, to be anything other than short term. The big picture then is that whether the smelter closes or not, it is unlikely to have much impact on the value of a long-term power purchase agreement, which is based on long-term trends, and which is helpful to de-risk the Blueskin wind cluster project.

For cheaper electricity, the Greens and Labour have recently announced a policy called "NZ Power" which they would implement if in power to guarantee lower prices. Here in Blueskin a number of solar installations are under way and more are planned over the year, both independently and via the solar syndicate, which will lower power bills to those houses. And of course we've got to keep on saying it: insulate, insulate, insulate!

Visit us at: www.blueskinpower.co.nz, or at the office at 1121 Mt Cargill Rd, Waitati (on Waitati School grounds). Telephone enquiries can be made on 482 2048  (the Wind Cluster) and 482 2207 (Energy Advice) and for any information about the solar project email Chris Le Breton at solar@blueskinpower.co.nz.

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