The Climate Change Commission has found New Zealand needs to add a terawatt hour of renewable generating capacity every year from 2025 - the equivalent of building two large wind farms a year. Photo / Brett Phibbs
The Climate Change Commission has found New Zealand needs to add a terawatt hour of renewable generating capacity every year from 2025 - the equivalent of building two large wind farms a year. Photo / Brett Phibbs
New Zealand needs to get a move-on building renewable energy capability if we are going to meet the Government’s deadline of being net carbon zero by 2050.
At the same time there is increasing pressure on businesses to reduce emissions. That means using renewable electricity to replace oil or coal. And it means building more solar, wind, thermal or even hydrogen-based capacity.
MinterEllisonRuddWatts partner Stephanie de Groot says: “There is a movement from businesses who need to show they are taking positive steps towards improving their environment, social and governance [ESG]. It’s being driven by customers and stakeholders, but there is also a regulatory perspective with mandatory climate-related disclosures.”
She says sectors of the business community are focusing on ESG outcomes and if they can use more renewable energy, or invest in renewables, that helps deliver on their wider goals.
“We know the regulatory system drives change, but it’s also the consumers and the investors who are equally driving change.”
While we are heading in the right direction, de Groot says, we need to deliver renewable energy capability and infrastructure at unprecedented levels and speed.
Stephanie de Groot is a partner at MinterEllisonRuddWatts.
She quotes a report from the Climate Change Commission which notes that New Zealand needs to add a terawatt hour of renewable generating capacity every year from 2025 on. That’s the equivalent of building two large-scale wind farms a year.
To put this in context, the most generating capacity New Zealand has built in a year was during the 1970s when 400 megawatts were added.
De Groot says the consenting process is a potential barrier. There are several aspects to the process which can lead to delay.
“Historically under the RMA [Resource Management Act] there is a notification aspect to the process where a resource consent application can be notified to the public. That enables people to get involved by making submissions and then requesting hearings. They have appeal rights as well.
“There is criticism that this can slow down consenting. On the flip side, however, having affected parties involved in the process means that the environmental effects of a project get tested to a greater extent than if people weren’t involved.”
People might argue they don’t like the visual impact of a wind farm or the potential loss of amenity. Likewise, there can be objections about the effect of a geothermal site on the local groundwater or cultural values.
Some of the consenting issues are difficult.
“One of the big issues arising from building solar farms is that they can often be constructed on highly productive land that could be used to support other sectors. It’s a finite resource.”
Scott Thompson, who is also a partner at MinterEllisonRuddWatts as well as the firm’s energy lead, says: “When you have carbon commitments to meet and infrastructure deficits to address you need consenting processes to be efficient.”
MinterEllisonRuddWatts partner Scott Thompson.
He says a considerable amount of carbon ends up in the atmosphere because of consenting delays, which is costly in other ways:
“The longer we take to decarbonise our energy system, the higher the costs because we have to pay for carbon offsets to keep, for example, the coal and the gas generators fired up.”
New Zealand has a good track record with renewable electricity generation, but the total energy consumption is relatively lower in terms of renewable resources. Thompson says much of our energy consumption comes from transport, with oil and industrial processes also powered by coal or gas-fired boilers.
“At some point all these processes will be electrified, replaced with electricity-powered heat pumps, and transport will move to electric vehicles and green hydrogen.
“This is why we need to move fast to develop a lot more renewable generating capacity. With that comes the need to build out our transmission and distribution network to enable all the new electricity generation.”
Depending on the complexity, the nature of the site and whether there are legal appeals, it can take a couple of years for a renewable energy project to progress through the consenting process.
However, there are examples that take much longer.
There is another brake that slows the development of key infrastructure projects such as renewable generation plants. Thompson says: “It’s difficult to build things at pace and at scale without a pipeline in place. The Government has been working with infrastructure industry bodies to address the issue. There is an opportunity to cement this with the new Government.”
He says work is also needed on getting a better procurement model for the sector.
“We need to get contracts that are fit for purpose. We want to be able to deliver projects on time and on budget, that’s even more important now because there is so much to build. If you don’t get the setting right, it can lead to enormous disputes, which decimates productivity and cost.”
This problem has come to the fore because many of today’s projects are bigger and more complex than in the past. They often involve overseas contractors who are dealing with regulatory settings that are unique to New Zealand. They can also face unfamiliar site locations, especially for wind farms, and the contractors may not be familiar with the risks.
De Groot says it’s important to emphasise that the previous Government and the incoming National, Act and NZ First parties have all identified that consenting challenges are an issue.
“The previous Government consulted on proposals to change the system to help speed things up. There have also been recent policy and regulatory changes to help. Change has happened and is continuing.”
She says the fast-track consenting processes have made a difference: “There was one developed in the wake of Covid to help speed economic recovery with fast-track consenting of, mainly, large-scale developments. It was not only for renewable energy although a lot of renewable projects have benefited from this process.”
This was separate from the standard consenting process under the Resource Management Act.
“It limits public participation and appeal rights, often the projects don’t go to a hearing,” de Groot says.
While the Covid-19 Recovery (Fast-track) Consenting Act 2020 has since been repealed, a similar process has been put into the new Natural and Built Environment Act, which replaces the RMA. National says it will repeal the Act, but it also says it wants to reform consenting rules for renewable energy generation projects, so the fast-track may be retained.
MinterEllisonRuddWatts is an advertising sponsor of the Herald’s Sustainable Business and Finance report.
