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Meridian Energy has used the announcement of the approval of its 176-turbine wind farm in Central Otago to highlight concerns about the interisland power link.
The country's biggest power generator is worried about how progress on the $1.5 billion Project Hayes would be affected by management issues surrounding the electricity link between the North and South Islands.
Meridian's chief executive, Keith Turner, said the charging regime for the high voltage direct current link disadvantaged new South Island generation projects.
It made such projects more expensive at a time when South Island security of supply was under pressure because of switchgear carrying half the interisland load being shut down indefinitely six weeks ago. "The security of supply is of much greater concern at the present moment. On the other hand the way the charges are allocated, those charges will flow on to any new project."
Meridian generates nearly all its power from South Island hydro systems and was bearing the bulk of the the cost of transmitting electricity along the interisland link. This was costing the State Owned Enterprise $78 million a year.
The pricing model had been imposed on the assumption power would invariably be shifted north from the South Island. This was not necessarily the case given dry years in the South Island and increased power demand.
Turner said that for 10 out of 12 months last year power was being transmitted south from North Island generating companies but Meridian was paying the cost of the link.
"The original premise of the DC link of transmitting power north has long since passed - it's now like any transmission of working both ways and doesn't seem fair just to allocate costs to South Island generators."
Turner said he had expected three or four more years' use of the switchgear and this had implications for New Zealand's intention to move towards 90 per cent renewable energy by 2025. "If they [the Government] wants renewable energy they're going to have to build renewable projects in both islands and build a strong transmission system to enable that."
National Grid operator Transpower said the Electricity Commission had established the transmission pricing model, designed to raise revenue to cover the $800 million cost of replacing the obsolete Pole One.
Acting chief executive Howard Cattermole said someone had to pay.
"Whoever gets to shoulder the cost of the link is going to be unhappy and will come up with a set of arguments to suggest that someone else pays. Who gets to benefit from that link - you can mount arguments that it allows South Island generators to get its product to the North Island."
He said replacement plans for Pole One should be finalised next year but new equipment would not be installed until 2012. Pole Two was now carrying 500MW but could be boosted to 700MW. "We don't think there'll be any immediate [supply] issues," Cattermole said.
Hayes to supply 263,000 homes with power
Meridian's Project Hayes wind farm will be among the biggest in the world and could supply up to 263,000 homes.
Commissioners appointed by Central Otago District Council yesterday announced that they had decided in a majority decision to grant consent to Meridian's wind farmon the Lammermoor Range.
Conditions included a requirement for the consent holder to submit detailed environmental and traffic management plans for approval before starting construction, the district council said yesterday.
The wind farm would be on an area of around 92 sq km about 70km northwest of Dunedin.
Opponents included All Black hooker Anton Oliver and poet laureate Brian Turner and an appeal to the Environment Court is possible from environment and local groups.
Meridian's chief executive Keith Turner said that the windfarm complemented the company's Waitaki hydro generating system 100km away.
Although big, the Meridian project is slightly smaller than Contact Energy's proposal for Port Waikato, which will have 218 turbines and generate 650MW.
