Days of large power stations numbered

By RICHARD BRADDELL

WELLINGTON - Rapid falls in the cost of small-scale electricity generation and sharply rising transmission costs have put paid to any more large investments in electricity transmission, says the operator of the national grid, Transpower.

"The cost of transmission has increased markedly due to resource consents and environmental concerns," chief executive Bob Thomson told the electricity inquiry in Wellington yesterday.

"The crossover point has been reached, there will be no more major transmission investments in this country, in my opinion."

The inquiry has heard much about the future of "distributed generation" or the use of small generators of about five or 10MW capacity that can be put into remote localities, thus doing away with the need to expand or build higher-cost transmission facilities.

But while small generators may be more economically efficient than building or maintaining transmission lines, incentives to install them are blurred because lines and transmission companies, which are the direct beneficiaries of those savings, are limited by law to a maximum allowable capacity of 5MW.

Northland lines company Top Energy, for instance, is seeking an exemption from present legislation and has taken court action to avoid being forced to sell its 5.7MW Ngawha geothermal plant.

Transpower said it was essential to get pricing signals at its distribution nodes that reflected not just the marginal cost of supply but the cost of security of supply.

But instead of simply raising the limit on restrictions on lines companies or Transpower itself to build distributed generation, Transpower said there should be no upper limit on size. Exemptions should be considered case by case.