Keith Turner and Stephen Barrett: Wind, water ... and a word for the gas

Keith Turner and Stephen Barrett

Meridian Energy chief executive Keith Turner is a vocal champion for renewable energy sources. But he has been accused of being too optimistic. Here he debates "that renewable energy sources are the best option for meeting electricity demand for the next 15 years" with one of his chief critics, Contact Energy CEO Stephen Barrett.

Dear Steve,

New Zealand, of all the countries in the world, is uniquely placed to have it all in regard to electricity - secure supply, at a fair price, with minimal environmental impact.

Being a long, thin country in the middle of an ocean means we get lots of wind and water.

The synergies between wind and hydro generation make a renewable future possible. Broadly speaking, when the wind blows we can preserve our hydro storage. When it stops, we can quickly start our hydro plants.

The fuel is clean, plentiful and free.

The alternative is to burn carbon, to invest a billion dollars in a terminal to import liquefied natural gas (LNG) and sign the country up to decades of exposure to international fossil fuel markets.

We saw the consequences of that in the oil shocks of the 1970s.

Renewable electricity meets the preferences of the vast majority of New Zealanders. A recent Energy Efficiency and Conservation Authority survey showed:

* 82 per cent and 79 per cent of people approve of wind and hydro generation respectively.

* Wind is the preferred generation method for 40.9 per cent, and hydro is preferred by 40.7 per cent.

* Coal is least preferred, followed by gas.

Keith

* * *

Dear Keith,

Firstly, to say that there are only two choices - wind and hydro or burn carbon and commit to LNG - is misleading.

New Zealand has a range of choices that can meet our future electricity needs, including hydro, wind, geothermal, gas, coal, solar and energy efficiency.

The second big problem is appearing to suggest that wind and new hydro developments can replace Maui gas and meet growing electricity demand.

About a quarter of New Zealand's electricity comes from natural gas, mainly from Maui. Wind produces about 1 per cent of power needs.

So, not only is it misleading to suggest that new renewables can easily fill the energy gap, but it is heroic to presume that sufficient satisfactory sites are available for the implied large-scale construction of renewable generation capacity.

While polls show people prefer renewable energy sources, they also show that the highest value is placed on security of energy supplies - keeping the lights on.

New Zealand needs to look at all its options, including backstops such as LNG, so that if local gas supplies come up short, we will be able to deliver security of supply.

Steve

* * * 

Dear Steve,

The question is whether renewables offer the "best option" for meeting electricity demand in the next 15 years. Not the "only" option.

Meridian agrees that we will be best able to meet electricity demand by harnessing a range of fuels. But our view is that renewables are the best option of the fuels available.

New Zealand is a rare example of a developed country whose electricity demand is met mainly from renewable resources. Our electricity supply has been as reliable as - and cheaper than - that of almost any other country. Why change this successful approach?

We have sufficient opportunity to develop further hydro and wind capacity to see us through the next 15 years and beyond.

There will always be a back-up role for non-renewable hydrocarbon fuels, and we need to step up our efforts to find a domestic resource to replace Maui gas, to fill the 25 per cent gap in our electricity supply it occupies.

But it is to our ample, clean, renewable fuels - water and wind - that Meridian will continue to turn to as the "best option".

Keith

* * *

Dear Keith,

We agree that the way to meet future energy needs is to harness a range of fuels and technologies.

And there is no doubt that hydro and wind will make important contributions. But we can't agree that wind and hydro alone will be sufficient to meet projected demand growth over the next 10 to 15 years.

We just can't see that there are enough sites capable of gaining a resource consent at economic prices to achieve that.

Such an outcome would require construction of hydro and wind generation on an unprecedented scale.

Thermal fuels are also rather more than a back-up. Natural gas is a core part of the electricity system.

We would prefer to continue obtaining natural gas from domestic gas fields. But it is prudent to ensure that the LNG option is available as a backstop.

In our view, the "best" option is not to put all our eggs in one or two baskets.

We have numerous options and we will need them all to provide secure electricity supply.

Steve

* * *

Dear Steve,

In looking to meet the electricity demand growth of the next 10 to 15 years, some important questions have to be asked.

Gas provides 25 per cent of supply now but when Maui runs out in a few years, will we have found a replacement?

Or will that 25 per cent have to be sustained using imported LNG, with its dire economic, social and strategic risks?

We can cross our fingers and hope we find sufficient indigenous natural gas - and we'd better find it soon - or we can develop generation capacity using the clean, renewable fuels we already have in abundance.

New Zealand must be as self-sufficient as possible in a commodity as fundamental as electricity. Our economy and society depend on it.

Renewables are the key to self-sufficiency - and they will have a lower price, especially if thermal fuels begin to attract a carbon cost.

Security of supply at a reasonable price, with the lowest environmental cost, has to be our aim.

Meridian is not arguing that renewables are the only option for achieving this, but we firmly believe they are the best option.

Keith

* * *

Dear Keith

Every choice about energy supplies involves trade-offs between price, environmental impact and security of supply.

New Zealand cannot avoid making those trade-offs as we face important energy choices in the next few years.

We have enough available options to manage the energy gap created by the rundown of the Maui gas field and the continuing growth in demand for electricity.

But getting the best outcome requires prudent planning. There is nothing worse than trying to manage such risks during periods of crisis.

When limitations on hydro resources led to the country facing electricity black-outs, a stark truth emerged - most people expect secure electricity supplies as a matter of course.

Considerable willingness emerged to sacrifice environmental and price considerations to have secure electricity.

To avoid making our choices in a crisis, we need to be prepared to implement all options, from building wind farms or new hydro dams through to thermal options.

To do otherwise is to needlessly risk New Zealand's economic and social well-being.

Michael