Anthony Doesburg: Green energy in the doldrums

As the UN's Copenhagen climate change conference draws near, New Zealand's efforts at developing green energy alternatives are stuttering along.

Two big projects are held up at the Environment Court and another, which has resource consent so a trial can take place, is stalled for lack of funds.

In all, projects worth about $1 billion, with more than 1GW of electricity-generation capacity - about an eighth of the country's present total - are on ice.

If there's a hopeful glow on the alternative energy front, it comes from pools of poo. In a fortnight a venture that refines algae grown on sewage ponds will be officially launched in Christchurch by Energy Minister Gerry Brownlee.

With the backing of Christchurch City Council, the National Institute of Water and Atmospheric Research (Niwa) and Invercargill-based company Solray Energy, the $5 million operation will produce up to 200,000 litres of oil a year from 5ha of oxidation ponds at Bromley. It's a modest start - that's about enough fuel to keep one big truck on the road.

The Bromley biorefinery is "mark II" technology, says Chris Bathurst, a Solray Energy director, and is a dozen times more efficient than the company's first effort. However, commercial viability won't be achieved until a third-generation refinery is built that will be up to 20 times more efficient again.

What Bathurst and other alternative energy pioneers are up against is shaky economics. At the price at which oil is being pumped from the ground today, the cost of oil production from algae can only be justified if there is a byproduct from the process.

Fortunately there are a couple. After algae is extracted from the sewage muck, reusable water is left behind, and the material that remains after the algae has given up its oil is suitable for use as fertiliser.

Yet getting the technology established remains a challenge, as Nick Gerritsen, a director of another algae-to-oil venture, Aquaflow Bionomic, testifies. Having spent about US$5 million ($7 million) on developing a biorefinery and understanding the chemistry of the refined product, Gerritsen says the Marlborough-based company is yet to start making a return.

Aquaflow has involvement in 20 potential projects on four continents, he says, some of which are more focused on water production than oil. The company finds itself "right on the nexus" of the two big issues of water and energy.

Wind generation has its own set of challenges. Project Hayes, a Meridian Energy plan to dot 176 huge turbines over 92sq m of Central Otago hills, has been stalled since February when an Environment Court appeal against its resource consent ended. A court official says the process of issuing a decision is "getting towards the end".

Even if the strenuous opposition to the project is overruled, the economics of Project Hayes and of another already approved Otago wind farm proposal, TrustPower's Mahinerangi project, are dicey.

They're subject to external factors such as the euro-New Zealand dollar exchange rate and turbine demand in other parts of the world, both of which influence turbine price - about €4 million ($8.18 million) for a 3 megawatt machine a year ago.

In Europe, environmental objections are being appeased by building wind farms in shallow coastal waters out of sight of land. Here, where the seabed falls away sharply, that would require floating turbines, one of which was commissioned in September off the Norwegian coast.

It remains to be seen if the cost of maintenance renders the floating monster - it weighs 234 tonnes - uneconomic in its European setting. Fraser Clark, chief executive of the New Zealand Wind Energy Association, can't imagine it working here.

"If we're just there with commercial viability onshore, we're clearly not going to be viable with offshore [wind farms]," Clark says.

Solray Energy's Bathurst not only believes in algae's potential but thinks the sea also has vast energy potential. Another venture he is involved with, Neptune Power, has consent to try out a tide-driven turbine in Cook Strait.

"We're ready to go, but money's dried up," Bathurst says.

Further north, a tidal energy project beneath the Kaipara Harbour, being proposed by Crest Energy, like Project Hayes is awaiting an Environment Court ruling. Crest has been twiddling its thumbs since June.

What's going to break the logjam? There's no hurrying the courts, says the wind association's Clark.

Bathurst is hoping the Cook Strait project will get moving before the end of the year. Aquaflow's Gerritsen, meantime, looks to the Government for a lead.

R&D incentives elsewhere in the world - Australia, for example - are a temptation for Aquaflow, while the decision by John Key not to join other world leaders in Copenhagen sends a bad signal, he says.

"It's fair to say New Zealand is drifting away from where the rest of the world is shifting to in terms of policy and incentives." Gerritsen says. It's hardly the way to combat climate change.

Growing greener

* US$155 billion was invested in sustainable energy worldwide last year, up slightly on 2007 but four times as much as in 2004.

* 2008 was the first year in which investment in new renewable power generation capacity exceeded investment in fossil-fuelled technologies.

* However, renewable energy still only accounted for 6.2 per cent of the world's power-generation capacity.

* Wind energy was the big winner, attracting US$51.8 billion, followed by solar (US$33.5 billion) and biofuels (US$16.9 billion).

Source: UN Environment Programme