It's blackouts or coal, says Meridian boss

By LIAM DANN

Coal is the most realistic answer to New Zealand's power problems, Meridian Energy chief executive Keith Turner told industry leaders yesterday.

Turner, one of the industry's most experienced executives, was speaking from the heart at the National Power conference in Auckland.

Monday's decision by Meridian to pull the plug on Project Aqua forced him rapidly to revise his speech notes. His topic was to have been: "A renewable future - with or without Project Aqua".

State-owned Meridian focuses on renewable energy sources and has no plans to build any new coal-fired power stations of its own.

Turner said companies such as Genesis and Mighty River had indicated that they would seek consent for coal-fired plants.

"We are inevitably heading towards major coal development. I say, 'Get on with it'."

If new coal projects were not under way soon, the country could be facing blackouts in dry years.

"We've been living on borrowed time. We're lucky it's wet this year."

There was still a future for hydro-electricity, but the uncertainties that sank Aqua needed to be solved before it could be harnessed, he said.

"We have at least 15,000GW/hours of hydro capacity that is undeveloped, economic and consentable."

Meridian would continue its fight with the Aoraki Water Trust over access rights to water from the Waitaki River, which had profound implications for the future of the water as an energy source.

The trust wants to take water from the river for irrigation.

"It is a case that tests whether the Resource Management Act would allow a new consent to be granted upstream from an existing water right. If you can lodge a consent anywhere and ignore those with existing rights, what is the value of the existing right?"

That court case would run for years and needed a conclusive decision, he said.

"Until [then], we have a grave doubt over existing hydro production, let alone new hydro production."

There was no single reason for stopping Project Aqua, he said. Ultimately it became clear "its prospects of succeeding were very dim and the costs were very high".

Last week auditors advised Meridian that uncertainty about the project's outcome meant it would have to be accounted as an expense rather than as capital.

"If the auditors are saying, 'We think your chances of consenting this project are so low that you cannot capitalise it', that's a pretty serious message."

Aqua was also beginning to suffer from growing costs, "not only the cost of keeping it going for a long time but the costs driven by the RMA to mitigate community impact, environmental impact and irrigation".

He was careful to point out that he did not blame the act itself for Aqua's failure. But he made it clear that the industry should push for some revision of the legislation.

If the industry was going to face up to the need for 5000MW of new capacity in the next 20 years, it would need consents for a project the size of Aqua every two years, he said.

The industry needed to start thinking strategically.

"We can't just go to Government and say, 'Fix it."'

That approach would inevitably lead back to central planning.

"We as an industry probably know better how to solve the blockages of permitting. We must figure out how to get together and do some good policy work and take it to the Government to enable quality modifications to the RMA."

Earlier, Solid Energy chief executive Don Elder told the conference there were plenty of investors interested in coal-fired power stations but uncertainties around the RMA and carbon tax were deterring them from making any commitment.

He said New Zealand had enough coal to provide for its energy needs for up to 400 years.