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Mighty River said today it had abandoned controversial plans to recommission a coal-fired power station known as Marsden B near Whangarei.
"Mighty River Power has decided not to proceed with seeking the consents necessary to enable recommissioning of the Marsden B power station, following a review of the company's potential generation developments and future market conditions," the state-owned company said in a statement.
Chief executive Doug Heffernan said the company was now confident New Zealand could meet its energy supply requirements over the next decade without the Marsden B station.
Environmental activists strongly opposed Mighty River's plans and launched a number of high profile protests.
The plan to fire up the plant, which was never commissioned when it was built in the 1970s, was the source of increasing embarrassment to the Government because it would have increased the country's carbon and greenhouse gas emissions.
Climate Change Minister David Parker this month wrote to all power generators telling them the Government's new energy strategy, due this year, would impose greenhouse gas charges on all new power stations.
Mr Parker said in his letter the Government was considering three proposals to reduce the electricity sector's greenhouse emissions: a straight carbon charge, an emissions trading scheme or direct regulation under the Electricity Act.
The Government had made it clear it wanted all new generation to come from renewable sources, he said.
Mr Heffernan said fuel availability in renewables and domestic gas for the next decade was now in a fundamentally better shape than in 2001-2003, when analysis showed a number of scenarios where Marsden B could be essential to provide security of supply, for example in dry years.
Since that decision, Mighty River had commissioned additional geothermal capacity and successfully and begun construction on other projects, including the largest geothermal power plant development in over 20 years at Kawerau.
Last month, Contact Energy announced it would spend $2 billion on new geothermal and wind power stations over five years.
Mr Heffernan said technology advances meant a converted Marsden B would no longer be economically viable and there was no point in securing consents.
He said Mighty River had identified opportunities for developing wind farms and small-scale, run-of-river hydro projects.
Mr Heffernan denied that opposition from environmentalists played any role in the decision.
Mighty River had spent around $4 million to date on the consenting process. He said it was not difficulty in the consenting process that lead to the decision -- it was simply a matter of economics.
The plan had been conceived when there were "doomsday scenarios" on power supply, but that situation had radically changed with numerous power schemes on the drawing boards.
Green Party co-leader Jeanette Fitzsimons says the announcement was very good news for New Zealand and climate change.
She said: "I congratulate Mighty River Power on finally seeing the light. The last thing New Zealand needs is more coal burning electricity stations.
"It is time to focus on developing renewable sources such as wind power and increasing efficiency to cut down on use."
- NZPA, NEWSTALK ZB
