Tiwai Point aluminium smelter boss Chris Blenkiron calls for more renewable energy

The New Zealand Aluminium Smelter (NZAS) chief executive Chris Blenkiron. Photo / Supplied

NZ Aluminium Smelter’s chief executive Chris Blenkiron says New Zealand needs more investment in renewable energy.

Blenkiron, who is in charge of the country’s biggest power user - the Tiwai Point aluminium smelter in Southland - told a Trans–Tasman Business Circle lunch that New Zealand had an opportunity to capitalise on its renewable energy system.

The 100% Rio Tinto-owned NZAS draws power from the Manapouri project, and the Clyde and Roxburgh dams.

The ink on the May 31 “demand response” deal with Meridian had barely dried before the generator called on the smelter to taper off its demand to help the system through an unusally dry and calm winter, coupled with constrained gas supply.

Tiwai was called on again in July and in August before heavy rain, and gas made available by Methanex took pressure off the system.

However, the calls mean that one of Tiwai’s potlines - accounting for about a third of its production - remains out of action.

The 206-pot line is now being reinstated at a rate of one per day. It will take until April next year to become fully operational.

Blenkiron said the deal - the biggest demand response arrangement of its type anywhere in the world - means Meridian can call on the smelter to free up 4% of the nation’s electricity demand at short notice.

New Zealand aims to have net neutral carbon emissions by 2050.

“All industry is electrifying so your industrial processes, your transport costs, your gas, petrol, diesel a lot of the time will be centralised into one electricity bill,” he said.

“Even some manual tasks will get automated in time, and that will be fed through generative artificial intelligence, which in itself is electricity-hungry,” he said.

“We know that the transition going forward will be difficult and bumpy.”

Blenkiron said having about one-third of Tiwai out of action had its issues.

“It’s not costless and it’s not painless, and it is definitely not riskless, but it is the right thing to do.”

Blenkiron said New Zealand’s system needed more wind and solar power, which would allow the country’s hydro stations to perform more of a firming role - a role that is at the moment fulfilled by coal and gas.

“Ultimately, the more green electricity that we can bring on board, the more that we can move hydro into a new era, and the less we can use coal and gas.”

That would also mean the country would become less reliant on demand response deals, which would only help national production.

“For me, we need to build more renewable power generation and we we need to get the obstacles out of the way.

“The generators need to understand that we need competitively priced electricity to ensure that our businesses can survive and thrive,” he said.

Blenkiron said one of the things holding back renewable energy generation was certainty of demand.

He said more power purchase agreements (PPA), which lock in customers during a project’s development, were the way forward.

“If a PPA is underwritten by a triple-A-rated balance sheet like Rio Tinto’s, it’s not difficult to get financing for these projects,” he said.

“Ultimately industry needs to understand the role that it can play to bring on those green electrons and what we have found for a large part is that writing PPAs for the longer term is a great way for developers to bring on green energy.”

Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.