Hon David Parker
Minister of Energy
Minister responsible for Climate Change issues

13 March 2007

Speech notes

Wind's potential to meet NZ's energy needs
Address to the New Zealand Wind Energy Conference
9am, Tuesday 13 March
Soundings Theatre, Te Papa, Wellington

Thank you for the opportunity to address you here today.

It's great to see so many people here. The fact that this is your biggest conference so far is testament to your highly successful and rapidly growing industry.

Last year was a record year for the renewable industry internationally with $38 billion US dollars investment and deployment reaching 182 GW.

Wind energy is a central component of that investment with deployment increasing by 24% to 59 GW. This is an extraordinarily strong market and I hope that New Zealand will increasingly become a part of it.

I know that you are aware of the launch late last year of the draft New Zealand Energy Strategy and its companion documents.

I also know that you are taking the time to thoroughly examine and respond to the suggestions made in them and I thank you for your time. You are the ones who are closest to the frontline and you know what the issues are for you. You feedback is essential and extremely valuable.

As stated in the NZES, our vision is for a reliable and resilient system delivering New Zealand sustainable, low-emissions energy.

We plan to do this by:

- Providing clear direction on the future of our energy system;

- Maintaining high levels of security and reliability at competitive prices;

- Maximising how efficiently we use our energy to safeguard affordability, economic productivity and our environment;

- Maximising the proportion of energy that comes from our abundant renewable resources

- Reducing our greenhouse gas emissions; and

- Promoting environmentally sustainable technologies

Given the need for the world to reduce greenhouse gas emissions, and the likelihood that emissions will carry an economic cost to our country in the future, it is vital that we alter the basis of our growing energy emissions.

We are lucky that we have such a good renewable energy resource in this country. It’s a resource that enables us to get about 70 percent of our current electricity requirements from renewable sources such as hydro, geothermal and wind - about the third highest percentage among developed countries.

Wind energy makes up about 2% of this. We have about 170 MW generating, about 150 MW is almost complete and another 1500MW is either consented or in the consent process.

The future looks promising, but much more still can be done to make the most of our resources and to achieve the vision set out by the Prime Minister in her speech to Parliament. As you know, the Prime Minister has raised the bar – suggesting that New Zealand become the first country that is truly sustainable. And that New Zealand should aspire to be carbon neutral.

Through the NZES the Government is determined to see the percentage of renewable energy in our electricity system increase over the coming years, and wind has a vital role to play in this increase.

The NZES and the New Zealand Energy Efficiency and Conservation Strategy – the NZEECS - are looking at the possibilities of setting targets for renewable energy. Renewable electricity could have its own target and more work is being undertaken to assess the pros and cons of setting a target. The basis, and size, of this, or these, targets is part of the consultation process and we are very interested in your views. We want to hear what your industry can contribute and by when, towards these targets.

Internationally, wind energy is an established technology. It has been around for 25 years, has a proven track record and is experiencing significant growth across the world.

Globally, wind energy grew by 24% in 2005 and it keeps rising. Much of this development is in countries with a lesser resource than we have here in New Zealand – Germany, the US and Spain.

We are lucky in New Zealand to have one of the best wind energy resources in the world, - the Saudi Arabia of wind, as many call it.

There have been concerns over the use of inherently intermittent renewables in a secure energy system.

An earlier study by EECA and MED based on the technology we have now, showed wind could provide at least 20% of total electricity generation – so there is plenty of room for growth.

The Electricity Commission is currently considering research that will look into improved wind forecasting, increased demand response and more geographically dispersed development of new wind farms.

We are also looking at ways to encourage a greater diversity of renewables technologies. Work is currently being undertaken by EECA, the Electricity Commission and MED to look in more depth at the implications of higher levels of renewable energy to the electricity system in terms of additional costs, security issues and carbon reduction.

Our existing thermal plants will play an essential role in supporting investment in new renewable generation. In the longer term, older thermal plant will need to be retired.

Any thermal generation that continues to be required for security of supply must be as modern, efficient and clean as possible, in order to minimise the sector’s greenhouse gas emissions profile.

Advances in technology and the extent to which wind energy is deployed around the world lead us to understand that intermittency is not a security issue. The actual issue is not security per se, but the cost associated with achieving security with a high level of intermittent generation.

The indicators are that these costs are minor in the near term at least.

Much has been said publicly about the issues around consenting renewable projects - including wind farms – with many criticizing the RMA process. There will always be criticism because it will always add a degree of cost to a project. But the process is absolutely necessary – local effects must be taken into account. The public need to have confidence that the system is fair.
And a robust process is better for all renewable energy in the long term.

The challenge for us now is how we take the RMA process and make it work for the goals set out in the NZES.

The RMA can strike a balance between local environmental effects and energy objectives, and we will support this process by actively providing consent authorities with the information that government departments and agencies have about the various trade-offs involved.

Over the longer term, the role of national guidance under the RMA for renewable energy could be further considered. We added emphasis to the importance of renewable electricity generation by amending section 7 of the RMA in 2005. We are advancing a National Environmental Statement, or NES, for transmission.

I have received various opinions about the merits of further guidance in the form of a National Policy Statement or NES for electricity generation, and I’m happy to consider this further. Some advice to me to date suggests that this may be of limited utility.

We can also take the lead in ensuring that consenting processes are started and finished in time for sensible energy planning and construction.
We are also considering a consolidated consenting process for wind and geothermal projects that would enable a pool of projects to be called in and considered by the same decision-making panel.

While such a mechanism would not guarantee the outcome for any individual project, it would, on balance, be likely to speed up the decision-making process, increase the quantity of consented sites, and establish de-facto benchmarks for environmental performance.

One way of ensuring that the consent process is as smooth as it can be is to select the best sites – and by best I mean in terms of the renewable resource AND a publicly acceptable location.

To do this, it helps to know what all the options are. Over the last year, EECA has worked with councils across the country to identify the renewable energy potential in their regions. By identifying the extent of the resources available we are able to help councils make provisions in their planning process for appropriate renewable energy developments in their regions.

The potential for development is significant – a total of 6500 MW were identified across eight regions, including 3,600 MW of potential wind energy. This excludes sites with wind speeds below 7.5 metres per second, which we recognize would be considered a good wind resource in Europe.

If only a third of this total potential was developed, it could meet our electricity growth for the next 10 years.

I must stress that this research does not take into account local environmental effects. It highlights the options and allows councils to pick the most appropriate areas for further investigation. It also highlights how little of our renewable resources we are currently using.

There is significant renewable capacity still available, at a price lower than thermal generation - even without a price on carbon. Therefore, this makes economic sense as well as sense for climate change.

There are other issues that we are looking at, and which to a large extent are relevant for all renewables. For example, the Electricity Commission and Transpower are analyzing the implications, including cost, of higher levels of renewable energy for the transmission and distribution network.

The Transitional Measures paper is examining a number of measures; we are looking at ways to price carbon to ensure that the different technologies are competing on the same footing. This will benefit renewables by making them more competitive against fossil fuels.

The specific renewable energy mechanisms in the Transitional Measures paper - obligations, feed-in and auctions – all have points for and against them. No one mechanism is a clear winner. We would like your views on the Transitional Measures paper.

I will finish by reiterating the process from here. Submissions on the governments draft energy strategies close on 30 March. We realize that there are several documents for you to respond to, and that it is a big task. These submissions will then be used to help us construct the final energy policy which I expect will be out around the middle of the year. Your feedback and input is essential to choosing the final energy strategy for New Zealand.

ENDS

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