7 May 2008

ETS will boost renewable generation, cut emissions - Contact

The New Zealand Emissions Trading Scheme has the potential to significantly increase investment in clean, renewable electricity generation projects and reduce greenhouse gas emissions from the sector, Contact Energy said today.

Contact Energy General Manager of Corporate Affairs, Bruce Parkes, said that with a price on carbon, energy from renewable generation projects is likely to be cheaper than electricity generated from thermal fuels and will provide the consumer with the most cost effective energy mix.

The comments are made in Contact’s submission on the Emissions Trading and Renewable Preference Bill which is currently before the Finance and Electoral Select Committee. The submission is now available on the Contact Energy website at www.contactenergy.co.nz/.

Contact will present its submission to the Committee tomorrow at 10am.

Mr Parkes said a price on carbon would facilitate a major change in the planning and investment environment within the energy generation sector. He said Contact has been factoring a likely price on carbon into its investment decisions for over 18 months now.

“At the start of 2007, the relative economics of New Zealand’s renewable generation options, and the pending introduction of a price on carbon, led the company to place on hold a consented 400 megawatt gas-fired power station, and instead pursue a $2.5 billion investment programme in renewable wind and geothermal generation projects.

“Once a price on carbon is factored into the equation, renewables are the most economic long-term proposition. With a price on carbon of at least NZ$20 per tonne, harnessing renewable options represents the best long-term value for Contact and for the country,” he said.

Mr Parkes said this was why Contact did not support the proposed 10 year moratorium on baseload thermal generation.

“A market price on carbon will ensure renewables are competitive on price with thermal options and steer investment towards renewables. An effective Emissions Trading Scheme makes regulating against thermal generation unnecessary.”

However, Mr Parkes said a number of key factors must fall into place if New Zealand is to deliver greater renewables.

“There cannot be undue delay in resource consenting processes, the country will need more large hydro developments and investment in a modern and robust transmission infrastructure is required to facilitate the growth in renewables,” he said.

Mr Parkes said with strong growth in fluctuating wind energy in particular over the coming years, efficient, fast-start gas-fired peaking capacity was vital to supporting it during times of high demand and still conditions.

He said it was vital the proposed thermal moratorium did not complicate or delay the construction of essential peaking capacity.

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