Tuesday, August 18, 2015



Exiting thermal

I got back from Auckland to the news that the Otahuhu B gas-fired power station would be shutting down at the end of September and would be replaced with renewables. Its quite a shocking decision - the plant was expected to last 25 years, not 15, and to be replaced by another gas-fired generator. But with Southdown and Huntly also closing down and Genesis cancelling its plans to build at Rodney, it looks like we're seeing a large-scale exit from thermal generation in New Zealand. How large? In the last 6 months, three of the five largest thermal power-plants have announced they are closing permanently, and the only two major thermal projects in the pipeline have been cancelled. Which will leave just two major thermal power stations: Stratford and Huntly 5. And Stratford is older than Otahuhu B and expected to reach the end of its life in 2024 or so...

This shift isn't due to any government policy - National has been trying to subsidise these polluters for as long as they can - but simply because wind and geothermal are now cheaper. Which makes you wonder where we'd be if we'd had a functioning ETS from the start, rather than one gutted and stuffed with subsidies and hot air...

The other interesting thing is that the shutdowns seem to be following the path of the "Tiwai exit" scenario in MBIE's Electricity Demand and Generation scenarios. So while a deal has been cut to keep Tiwai open, clearly the electricity industry doesn't think it will last and are planning accordingly.