Geothermal Energy - The Cinderella Of Our Energy Resources

Friday 3 May 2002 Ken Shirley

Speech to the NZ Geothermal Association Forum 2002, 11:30am, Friday, 3rd May 2002, Waipahihi Marae, Taupo

The development of geothermal power is part of New Zealand's technological expertise. Pioneering efforts at Wairakei during the 1950's followed by several decades of refinement and innovation gave rise to New Zealand's international reputation in this field.

As you will all appreciate geothermal power plants are particularly well suited to providing base load power, exceeding even hydro stations in their availability with supply factors over 90% commonly achievable.

Base load operation combined with high availability and immunity to climate variations, means that geothermal annual generation from a given installed capacity is high.

Geothermal resources presently provide about 4% of New Zealand's installed electricity generating capacity but 6.4% of the annual generation. We also know that growth in electricity demand means that 150 - 200 MW of new generation is needed each year.

While I describe myself as an informed sceptic over the Kyoto "hot air" issue, I do recognise the significance of geothermal energy as a non-fossil fuel based, non-carbon emitting, clean, efficient and renewable resource.

This week's policy announcements from Government outlining their intended ratification of the Kyoto Protocol in August will progressively have a major impact on the energy sector.

An emission charge on the carbon fuels of $25 a tonne of carbon dioxide equivalent will apply. This will increase electricity prices by 9%, gas prices by 8% and coal by 19%.

The total capital investment of the new geothermal generation plant over the last 5 years is estimated to be $285 million, which gives a very low installation cost of around $1.85 million per MW.

I understand that the Mokai output, which was installed at 50 MW hours, could be doubled with the restriction being the lack of new drillings and the exacting resource consent procedures that we now suffer. The only wells being used at Mokai at those drilled by Government in the late 1970's and little, if any, additional drilling has been undertaken.

It seems we have a classic catch-22 situation in that under the Resource Management Act's precautionary principle consents can't be granted to drill until you can prove the result and more particularly that there will be no significant adverse impact on the environment generally.

The catch of course is that you can't prove it until you drill it and test. This is just one example of the nonsense of the precautionary principle, which is all too often used to an unreasonable extent by various parties to stymie investments and development.

There is certainly a place for considered risk assessment and risk management but all too often the balance is all wrong with the alleged rights of vociferous minorities completely overriding the greater good.

I am certainly not advocating free for all, non-restricted access to the geothermal resource. Key features such as Whakarewarewa, Waitapu and Orakei-Koraka should be preserved but we could do considerably more work in utilising geothermal resource without threatening these other values.

New technologies of course open up exciting opportunities, particularly in the areas of hot dry rock heat exchange such as that carried out at Los Alamos in the USA and Sehultz in France.

The use of geothermal fluids at Tasman Pulp to process steam for paper drying and timber drying is a good example of direct use of geothermal power.

Similarly the conversion of Taupo Lucerne Ltd's drying plant from steam from Öhäki field to using hot water from the reinjection system seems to be working well. The Wairakei prawn park is a good example of direct use of Wairakei's hot water.

Up until 1988 the Geothermal Energy Act 1953 was the main legislation controlling the development of geothermal resources for electricity. It was specifically set up to allow for the development of Wairakei and to give the Minister of Energy, through the Ministry of Works and the New Zealand Electricity Department quite sweeping powers -

"The Minister may authorise search for geothermal energy and give power to enter land".

With the passage of the Resource Management Act in 1991 the utilisation of geothermal resources fell under the newly created Act. The purpose of the Act is to promote the sustainable management of natural and physical resources and it requires Resource Managers to have regard to efficient use and development of natural and physical resources and to have regard to any finite characteristics of natural and physical resources.

While mineral resources were specifically excluded from the RMA, geothermal resources were not. Geothermal resources are now required to be managed in a sustainable and efficient way. "Sustainable management" is defined as managing the use of resources in a way or at a rate, which enables social, economic and cultural wellbeing ........ while meeting the reasonably foreseeable needs of each generation; safeguarding the life supporting capacity of air, water, soil and eco-systems; and avoiding, remedying or mitigating any adverse effects or activities on the environment.

While these over-arching frameworks may be laudable, the implementation has been appalling, frustrating and extremely costly to any party acquiring resource consents.

I am of the firm view that the scope of the RMA has to be more sharply focussed to concentrate on the management of natural and physical resources which was the original intention and the nebulous societal and cultural references should be expunged.

Section 8 of the Act requires that all persons exercising functions and powers under it, in relation to managing the use, development, and protection of natural and physical resources shall take into account the principles of the Treaty of Waitangi.

The Act has been in the statute books for 11 years and successive governments have been unable to say what these principles are. Not surprisingly, there are plenty of groups prepared to full the legislative vacuum and provide their own interpretation.

This is not necessarily saying that cultural and social aspirations are not important, but these issues need to be addressed and often are addressed more adequately in other ways.

We particularly get into difficulties when we introduce metaphysical and spiritual values, which have no reference point in our law. The law for managing natural and physical resources cannot and should not be expected to provide for the needs of Taniwha's, hobgobblins, "the little people" or any other metaphysical expression. As far as I am concerned all persons should be free to hold to whatever superstitions, myths or religions they want or need - they have no place in secular law that is binding on us all.

I am aware that the geothermal industry has generally had very good co-operation with Maori landowners and that is to be applauded. The rights of land owners and the protection of property rights generally should feature prominently in our resource management laws and no outside parties, in particular the Government, should be able to confiscate or diminish those rights without adequate compensation.

The question of standing should be reintroduced where only those parties who are affected by a proposal should have the right to participate. This existed in the former Town and Country Planning legislation and acted as a very effective screen against the malicious and vindictive objections and the spurious claims from minority groups.

Equally costs should be awarded against individuals and groups who make spurious objections. Regrettably the current Government has reversed that situation and now community groups are immune from cost recovery but also have a special fund through the Ministry for the Environment to finance their campaigns.

Through the final stages of the previous Government extensive reforms were proposed to the RMA. While supporting all of these I considered them to be necessary but not sufficient.

They were important fine tunings that would have certainly helped streamline the process but they did not include the fundamental refocusing of some of the principles to ensure that they were more confined to the original intention of the legislation.

Regretfully these amendments were not passed during the term of the last Parliament and the incoming Labour/Alliance Government, supported by the Greens, underwent a lengthy review of the proposals and finally rejected them all.

There are numerous examples of the renewable energy sector being similarly frustrated and I think in particular of the proposal for a wind farm on Pencarrow Head which did not proceed because of opposition from Seatoun residents across Wellington Heads.

It is hard to imagine a more appropriate site for a wind farm than Pencarrow Head.

Geothermal energy in New Zealand continues to face stiff competition particularly from natural gas which has been chosen as a fuel source in a number of new power plants.

While the relatively low price of natural gas is expected to continue for a few years.

In the longer term this supply cannot be assured. The uncertainty of future gas prices and availability was the reason given for today's announcement by Contact Energy that it has shelved the proposed new Otahuhu station.

We know that the Maui field will be exhausted after 2007 and without further development of the gas resource New Zealand could soon be looking for alternative supplies.

To me geothermal seems to be a natural resource with a huge potential. It is time for Cinderella to go to the ball.

Ends

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