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Project Aqua – New Zealand’s Cheapest Power Option


Media Release
For immediate distribution: 12 December 2003

Project Aqua – New Zealand’s Cheapest Power Option

Project Aqua is the most cost-effective large-scale electricity generation proposal on the horizon in New Zealand and would provide a vital boost to the national grid, helping to ensure security of supply in the years beyond 2010.

The proposed hydro-electric scheme involves six power stations being built along a 60-kilometre canal, which would run down the south side of the lower Waitaki Valley. It would have the capacity to produce 524 megawatts of electricity which, according to pre-feasibility studies, would cost 4.5 cents per kilowatt hour (c/kWh). Project Aqua would generate enough low-cost renewable electricity, in an average year, to power the equivalent of 375,000 households, or about 250,000 households in a very dry year (a 1-in-20 year event).

“Project Aqua is a very important part of the total picture for New Zealand. It would be renewable energy. The generation from Project Aqua would not create more CO2,” says Meridian Energy spokesperson Alan Seay.

Apart from Project Aqua, there is approximately another 230MW of hydro electricity that could be developed at a cost of up to 7 c/kWh, in a number of smaller schemes and existing hydro efficiency enhancements. Other larger hydro developments would cost approximately 8.5 c/kWh.

“Project Aqua is cheaper because it makes use of low earth and gravel for canals rather than concrete. It also utilises existing hydro facilities - Lakes Tekapo, Pukaki, Benmore, Aviemore and Waitaki – as the scheme’s storage lakes. Project Aqua is the natural extension of the existing chain of eight power stations on the Waitaki River,” says Alan Seay.

Wind power comes at a cost of between 6.2 and 6.5c/kWh and is another form of energy that is being utilised by Meridian Energy, which is currently constructing the biggest wind farm in the country, Project Te Apiti in the Manawatu.

“It’s fantastic that we’re starting to utilise wind as another form of renewable electricity, but we also have to be realistic. The entire Te Apiti wind farm – with 55 large wind turbines – will only produce around two-thirds the energy of a single Project Aqua power station. It complements our hydro generation, not replaces it.”

Alan Seay says our current supply of cheap gas is quickly running out, with our existing gas-fired power stations potentially short of gas within three years.

Other generation options include Liquefied Natural Gas, which would cost between 9.3 and 11.6c/kWh, and could have large safety risks given New Zealand’s seismic activity. Oil generation also has the drawbacks of high cost and exposure to international price shocks, as well as its high sulphur content. All fossil fuel options produce significant quantities of CO2 emissions.

Coal is a fuel which is readily available in New Zealand but Alan Seay says just because it’s available doesn’t mean it is cheap.

“Power from new North Island coal-fired generation would currently cost between 8.3 and 9.4c/kWh, and if a carbon tax is introduced that price would jump by 1.5c/kWh. Removing the high sulphur content might add another 2 cents to the kilowatt per hour cost.

“New Zealand has the ability to have a renewable energy future, which has a minimal impact on the environment while still providing for our economic and social development. Project Aqua is offering us that future…it’s an opportunity we can’t turn away,” concludes Alan Seay.

Indicative unit costs for generation options are outlined in the table below:
c/kWh
Gas* 2005-2025 6.5-8.5
Wind 2006-2025 6.2-8.5
Geothermal 2006-2025 4.0-8.5
Project Aqua 2009-2012 4.5
Other Hydro 2008-2012 7.0-8.5
Cogeneration 2005-2025 4.6
LNG* 2005-2025 9.3-11.6
Coal* South Island 7.6-8.6
North Island 9.8-10.9
*Including $15/tCO2 carbon charge
Source: Ministry of Economic Development, NZ Energy Outlook to 2025, October 2003, www.med.govt.nz


ENDS

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