By Gavin Evans
Aug. 9 (BusinessDesk) - Mercury NZ says it is aiming to have contractors on site to start work on its 119-megawatt Turitea wind farm this month.
Safety improvements on the local roads around the $256 million project have already begun and ground testing is underway to help confirm foundation designs for structures on the site south-east of Palmerston North.
A specific date for getting construction crews on site is yet to be confirmed, “but we are getting close,” Mercury says.
August is shaping up as a key month for firms trying to settle their near-term generation investment plans. Contact Energy is aiming to start appraisal drilling at its Tauhara geothermal field this month for an investment decision early next year. Meridian Energy plans to seek bids at the end of the month for civil works at its potential 140 MW Maungaharuru wind farm north of Napier. Tilt Renewables wants to make an investment decision on its 130 MW Waverley wind project by year-end.
John Kidd, head of research at Enerlytica, says investors will spend the coming earnings season trying to glean from the listed firms their commitment to new generation capacity and its potential timing.
While electrification of the economy is inevitable and already underway, demand remains “very, very flat,” Kidd told BusinessDesk.
Firms with gas-fired plants are concerned about future fuel supplies and their cost and will be using their renewable options to try and “squeeze out” better terms from gas suppliers.
And firms planning new renewable plant will be trying to avoid a repeat of the over-investment in capacity seen a decade ago.
“There is deep uncertainty across the sector,” Kidd said.
“You do want to position yourself quite carefully in all this.
“You’re not going to see people just jumping in.”
The projects being eyed by the four biggest generators could add about 430 MW of new capacity within the next four years. Mercury expects its first wind turbines could be generating by late 2020. Tilt is aiming to commission Waverley in late 2021. Meridian’s tender documents say it could start work at Maungaharuru early next year, subject to a December investment decision.
But the major generators are not the only players building new capacity.
Homes and businesses have added 21 megawatts of solar to their rooftops in the past year, according to Electricity Authority data. Todd Corporation is building a 100 MW gas-fired plant south of New Plymouth and Top Energy is currently doubling the generation capacity of its Ngawha geothermal site in Northland.
Ballance Agri-Nutrients is considering adding 16 MW of wind power at its Kapuni plant as part of a hydrogen initiative and Refining NZ aims to make an investment decision in October on a 26 MW solar installation it plans next to its refinery at Marsden Point.
Contact will spend about $30 million drilling four appraisal wells at Tauhara this year and says it is in talks with vendors on a range of technologies.
It is planning a staged development and is looking at an initial build large enough to replace the current production from its ageing 377 MW gas-fired Taranaki Combined Cycle plant at Stratford.
The company spent about $50 million in 2017 securing another five year’s life from the now 23-year-old plant. It said in June that TCC could play an important role beyond 2022 helping electrify transport and industry but it would need affordable and reliable gas supplies to do so.
Contact and Genesis operate the country’s biggest gas-fired power stations. Genesis has agreed to buy the first 20 years’ output of Tilt’s Waverley project as part of a plan to stop year-round running of its 400 MW gas-fired plant at Huntly within five years.
Enerlytica’s Kidd says the desire of Genesis to reduce its emissions is genuine, but he said both it and Contact are working to create options and keep pressure on gas suppliers who face the prospect of demand destruction otherwise.
Contact’s last investment at TCC had not really paid off and Kidd was sceptical that the company would spend another $60-70 million to extend its life beyond 2022.
“I don’t think they will spend it again.”