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Tiwai Will Create Cheaper Power For Kiwis; Or Will It?

Otautahi - The Manapōuri electricity supplied to the Tiwai Pt smelter near Bluff falls back into the hand of all New Zealanders to provide green and cheap power from 2024. Or will it?

An Australian businessman is considering using the aluminium smelter site and Manapōuri electricity for hydrogen production. Australian billionaire Dr Andrew Forrest has reportedly considered the aluminium smelter site at for hydrogen production, probably for export.

Hydrogen is a clean-burning molecule but today, 99 percent of hydrogen is still made using fossil fuels, usually through a pollution-heavy process of making electricity to break the hydrogen / oxygen bonds that make the water molecule.

Some say green hydrogen, which is produced using electricity from renewable resources, could be the key to curbing our carbon footprint.

Tiwai Pt may close in 2024 which, all things being equal, could provide green, cheaper power to all Aotearoa households and businesses because wholesale electricity prices will fall.

While the pass through from wholesale to retail prices is complex, lower long term wholesale prices must mean retail prices will be lower than they would otherwise be.

If Manapōuri power is not made available to all New Zealanders to help decarbonise and contribute toward meeting our Paris agreement emissions levels, then wholesale electricity prices will go higher or stay higher than they would otherwise.

So, what is the value of Manapouri power to New Zealand? Massive, in terms of cheap renewable power and lower electricity prices and reduced greenhouse gas emissions.

What will He Pou a Rangi NZ Climate Change Commission think about the possible future of Manapouri power with or without Tiwai or another buyer of the block of electricity that represents around 12 percent of all our electricity generation capacity today?

The 2024 closure of Tiwai Pt is a result of a deal, or lack of it, between Meridian Energy, the 51 percent state owned holder of the Manapouri power plant, and the smelter's owners, the multinational mining company Rio Tinto.

Tiwai Pt is driven by the Manapōuri hydroelectric power station in Fiordland. New Zealanders need to think carefully what we do with our hydro generation capacity as we address climate change.

There is not much additional renewable hydro and geothermal capacity and both represent strategic assets because of their contribution to decarbonisation through electrification.

If we sell our now fixed hydro-electric generation capacity so foreigners can reduce their emissions, we will not only pay more for our electricity than we would otherwise have paid but we will spend more on offshore mitigation to meet our Paris commitments. We will invest more scarce capital on building more electricity generation capacity sooner than we would have.

There should be a national interest-test applied before any long term bulk supply contract is signed that could so materially affect electricity prices, reliability of supply and our opportunities to meet our emissions reduction targets now on our statute book and committed to under the Paris Agreement.

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