Encouraging small-scale electricity generation

Small scale electricity generation connected to local lines networks will be helped along by new regulations, says Energy Minister Pete Hodgson.

Mr Hodgson has released a discussion paper outlining proposals to regulate lines companies charges and conditions for connecting generators to their networks.

Major power stations connect directly to the national grid, but 15 to 20 percent of New Zealand’s electricity comes from smaller plants connected to local lines networks. Known as distributed generation, this includes local hydro schemes, landfill gas, small geothermal, diesel, gas, wind and solar generation and cogeneration, which uses spare industrial heat to produce electricity.

"Distributed generation has many benefits and the Government wants to open up more opportunities for it to grow," Mr Hodgson said. "There is considerable potential for more small-scale power projects in New Zealand and increasing interest from electricity companies and other investors."

Mr Hodgson said distributed generation increased supply security by locating generation closer to load and reducing dependence on major plants and long-distance transmission. Distributed generation also reduced energy losses from transmission and had less environmental impact than major plants.

"I expect that regulating line charges for distributed generation will help the expansion of renewable generation, which is often connected to local lines. Wind farms and micro hydro stations, for example, will frequently be located away from the national grid and the ability to connect to local lines for a reasonable charge will help make such projects viable. This is another way we can make progress towards a sustainable energy future."

The proposed regulations will allow generation up to 10kW to connect to local lines without charge. For generation above 10kW, lines companies may seek reasonable payment for any new assets needed to cope with the extra load. Generators and lines companies will have access to an arbitrator to determine disputes.

The discussion document is at http://www.med.govt.nz/ers/electric/distributed-generation/ Submissions are sought by 3 November 2003.

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