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PGF approves wind turbines funding for Stewart Island

Hon David Parker
Minister for the Environment

Friday November 22, 2019

22 November 2019 PĀNUI PĀPĀHO

Stewart Island/Rakiura has been granted $3.16 million from the Provincial Growth Fund to help build two wind turbines, putting the island on a path to sustainable electricity generation, Environment Minister David Parker announced today.

“Stewart Island is our third largest island, after the North and South Islands, and it is high time we addressed its energy future. Its isolation means it faces challenges to its sustainable economic development,” David Parker said.

It is estimated Stewart Islanders currently pay on average about three times as much as mainlanders for power, putting a huge extra burden on household budgets. The high cost of electricity also hinders businesses that might otherwise – for example – process fish on the island.

“It also makes sense to reduce the reliance on diesel, given the island’s reputation and potential as an environmental tourist destination, both for the National Park and as a Dark Sky Sanctuary,” David Parker said.

“Electricity is currently generated on the island through diesel generators that consume around 360,000 litres of diesel a year. Currently the full cost of diesel is not met, and fiscal reserves are likely to be depleted within a few years.

“Building an initial two wind turbines as part of the island’s power generation network is the most economic and environmentally acceptable option. It provides a renewable energy source. It is estimated to reduce diesel use on the island by half, which will enable the price of electricity to be stabilised.

“The economic resilience of Stewart Island will be considerably improved through this investment. Installing wind turbines will work to improve business viability, increase productivity and encourage businesses to remain on the island. Jobs will be created during the pre-construction and construction phase,” David Parker said.

Some on the island had wanted a hydro scheme but there was not enough storage for that and it would be more expensive.

Some had wanted a cable from the mainland, but that would be much more expensive.

“Wind energy is a clean fuel source compared to other energy sources. It does not pollute the air or produce greenhouse gasses,” David Parker said.

The PGF funding will allow for the pre-development and construction stages to be completed. The pre-development phase includes design, resource consents, geotechnical surveying, land access and economic analysis. The construction phase will include civil works and construction and turbine installation.

David Parker said there had been more than a dozen reports over the years into alternative energy sources for the island, but none had gone ahead.

“We are committed to addressing this important issue for the households and businesses on the island.”

Note to Editors:
Funding from the Provincial Growth Fund is approved in principle and announced, after which contracts are negotiated. Some funding may depend on completion of business cases. Payments are made once agreed milestones are met. These are set as part of contract negotiations, and differ from project to project.

Stewart Island PGF announcement


What is being funded?
The Southland District Council will receive a $3.16 million grant from the PGF towards converting part of Stewart Island’s electricity generation to wind by helping build two wind turbines on the island.
The funding will be provided in tranches after key milestones of work are delivered as part of the project.

What will the funding be used for?
In the pre-construction phase the funding will enable independent consultants to undertake pre-development activity including an economic analysis, the procurement of resource consents, further geotechnical work, and securing land access agreements. At the completion of the pre-construction phase, funding will also be used to install two wind turbines on Stewart Island.

What is part of the pre-construction and construction phase?
The total cost of the project is $3.16 million, which is broken into two distinct segments being:
Pre-development includes:
o Preliminary design
o Land access agreements
o Consenting and DOC concession
o Further wind monitoring and analysis
o Final business case and design
o Project management
Construction includes:
o Civil works
o Electrical construction costs
o Turbine installation

What kind of wind turbines will be installed?
Given the infrastructure on Stewart Island, smaller scale wind turbines would be more suitable. Two turbines which have been assessed as potential options are the Northern Power Systems NPS100-24 (95 kW) turbine and the XANT M24 (95kW) turbine.

What are the outcomes expected from the installation of the wind turbines?
Installing wind turbines will help:
• Stabilise the electricity at an affordable price, which would otherwise increase substantially once dwindling financial reserves are depleted.
• encourage business to remain on the island.
• bring positive environmental impacts with less diesel being used.
• enhance business confidence and viability.

Why is electricity a major concern for Stewart Islanders?
The generation of electricity and its on-going generation and maintenance costs, is identified as a significant barrier for the future sustainability of the Stewart Island community.

Power is generated on the island by diesel. The cost of diesel is continuing to rise. The diesel generators consume about 360,000 litres of diesel per annum.

Where will the wind turbines go?
An independent consultant updated a 2016 MBIE commissioned paper, Roaring40s Wind Power, which looked at wind energy electricity generation on Stewart Island.
Consent issues will have to be completed before a decision can be made on a site.

Were there any other electricity generation options considered?
The community has been through a number of investigations into alternative options for electricity for Stewart Island including hydro power and a cable from the main land. None proceeded.

Who will own the wind turbines?
The Southland District Council will own the asset and manage its upkeep.

How much do Stewart Islanders pay for electricity?
Stewart Island residents are estimated to pay about three times as much as mainlanders on average for power.
The cost of diesel generated electricity is expected to increase further and become a significant impediment.


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