Contribution to Government's Policies and Objectives
As stated above, the proposed Te Apiti development contributes to the government's stated objectives for the energy sector (energy efficiency and security of supply with an increasing focus on renewables) and is consistent with the principles for sustainable development.
Security of Supply
Ensuring security of electricity supply is a critical issue for all New Zealanders and for the government. There are two aspects to security of supply. Firstly, it is imperative to minimise the risk associated with dry years and secondly to ensure that New Zealand has the generation capacity over the long term to meet the projected growth in energy demand.
Dry Year Risk
Heavy reliance on hydro-generated electricity leaves New Zealand vulnerable to the effects of dry years. 2001 was very dry in the South Island hydro catchments and 2003 began similarly severely. This year's water shortage almost reached crisis point and necessitated large-scale public electricity conservation campaigns. Early indications suggest that New Zealand may be in the initial stages of an extended period of dry weather like that experienced between 1947 and 1976. It is possible that the current dry period began as early as 1998. Dry years indicate the dependence of both consumers and industry on energy as a key element of infrastructure and, consequently, how essential security of supply is.
One of the considerable advantages of electricity generated by wind is that supply is not dependent on rainfall. The Te Apiti development could help ensure continued electricity supply for both New Zealand consumers and industry during dry periods to reduce the likelihood of future energy crises. Given the possibility that New Zealand has entered an extended dry period, it is highly desirable that additional generating capacity is developed, particularly in the next few years. The Te Apiti development is one of the few developments ready to proceed in the near term and hence it would be highly beneficial that it progress according to Meridian's project timetable. This would ensure that the wind farm would begin to generate electricity by the end of 2004 and achieve full production capacity early in 2005.
Growth in Energy Demand
A further aspect of security of supply is ensuring that New Zealand has the generation capacity to meet the forecasted growth in energy demand. The most recent energy outlook provided by the Ministry of Economic Development projects that the composition of energy demand will change as the demand for energy increases, the Maui gas field declines and new technologies for the production, delivery and use of energy become more economically viable.
The baseline scenario projects that total consumer energy demand will increase by 1.1% p.a. between 1998 and 2020 for 3% p.a. GDP growth. Residential sector consumer energy is projected to grow, on average, at 2.1% p.a. between 1998 and 2020, the industrial and commercial sector to decline by 0.3% p.a., and the transport sector to grow by approximately 2.0% p.a. Over the same period electricity consumption is projected to increase by around 1.8% p.a.
It is important that, as the means become available, New Zealand undertakes the transition to renewable energy sources to ensure that we have the capacity to accommodate the growth in demand and to compensate for the inevitable decline in non-renewable sources, such as the Maui gas field. The Te Apiti project would contribute to the increased generation capacity required to satisfy demand while at the same time reducing New Zealand's dependence on non-renewable energy sources.
Sustainable Development Programme of Action for Energy
The Sustainable Development Programme of Action [link to MFE website] is one of the Government's major over arching documents designed to guide and underpin policy development. Energy has been identified as one of the target areas for sustainable development because of its correlation to economic growth, potential environmental impact, and because both consumers and industry are heavily reliant on its supply.
The major objective of the programme of action for energy is to ensure continued delivery of energy services to New Zealanders. It acknowledges that renewable energy sources, such as wind power, will become increasingly important in providing security of supply and in mitigating harmful effects that energy use can have on the environment. Three desired outcomes are identified:
- energy use in New Zealand becomes progressively more efficient and less wasteful;
- renewable sources of energy are developed and maximised; and
- New Zealand consumers have a secure energy supply.
Specific actions to achieve these outcomes are set out in the government's National Energy Efficiency and Conservation Strategy [link to MFE website], the climate change initiatives and the electricity policy statement. The Te Apiti proposal is consistent with the actions outlined in these documents.2
National Energy Efficiency and Conservation Strategy
The National Energy Efficiency and Conservation Strategy (NEECS) is the government's primary means to achieve outcomes sought in the sustainable development programme of action. The purpose of the NEECS is to facilitate the move towards a sustainable energy future for New Zealand by promoting energy efficiency, conservation, and a transition to the use of renewable energy sources.
The NEECS identifies two key policy directions that support New Zealand's movement towards a sustainable energy economy.
- Ongoing improvement in our energy efficiency
Target: By 2012, energy efficiency throughout the economy will improve by at least 20 percent. This target is equivalent to a continual improvement rate of two percent per annum to 2012. - Progressive transition to renewable sources of energy
Target: By 2012, renewable energy sources will generate an additional 30PJ of energy above 2000 levels. In 2000, renewable energy sources provided 133.5PJ, or 29% of consumer energy. The target means that by 2012, renewable sources should generate a minimum of 163.5PJ of consumer energy, which would equate to approximately a 30-35% market share.
It is estimated that a wind farm development, like that proposed at Te Apiti, could provide between 1.17 - 1.36PJ, or approximately 4%, of the 30PJ target.
Government Policy Statement: The Electricity Industry
The Government's overall objective for the electricity industry is to ensure that electricity is delivered in an efficient, fair, reliable and environmentally sustainable manner to all classes of consumer. To meet this objective, the Government favours industry solutions that satisfy consumers' electricity requirements in a manner which is least-cost to the economy and in accordance with the principle of sustainable development.
The government has identified a number of desired outcomes consistent with the above objective. Meridian Energy's proposal would particularly contribute to achieving the following outcomes:
- the use of new electricity technologies, renewables and distributed generation is facilitated and generators using these approaches do not face barriers;
- generation is consistent with government policies on climate change and energy efficiency; and
- risks relating to security of supply are properly managed.
Resource Management (Energy and Climate Change) Amendment Bill
The Resource Management (Energy and Climate Change) Amendment Bill [link to MFE website] has recently been introduced into parliament. The purpose of the bill is to ensure that decision makers give greater weight to climate change and related energy matters, such as energy efficiency or the use of renewable energy, when exercising functions and powers set out in the RMA 1991. The bill seeks greater alignment between local government plans and national energy objectives, outlined in the NEECS and climate change policies, and aims to ensure that councils consider the contribution their regions can make to meeting New Zealand's commitments under the Kyoto Protocol.
Specifically the Bill amends section 7 of the RMA to require decision-makers to have particular regard to the efficient use of energy, the effects of climate change, and the benefits associated with renewable sources of energy.
Climate Change Policy
New Zealand's climate change policy [link to New Zealand Climate Change Office website] is very closely related to renewable energy initiatives. The utilisation of renewable resources for energy generation is heavily dependent on the incentives provided by the government's climate change policies.
"Projects" is one element of the government's climate change policy package and is expected to play a key role, prior to the introduction of the emissions charge, in reducing greenhouse gas emissions. A "Project" is a specific activity that reduces emissions in return for a government incentive. An activity cannot be a "Project" unless it would be uneconomic without payment of an incentive. The incentive for the first round of "Projects" will be a promise concerning the future delivery of Kyoto emission units to the investor conditional on delivery of emission abatement. These emission units, often referred to as "carbon credits", will be internationally tradable when the Kyoto Protocol comes into force.
The government has already accepted the proposed Te Apiti development as a "project" and reserved emission units for it. The government is in the process of concluding the project agreement with Meridian Energy. This indicates the contribution the development could make to meeting New Zealand's Kyoto commitments.
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