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New Zealand is ideally situated to generate electricity from wind. Located directly across the path of prevailing westerly winds, many regions of New Zealand have a wind resource that is among the best in the world, with annual average wind speeds of approximately 10 m/s.

In 2002 the Ministry commissioned a study, Availability and Costs of Renewable Sources of Energy for Generating Electricity and Heat, which identifies that wind energy has the potential to contribute significantly to meeting New Zealand's energy needs. The table below identifies the contribution wind power could make to consumer energy, compared with hydro-generation, at less than 15 cents per kilowatt-hour (c/kWh).

NB. High confidence resources are those that are well proven and readily able to be permitted and developed. Achievable development rate has been taken into account. High confidence resources represent an 80-90% confidence that the uptake will occur. Medium confidence estimates represent a median estimate of uptake. Generally these are associated with a more liberal consenting environment. Low confidence estimates represent resources that can be developed but difficulties are expected in terms of permitting and access. They represent a 10-20% confidence that the uptake will occur. Confidence levels are cumulative e.g. the medium confidence resource available will include both the high and medium confidence bands.

The study identifies that the technology associated with wind power continues to mature, which in turn continues to reduce the unit cost of generation. By 2012, generation in the 4-6c/kWh band will be possible, with the largest resource available in the 6-10c/kWh band. By 2025, considerably more of the resource could be available for generation in the 4-6c/kWh band.¹ Technological advancement, when combined with New Zealand's wind resource, provides a potentially major opportunity to utilise this renewable resource for electricity generation.

In 2005, the Ministry of Economic Development and the Energy Efficiency and Conservation Authority commissioned Energy Link Limited and MWHNZ Limited to develop a methodology that can be used to quantify the potential for the integration of wind generated electricity into the New Zealand electricity system and to undertake an initial application of this methodology.² Wind energy integration is defined as the ability of wind farms to connect to, and operate within, the New Zealand electricity supply network in a manner which is compatible with the day-to-day operation and short term security of the electricity supply system as a whole³.

Wind energy is currently in its infancy in New Zealand with penetration having reached only 2.5 percent by the start of 2005. The wind energy integration study finds that wind energy could potentially make up 20 percent of market share with penetration of around 35 percent. The initial analysis therefore indicates that there is potential for much higher levels of wind integration than we currently have.

Wind energy, as with other renewable energy sources, is an environmentally responsible alternative to energy derived from fossil fuels because generation does not produce carbon dioxide. Carbon dioxide emissions could be significantly reduced if the potential of wind energy was fully exploited. By contributing to the reduction of greenhouse gases, the Titiokura wind farm would assist New Zealand in meeting its commitments under the Kyoto Protocol.

¹ A similar study by the Energy Efficiency and Conservation Authority (EECA) in 2001, Review of New Zealand's Wind Energy Potential to 2015, identified that wind energy provided approximately 0.5% (150 GWh/y) of New Zealand's electricity and could potentially provide 23% (7,900 GWh/y) of 2001 electricity needs at costs of up to 10c/kWh within 10-15 years.

² Energy Link and MWHNZ, Wind Energy Integration in New Zealand, May 2005.

³ Wind energy integration is quantified by its penetration and its market share. Penetration is defined as the ratio of installed wind capacity in MW to peak generation in MW, expressed as a percentage value (expressed relative to the peak demand of the country as a whole). Market share is the proportion of total annual generation (GWh) that is generated from wind (expressed relative to the total annual generation of the country as a whole).