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2 The Status Quo

2.1 Current regulatory framework

The wider framework that governs the use and development of New Zealand’s renewable energy resources is set by a number of national and international statutes, strategies and policies including the:

  • Resource Management Act 1991 and the Resource Management (Energy and Climate Change) Amendment Act 2004

  • Electricity Act 1992, including the Government Policy Statement on Electricity Governance

  • Energy Efficiency and Conservation Act 2000

  • Climate Change Response Act 2002

  • Climate Change (Emissions Trading and Renewable Preferences) Bill 2007

  • Kyoto Protocol

  • Energy Policy Framework

  • Sustainable Development Programme of Action – Energy

  • New Zealand Energy Strategy

  • New Zealand Energy Efficiency and Conservation Strategy

  • National Policy Statement on Electricity Transmission.

Within this wider framework, the regulatory environment within which New Zealand’s renewable energy resources are to be used and developed is primarily determined by the RMA.  The New Zealand Energy Strategy and New Zealand Emissions Trading Scheme are also expected to have a significant influence on the development of these resources.  The key elements of this regulatory environment are outlined below, to provide a background to discussion later in this section on the current status, expected future scenario, and problems identified with the status quo.

2.1.1 The Resource Management Act 1991

Section 2 of the RMA defines renewable energy as: “energy produced from solar, wind, hydro, geothermal, biomass, tidal, wave, and ocean current sources”.  Renewable energy broadly encompasses energy derived from resources that are either regenerative or resources that, for practical purposes, are not depleted by their use over very long timeframes.

District and regional councils are responsible for making decisions on applications for renewable electricity generation projects under the provisions of the RMA.  The decisions of these bodies are guided by the content of district and regional plans and regional policy statements.

The Resource Management (Energy and Climate Change) Amendment Act 2004 (RMAA) introduced three new matters into section 7 (Other matters) of Part II of the RMA, requiring all persons exercising functions and powers under the Act to have particular regard to:

  1. the efficiency of the end use of energy
    1. the effects of climate change
    2. the benefits to be derived from the use and development of renewable energy.

Some local authorities have made changes to their plans and/or policy statements in response to these amendments.  Eleven (of 86) regional councils, unitary authorities and territorial authorities have introduced objectives, policies and methods regarding climate change, energy efficiency and renewable energy and at least two others have drafted plan changes to address these matters.  The amendments vary for each local authority in their extent and focus; however, all have a general aim of encouraging renewable electricity generation while avoiding, remedying or mitigating adverse effects on the environment.

2.1.2 Ministerial call-in

Section 141A of the RMA allows the Minister for the Environment to intervene in local authority decision-making processes by ‘calling in’ applications or requests for private plan changes of national significance.  Section 141B(2) of the RMA sets out the relevant factors the Minister may choose to consider when deciding whether a proposal is of national significance.  These factors include whether the matter:

  1. Has aroused widespread public concern or interest regarding its actual or likely effect on the environment, including the global environment; or
  2. Involves or is likely to involve significant use of natural and physical resources; or
  3. Affects or is likely to affect any structure, feature, place, or area of national significance; or
  4. Affects or is likely to affect more than one region or district; or
  5. Affects or is likely to affect or is relevant to New Zealand’s international obligations to the global environment; or
  6. Involves or is likely to involve technology, processes or methods which are new to New Zealand and which may affect the environment; or
  7. Results or is likely to result in or contribute to significant or irreversible changes to the environment, including the global environment; or
  8. Is or is likely to be significant in terms of section 8 (Treaty of Waitangi).

The Minister can be formally requested to intervene in a proposal, either by the applicant or by the relevant local authority.  The Minister can also choose to intervene.  When deciding whether to intervene, among other considerations, the Minister must have regard to the extent to which a matter is of national importance.  Before the 2005 amendment to broaden the Minister’s call-in powers, the call-in provisions of the RMA had only been applied once in the mid-1990s in relation to the Stratford Power Station proposal.  However, in 2007, Transpower’s North Island Grid Upgrade Project was called in, and so far in 2008 the ‘Te Waka’ wind farm proposal and ‘Te Mihi’ geothermal power station proposal have both been called in.  The increasing willingness of the Minister to call in energy-related proposals could reflect the fact that many of the factors set out in section 141B(2) apply to these proposals.  Given the nature of effects, both beneficial and adverse, of renewable electricity generation projects this trend is likely to continue.

Although not a universally supported or a universally appropriate option, the Ministerial power to ‘call in’ renewable electricity generation projects has the potential to ensure that complex and nationally significant proposals are processed in a timely and cost-effective manner; and that the nationally significant factors of such proposals are given appropriate consideration by decision-makers.  The call-in process also has the potential to aid in establishing case law that can be used to inform consent applications and to guide decision-makers when considering other similar projects.

In this context, it is expected that an increasing number of applicants and councils will seek to invoke the call-in provisions in relation to renewable electricity generation projects, particularly if decisions made by the Minister (through a Board of Inquiry) are better able to deal with increasingly complex resource management matters, often relating to the balancing of conflicting local and national benefits and adverse effects.

2.1.3 The New Zealand Energy Strategy

The New Zealand Energy Strategy to 2050 was released in October 2007.  The NZES sets out the government’s vision for a reliable and resilient system delivering New Zealand sustainable, low emissions energy services.  It specifically responds to the challenges of climate change and improving security of energy supply.

The NZES is a whole of system strategy covering electricity, transport, technologies, energy efficiency, and energy affordability.  One of its key actions is to adopt a target for renewable electricity generation of 90 per cent by 2025 (based on delivered electricity in an average hydrological year).  The NZES outlines the likely make-up of electricity generation under two scenarios: base case and low-carbon energy sector.  The base case is effectively the status quo, while the low-carbon energy sector provides a close approximation of a case where the 90 per cent target is achieved.  Both scenarios take into account predicted increases in electricity demand although the low-carbon energy scenario assumes greater improvements in demand reduction (such as increased energy efficiency) than the base case.  In addition, a greater degree of technological advancement and the introduction of carbon pricing are assumed in the low-carbon scenario.

The mix and timing of projects underlying the low-carbon scenario has been modelled by the Electricity Commission.9  The modelling involved the development of five scenarios, ranging from the ‘sustainability path’ to ‘high gas discovery’.  Although it is underpinned by different assumptions and is not driven by the 90 per cent renewable target, the ‘sustainability path’ in the Commission’s modelling achieves an equivalent proportion of renewable electricity generation by 2025 and can therefore be compared with the low-carbon scenario in the NZES.  Table 1 shows the estimated mix and timing of electricity generation projects under the ‘sustainability path’ scenario, as well as the percentage of electricity generated from renewable sources at periods between 2008 and 2025.  Two of the hydro projects shown in Table 1 refer to control gate refits resulting in increased generation, but the remaining projects represent new generation capacity that will need to be consented under the RMA and constructed within these time periods in order to achieve the 90 per cent target set by the NZES.

Table 1: Projected generation under the Electricity Commission’s ‘Sustainability Path’ scenario

  Gas/oil Diesel Hydro Wind Geothermal Biomass Marine Total Renewable
Installed capacity 2007 (MW) 2959 156 5346 434 322 130 0 9347  
2007 output (GWh) 12,268 68 24,692 3,422 1,128 1,025 0 42,603 71%
Added capacity 2008–2010 –300 150 (1) 39 (3) 252 (4) 338.5 (4)     480  
Projected 2010 output (GWh) 10,532 134 24,872 5,408 2,314 1,025 0 44,286 76%
Added capacity 2011–2015   150 (1) 285.5 (7) 117 (3)       553  
Projected 2015 output (GWh) 11,180 200 26,191 6,331 2,314 1,025 0 47,240 76%
Added capacity 2016–2020 –885 (1) 450 (3) 488 (5) 496 (5) 620 (5) 30 (1)   1199  
Projected 2020 output (GWh) 5,561 397 28,445 10,241 4,487 1,261 0 50,392 88%
Added capacity 2021–2025 –360 300 (2) 220 (4+) 75 (1) 470 (4) 60 (2) 50 (1+) 815  
Installed capacity 2025 (MW) 1,414 1,206 6,378 1,374 1,750.5 220 50 12,393  
Projected 2025 output (GWh) 4,847 528 29,458 10,833 6,134 1,734 219 53,754 90%

Source: Enfocus Ltd 2008

Notes: See the Electricity Commission’s 2008 Grid Planning Assumptions for further detail on the assumptions underlying the modelling of the sustainability path scenario.  For the purposes of calculating output, the following load factors have been assumed: Wind 40%, Hydro 53%, diesel peakers 5%, geothermal 90%, biomass 90% and wave power 50%.

2.1.4 The emissions trading scheme

From December 2006 through March 2007, the government released five discussion documents and consulted broadly on possible policy directions for climate change and sustainability.  In response to this consultation, the government has decided in principle that New Zealand will adopt an emissions trading scheme (the NZETS) as its core price-based measure for mitigating climate change.

The NZETS will, over time, include all major sectors (including stationary energy) and the six greenhouse gases specified in the Kyoto Protocol.  It will be introduced across the economy in stages to allow gradual adjustment.  All major sectors of the economy will be exposed to the international price of emissions at the margin for all operations by the beginning of 2013.  The scheme will allow both sales to and purchases from international trading markets.  The ‘stationary energy’ sector (coal, natural gas and geothermal) will enter into the NZETS in January 2010.  Upon entry into the scheme, sectors will assume the core obligation to surrender emission units to match emissions, and further obligations with regard to monitoring and reporting.

2.2 Situation under the status quo

2.2.1 Emerging trends

The use and development of natural resources for the purpose of renewable electricity generation will always result in adverse environmental effects of some degree.  These effects are likely to increase with scale and it is also likely that renewable electricity generation proposals, with the potential to contribute meaningfully to national electricity generation capacity, will always require resource consents.  Will consent will be granted, or will it be granted subject to commercially viable conditions?  That question is undoubtedly central to the decisions of generators considering the implications of investing significant sums, sometimes in the hundreds of millions of dollars, in the construction of large-scale renewable electricity generation projects.

In general terms, well-designed and appropriate projects should gain consent under the existing RMA framework, whereas poorly conceived projects with overwhelmingly negative environmental effects should be declined.  However, the relativistic nature of decisions charged with promoting the sustainable management of natural and physical resources means that RMA decisions will never be as ‘black and white’ as many would like – irrespective of which side of the debate one is on.  The question this section 32 evaluation seeks to address is whether an NPS is needed to assist those ‘well-designed and appropriate’ projects in gaining consent, or whether the status quo is adequate for this purpose.

There is a perception, and often a reality, of lengthy delays and high costs associated with the acquisition of resource consent for renewable electricity generation projects.  To take a balanced view, any major development project will face higher costs associated with the RMA; these costs will be relative to the scale and mix of effects that need to be assessed.  The costs associated with assessing environmental effects and gaining resource consent are, in the majority of cases, likely to be generally appropriate and associated with the reasonable requirements of preparing resource consent applications for projects that may have significant environmental effects; additional costs associated with unnecessary processing delays are, however, less acceptable.

Uncertainty in the RMA decision-making framework due to a lack of clarity surrounding the balancing of effects associated with renewable electricity generation projects can complicate the consent process and has the potential to add significant development costs to these projects.  Very little information is publicly available on the projects that might have been discounted as ‘unconsentable’ under the RMA before reaching the consenting stage – making it very difficult to confirm whether the RMA has acted as a deterrent to even more (or larger projects) being advanced to the consenting stage.  However, while the costs of uncertainty in relation to renewable electricity generation projects are difficult to quantify, anecdotal accounts suggest they can be of sufficient size to undermine the viability of projects at the pre-application stage.

Assessments of the effect the RMA is having on renewable electricity generation projects have been undertaken by MWH Consultants in 2003,10 the Governmental Reference Group in 2006,11 and the Environmental Challenge Limited (ECL) in May 2006.12  A review of these reports, along with a review of recent case law and the results of consultation with key stakeholders in the energy market (generators, regulators and interest groups), has highlighted a number of significant issues with the resource consent process.  These issues are discussed under the subheadings below.

2.2.1.1 Objectives and policies in statutory planning documents

Some notable exceptions aside, regional policy statements generally do not contain policies that would encourage the use and development of resources (such as wind or water) for renewable electricity generation purposes.  Again with some notable exceptions, this pattern is found in regional and district plans, which generally lack relevant policies and methods under which consents for renewable energy could be sought.  Similarly, a primary finding of a 2004 review of planning for wind energy13 was that “many district plans are effectively silent with regard to wind energy”.  It is important to note that the New Zealand wind industry was still in its infancy when the first generation of plans under the RMA were produced; second generation plans, or plan changes, in those locations where wind energy is being actively developed are beginning to include specific provision for wind farms (eg, the recently notified Tararua District Plan, with the Tararua District including one of New Zealand’s first large-scale commercial wind farms, at Te Apiti).

The 2004 amendment to the RMA inserted the effects of climate change and the benefits of renewable energy into section 7 as matters to which decision-makers are to have particular regard.  Yet only 11 of 86 regional councils and territorial authorities have introduced objectives, policies and methods into their plans regarding climate change, energy efficiency and renewable energy.  This could reflect differing levels of resourcing or capacity, or, because not all of New Zealand is endowed with renewable energy resources some local authorities may not have been prompted to consider changes to their planning framework.  On the other hand, it could reflect the political difficulty of providing for development that has the promise of benefits at both national and local scales, but the potential to result in significant adverse local environmental effects.

In short, perhaps due to the relative lack of government guidance, much of the country does not have an explicit policy framework to guide the assessment of applications to use and develop renewable energy resources.  Without this guidance, generators can find themselves having to negotiate a patchy regulatory system where local authority’s plans are skewed towards identifying and evaluating the potential adverse effects of renewable electricity generation projects.

2.2.1.2 Consenting existing generation capacity

The presumption in the RMA is that consents granted to provide for the use of public resources, such as the allocation of water-use rights or the granting of permission for private occupation of the coastal marine area, will expire.  If the consent-holder proposes to continue undertaking the consented activity, new consents will be required.  In many instances the most sustainable use of natural and physical resources will be to maintain existing renewable generation capacity and to maximise its efficient use.  If existing generation capacity is not maintained, the new generation capacity required to make up for the resultant shortfall would be considerably more expensive to develop than the alternative of optimising the efficiency with which existing capacity is used.  There are also economic benefits to optimising the potential returns from existing investment, and as such there is a logical desire amongst generators to enhance the use of existing infrastructure and resources for renewable electricity generation.

In addition to facing the same barriers as new projects, existing renewable electricity generation infrastructure was often developed at a time when New Zealand’s natural and physical resources were managed under a different set of values.  Gaining consent for existing projects under the RMA can therefore be particularly complicated and can entail longer lead-in and processing times than new projects.  Generators consider the process of gaining consent for existing projects to be an unduly difficult, costly and time-consuming process given the significant contribution that these projects make to the security of electricity supply in New Zealand and the wellbeing of New Zealanders.  There have been no instances where consent for existing large-scale renewable electricity generation activities has been declined, although conditions have been changed to improve environmental performance and the term of the subsequent consent has, in some cases, been granted for less than was sought (the Tongariro Power Development is one such example).  While it is necessary to consider the appropriateness of existing generation infrastructure as consents approach expiry, the general lack of policy recognition for the benefits of these projects continues to frustrate generators.

2.2.1.3 Processing timeframes

In almost all cases studied where generators have sought to develop significant renewable electricity generation projects under the RMA, applications have been publicly notified to a broad audience and the processing timeframes have extended beyond the statutory timeframes identified by the RMA.  It is appropriate for affected parties to be notified and, in some cases, for statutory timelines to be extended to allow applicants to explore potential avenues for resolution of submitters’ concerns.

Hydro projects were found to have the longest processing timeframes; on average generators waited 18 months after the final date for lodging appeals before receiving a decision from the Environment Court.  This delay is significant when added to the time it takes to prepare a consent application (which anecdotal accounts suggests can stretch for five years or more), and in view of the time it can take for councils to process applications.

2.2.1.4 National benefit analysis

One of the key issues for consenting renewable electricity generation is that the costs (in environmental terms) are often incurred locally, while the local benefits are difficult to assess and are generally felt (or calculated) at a national level.

In over half of the projects reviewed as part of this assessment, decision-makers undertook an analysis of the national benefit of the proposal.  However, few council decisions explicitly gave weight to national electricity generation benefits as a counter-balance to the adverse effects.

The beneficial effects of the commercial activity of renewable electricity generation do not generally gain material recognition in policy statements and plans.  Although only required in second generation plans, few regional and district plans seek to acknowledge the significant social, economic and environmental benefits associated with renewable electricity generation activities.  Perhaps these are implied, but the general lack of amendments made to plans and/or policy statements around the country to explicitly recognise the benefits of renewable electricity generation continues to be a barrier to the timely and efficient granting of consents for well conceived renewable electricity generation projects.

More broadly, plans tend to look at site impacts rather than the sectoral or strategic environmental implications of decisions.  Despite this, case law emerging from the Environment Court is beginning to encourage standardised methodologies for the assessment of environmental effects in areas where expert consideration of these effects can be highly subjective.  An example of this is the so-called ‘Pigeon Bay Criteria’ for assessing the effects of proposals on the natural landscape.

Although there is evidence of greater certainty and consistency in the RMA decision-making framework since the 2004 amendment, the following question taken from the Environment Court’s decision on Meridian Energy’s proposed wind energy project, ‘West Wind’, at Makara14 illustrates the difficult position that decision-makers regularly find themselves in when asked to consider the issue of weighing national benefits against local effects in relation to renewable electricity generation proposals:

[456] ... Where should the weighting lie between the benefits for the wider environment, and the disbenefits for the local environment and those who live and work in it?  Put another way, acknowledging that every desirable outcome comes at a cost, how much of this outcome should the local environment and its local inhabitants reasonably be asked to bear?

The question expressed by the Environment Court in the Makara wind farm decision is one that has to be addressed in all decisions on applications for consent to develop renewable electricity generation activities.  Despite the difficulty inherent in making such judgements, case law is beginning to establish the clear need to factor national benefits into these decisions.  In an earlier case in relation to the Awhitu wind farm project, Genesis Power Limited v Franklin District Council (A148/05), the Environment Court found that the benefits of this proposed wind development, when seen in the national context, outweighed the site-specific effects and effects on the local surrounding area.  In that case, the Environment Court concluded that granting resource consent to the proposal would have numerous positive effects in the national interest and would reflect changes made by the RMA (Energy and Climate Change) Amendment Act 2004.  In a similar vein to the Genesis Power decisions, the Court in Unison Networks and Hawke’s Bay Wind Farm v Hastings District Council W58/06 clearly recognised that the proposed wind farm would have adverse effects on landscape and visual amenity but, after balancing the competing factors, concluded that the best way to promote sustainable management was to grant consent.  While the Court sought to weigh local and national implications in both the Genesis Power and Unison Networks decisions, the exercise of doing so was taxing.

It is notable that, despite receiving consent for the Awhitu project, Genesis Power has chosen not to proceed to the development stage and it is understood that the significant costs associated with the mitigation measures required by the conditions of consent were influential in this regard.  This observation reflects concern amongst the major generators that resource consents show a trend to be granted subject to conditions of consent that are too strict and ‘protectionist’, so as to undermine the financial viability of consented projects.  For example, TrustPower Limited advises that conditions have been imposed on six of its hydro schemes, resulting in a loss of capacity ranging from 1.2 to 9 per cent.  The cumulative impact of incrementally reducing the capacity of particular applications will mean that more capacity needs to be developed elsewhere to meet demand.  Perhaps counter-intuitively, applying strict protectionist conditions could further spread the footprint of adverse effects associated with this form of development.  The emergence of such a trend represents a significant obstacle within the existing consenting framework that could undermine the efforts of generators to develop sufficient renewable electricity generation capacity to meet the government’s target for renewable electricity generation of 90 per cent by 2025.

The difficulty of weighing national and local effects and benefits is understandable given the complex and varied nature of the resources, technologies, local values and national benefits at play in applications for consent to use and develop renewable energy resources.  The philosophy behind the RMA leads it to remain largely silent on how to appropriately balance national and local benefits and effects, preferring instead to rely on the case-specific judgements of decision-makers whose consideration of effects and benefits is subject to assessment against Part II of the RMA.  Within this framework decision-makers are required to have particular regard to the benefits to be derived from the use and development of renewable electricity generation and until such time as the significance of these benefits are made clear, generators will face lodging applications within an uncertain regulatory framework.

2.2.2 Situation in 2008

In order to establish emerging trends, much of the foregoing analysis has necessarily been backward-looking.  Although the New Zealand Energy Strategy has only recently been released and the New Zealand Emissions Trading Scheme has not yet been introduced, both have been foreshadowed for some time; it is possible that the investment decisions of generators have recently been influenced in anticipation of these changes to the regulatory environment.  As such, an analysis of the immediate situation is required to predict the effect of the status quo on the future of renewable electricity generation in New Zealand.

As at June 2008, four renewable electricity generation projects were under construction.  In addition to this, a further 14 projects have been consented around the country, four of which are under appeal.  Excluding these four, the 10 projects will provide a total additional capacity of 858.9 MW.  Notably the four projects under appeal are all wind farms.  If granted consent, these projects would provide an additional total capacity of 1040 MW. Tables 2–4 below provide further details.

Table 2: Renewable electricity generation projects under construction

Name Type Operator Commissioning date Region Capacity (MW)
Kawerau Geothermal Mighty River Power 2008 Bay of Plenty 90
Ngawha Expansion Geothermal Top Energy 2008 Northland 15
Te Rere Hau (parts 2–4) Wind NZ Windfarms 2008–2009 Manawatu 46
West Wind Wind Meridian 2009 Wellington 142.6

Source: Ministry of Economic Development (unpublished data).

Table 3: Renewable electricity generation projects consented

Name Type Developer Region Capacity (MW)
Hawea Gates (retrofit) Hydro Contact Energy Otago 19
Lake Rochfort Hydro Project Hydro Kawatiri Energy West Coast 4
Nga Awa Purua Geothermal Rotokawa Joint Venture Waikato 13
Tukairangi Road Geothermal Geotherm Group Waikato 60
Centennial Drive Geothermal Contact Energy Waikato 20
Hawke’s Bay Wind Farm Wind Hawke’s Bay Wind Farm Hastings 225
Titiokura Wind Unison Hastings 48
Taumatatotara (on hold) Wind Ventus Waikato 20
Awhitu (on hold) Wind Genesis Franklin 18
Horseshoe Bend Wind Pioneer Generation Central Otago 1.8

Source: Ministry of Economic Development (unpublished data).

Table 4: Renewable electricity generation projects consented but under appeal

Name Type Developer Region Capacity (MW)
Taharoa Wind Taharoa C Inc Kawhia 100
Project Hayes Wind Meridian Central Otago 630
Mahinerangi Wind TrustPower Otago 200
Motorimu Wind Allco Wind Energy Manawatu 110
Kaiwera Downs Wind TrustPower Southland 240
Te Uku Wind WEL Energy Waikato 84

Source: Ministry of Economic Development (unpublished data).

New renewable electricity generation technologies are currently being developed and tested under the status quo.  A project to trial a 1 MW tidal stream turbine in the Cook Strait was granted a coastal permit in April 2008, and a council hearing was held in May 2008 to consider an application to install marine turbines in the Kaipara Harbour.  In addition, at least 14 wave and tidal stream technologies are currently being investigated around New Zealand.  International trends suggest that investment in marine and tidal electricity generation projects is becoming economic.  If site-specific conditions prove appropriate, New Zealand is anticipated to see more widespread ‘speculation’ around marine and tidal electricity generation projects.

The emerging pattern then is one of increasing willingness on behalf of generators to propose large-scale renewable electricity generation projects, particularly wind generation projects.  Nevertheless, all issues raised in section 2.2.1 above are still relevant.  Regulation has a significant influence on the commercial decisions of generators, at least as far as the energy sector is concerned; therefore the NZETS and the NZES will only achieve their long-term targets if there is corresponding attention to the actual and potential blockages or constraints within the regulatory system.  Accordingly, in the absence of clear evidence to the contrary, we can expect the trends identified in section 2.2.1 to be a reasonable indicator of future experience.

2.3 Likely future scenario under the status quo

There is a degree of uncertainty surrounding estimates as to the likely timing and mix of future renewable electricity generation projects, largely because they are subject to the commercial decisions of generators.  An underlying assumption of the models relied upon in this evaluation is, that projects with the least ‘cost’ will proceed earlier than more ‘costly’ projects.  In this sense ‘cost’ is influenced by factors such as demand for electricity, emissions charges, available technology and the time and monetary costs of obtaining consent for a project.  A variable factor is the cost that electricity generators receive for any electricity generated.  It is assumed that the ‘market’ will determine when and where new generation projects are undertaken based on these factors.

It is possible that the analysis of trends and the current situation undertaken above may underplay the issues that will face future proponents of renewable electricity generation projects.  Assuming the market is working to favour the most cost-effective projects, the most financially attractive projects and the projects that are the easiest to consent have probably already been developed or applied for.  If this assumption holds, future projects are likely to be more costly to develop, more complex to process and, possibly, more likely to be associated with significant or uncertain environmental effects.

Introducing an emissions price will increase the cost of transport fuels and other non-renewable energy (such as coal and natural gas).  Conversely, it will reduce the relative price of low-emission goods and services and increase the relative returns on investment in low-emissions technologies.  This will make it more cost effective for electricity generators to invest in renewable energy such as wind, marine and solar power into the future.  Hence, as section 2.2.2 above shows, the NZETS and the government’s proposal to restrict the development of base load thermal generation for the next 10 years will have an immediate effect on long-term investment decisions made by the New Zealand energy sector.

Table 1 above illustrated a possible scenario to get New Zealand to a position where it is generating 90 per cent of its electricity from renewable sources.  This could involve more than 56 electricity generation projects being consented, built and commissioned before 2025.  Under the scenario modelled by the Electricity Commission, this would include more than 48 renewable electricity projects ranging in size from a 5 MW hydro project to a possible 250 MW wind farm.  Of the assumed projects, 23 will produce less than 50 MW while 13 would produce more than 100 MW.

The mix of renewable projects includes at least 19 hydro projects, 13 wind projects, 13 geothermal projects, 3 biomass projects and 1 or more wave projects of varying sizes.  It is noted that the mix of generation types assumed by the modellers has been criticised for over-emphasising hydro and under-emphasising the contribution of wind projects.  Some of these projects (such as project West Wind) are already consented and others (such as the Te Mihi geothermal project) are part-way through the consenting process.  The majority, however, are still to be considered under the RMA.

Under the scenario modelled (or any other credible scenario), renewable projects will be distributed around the country reflecting the distribution of energy sources.  Under the ‘sustainability path’ scenario, New Zealand could expect at least one renewable energy project in 12 of the country’s 16 regions.  The greatest concentration of projects is likely to be in the Waikato region (in part because of its substantial geothermal resource) with the modelled scenario suggesting at least 13 projects there.  However, Bay of Plenty, Hawke’s Bay, Manawatu, Wellington and Otago regions are also likely to see at least three renewable projects each over the next 17 years.

2.4 Problem statement

Renewable electricity generation projects are often very complex in that they tend to introduce potentially significant adverse environmental effects at the same time as significant benefits.  Complicating the matter further, the nature and degree of potential effects can in some cases be difficult to assess or are subjective, leading to polarised expert opinions.  Importantly, the benefits of these projects can come at the cost of valued elements of the local environment.  Within a regulatory regime that encourages democratic participation and local decision-making, developers are required to rigorously assess the effects and benefits of their proposal to use and develop the particular natural and physical resource.  This generally requires developers to factor long lead-times into their project plans to enable extensive public consultation and comprehensive baseline monitoring.  The time and costs involved in preparing an application for resource consent can therefore be substantial.  Given the potential environmental effects associated with most renewable electricity generation projects, this work is appropriate and necessary to satisfy decision-makers that a particular proposal promotes the purpose of the RMA.  Furthermore, long lead-times, effective pre-application consultation and strong effects assessments can significantly reduce consent processing times for well-conceived and managed projects.  This fact is aptly demonstrated by Environment Waikato and Taupo District Council’s rapid processing of resource consents for the Rotokawa II geothermal project, which was largely attributable to a lengthy process of public consultation and a comprehensive assessment of effects guided by a clear regulatory framework.

Notwithstanding the emergence of RMA ‘success stories’ such as the Rotokawa II project, comprehensive public consultation and effects assessments have not necessarily reduced the time it takes to gain an appeal-free consent in many jurisdictions across New Zealand and the general presumption of generators is that all large-scale projects will be appealed to the Environment Court.  Lack of regulator expertise, lack of a relevant policy framework, active local opposition, the reputation and approach of the developer, and the nature and complexity of the proposal all affect the time and cost of gaining resource consent for renewable electricity generation projects.

Council officers are repeatedly called upon to make balancing judgements against the purpose of the RMA: when processing consents; when receiving the consent; when considering whether further information is required; when making notification decisions; and, ultimately, when making a recommendation to the council hearings panel.  Similarly, decision-makers must keep the ultimate purpose of the RMA in mind when considering submissions and evidence on a particular application.  Renewable electricity projects will in almost all instances require council officers and decision-makers to consider competing section 6 and 7 values throughout the resource consent process.  While this context is common to all large-scale development projects, due to the potential scope of adverse environmental effects and the nature of associated benefits, renewable electricity generation activities tend to raise a particularly broad set of resource management issues.  The current RMA decision-making framework requires decision-makers to consider the benefits of renewable electricity generation but does not clarify the nature of these benefits or provide guidance on the weight that should be afforded to them.  In this context, balancing judgements made subject to Part II of the RMA can be particularly complicated and can take time for a responsible public servant or decision-maker to make.  The compounding effect will have a significant bearing on the time it takes to process consent applications.  It is considered, therefore, that the critical factor influencing the time it takes to gain consent is the compounding effect of uncertainty within the regulatory framework.

The problem with the status quo, therefore, is that the RMA does not clearly establish the significance of the benefits of renewable electricity generation projects, which by their nature can compete with other environmental values and are often felt at the national level.  Decisions made by the Environment Court are beginning to establish case law that tackles and clarifies this issue.  Nevertheless, the lack of statutory guidance complicates the decision-making process and has contributed to persistent uncertainty in the marketplace which, if left unchecked, has the potential to frustrate efforts to increase the proportion of electricity generated from renewable sources and to deliver the various social, economic and wellbeing benefits associated with such an increase.

It is considered that this problem has emerged primarily for the following reasons.

  1. There is the potential for inconsistent recognition through the RMA decision-making process of the nationally (and globally) significant benefits of renewable electricity generation capacity in New Zealand.  RMA decisions, particularly those made by the Environment Court, are beginning to address the national and global environmental benefits of renewable electricity generation.  Decision-makers have, in particular, proven to be very good at dealing with adverse environmental effects versus economic and social benefits.  Without clearly articulated statutory guidance on the benefits of renewable electricity generation, however, it can be very challenging to weigh these benefits against local adverse environmental effects.  A persistent problem with the status quo is that there is insufficient statutory guidance to ensure that the national benefits of renewable electricity generation will be consistently applied in balancing judgements made against Part II of the RMA.  In this context, there is a significant degree of uncertainty as to whether the current decision-making framework will support an increase in the proportion of electricity generated from renewable sources sufficient to deliver the potential social and economic benefits associated with meeting the government’s target for renewable electricity generation.
  2. Until recently local authorities have not, in general, developed specific policies to address renewable electricity generation.  The government believes that the amendments made to the RMA in 2004 that relate to the effects of climate change, and the benefits of using and developing renewable energy sources, need to be reflected in district and regional plans in order for these benefits to be given appropriate weight in the judgements of RMA decision-makers.  A timely and consistent policy response to the 2004 amendment is required if the targets of the NZES are to be met.
  3. The lack of policy guidance across much of New Zealand in relation to renewable electricity generation can hinder investment in future technology.  Many current and likely future means of generating electricity from renewable sources are in the early phases of commercialisation and their effects and viability are often unknown.  As such, more research and investigation into potential generation technologies and energy sources will be necessary to ensure that the decisions of the energy sector in New Zealand promote the sustainable management of natural and physical resources.  Policy statements and plans will need to be amended to remove impediments to research and investigation.  As knowledge of technology improves, local and regional councils should become more proactive in identifying potential opportunities in their areas; and they should increase the level of consultation with the community and generators (both large and small-scale) to encourage appropriate investment.
  4. Costs and processes associated with resource consent acquisition can discourage investment in smaller-scale projects with limited adverse effects.  While larger-scale renewable generation projects will have a dominant influence on security of electricity supply, there is significant potential for smaller community-scale ‘distributed renewable electricity generation’ to make a valuable cumulative contribution towards developing a reliable, secure and clean electricity supply in New Zealand.  The cost of gaining consent under the RMA as a percentage of total project costs is likely to be proportionately higher for small-scale projects and the fact that many regional and district plans are silent on small-scale renewable electricity generation can create unnecessarily high compliance costs and uncertainty for potential developers.
  5. Consenting existing renewable generation activities can be unnecessarily onerous.  Existing projects (largely hydro schemes) have a range of known adverse environmental effects, as well as significant benefits which have been enjoyed by local and national communities.  There have been a range of challenges for existing operators in consenting existing projects, and while it is necessary to re-evaluate the appropriateness of a project in more modern times, the consenting process for existing activities of this type should perhaps emphasise efforts to improve environmental performance, increase efficiency, and ensure the effective use of resources.
  6. Projects may be becoming increasingly difficult to consent.  Renewable electricity generation projects consented and developed to date are likely to have been the most economically attractive projects and those that have been ‘easier’ to consent.  Demand for electricity will continue to increase, and as the store of more easily ‘consentable’ projects diminishes, more complex decisions to balance local adverse effects and national benefits will need to be made.  This trend is emerging in a context of population growth and increasing affluence where New Zealanders are demanding more of the recreational, amenity and ecological attributes of the environment.  The environmental effects and benefits of renewable electricity generation can be extensive; as time goes by, decision-makers will be required to make judgements that balance an increasingly competing set of environmental values.  A regulatory regime that does not clearly articulate the national significance of the benefits of renewable electricity generation will perpetuate the problems faced by applicants and decision-makers in relation to renewable electricity generation projects.

9 Electricity Commission, 2008 Grid Planning Assumptions: Consultation material on draft generation scenarios (2008).

10 Evaluation of Energy Efficiency and Renewable Issues in Plans under the Resource Management Act, and Other Local Authority Initiatives, MWH, April 2003.

11 The Merits and Potential Scope of National Guidance on the Management of Electricity Generation under the RMA, Draft Report of the Reference Group, May 2006.

12 Electricity Generation Case Study: Trend Analysis, The Environmental Challenge Ltd, Report to the Ministry for the Environment, May 2006.

13 Winds Up, Mark Ashby, 2004.

14 Meridian Energy v Wellington City Council and Wellington Regional Council W31/07.

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