Executive Summary
The New Zealand Electricity Market, Project Economics and Alternatives
Renewable energy is a key plank in New Zealand’s priority policy for reducing greenhouse gas emissions, and the development of the Turitea wind farm is well aligned with this policy. It is not surprising that MRP is seeking to maximise the size of the wind farm given its very high-quality wind resource and its proximity to both the national grid and the centre(s) of electricity demand.
The Board accepts the advice of MRP’s experts that the cost of the wind farm is primarily an issue for MRP, with thecost to electricity consumersbeingprotected through the electricity market pricing structure for the purchase of wind-generated power.
The Board concluded that endeavouring to undertake a comprehensive economic analysis of all of the potential benefits and disbenefits of the wind farm would be largely a theoretical exercise with individual economic valuations, by necessity, requiring a range of variables to be considered to cover uncertainties. When aggregated, this range would then result in an even wider range of possible outcomes which would lack any robustness in assisting with any meaningful decision making. Further, the Board accepts Dr Layton’s1 view that an economic value is implicit in all consent decisions including the measures taken to avoid, remedy or mitigate effects. If the wind farm is built to operate within specified limits to control these effects, then the economic value can be regarded as having been internalised within the design and operational costs of the wind farm with no unaccounted external effects. The Board’s role under the Resource Management Act 1991 (RMA) is to decide on the consent application based on its assessment as to whether the project’s benefits outweigh its adverse environmental effects. In this context, the Board has undertaken detailed evaluations of all of the potential environmental disbenefits including whether each can be avoided, mitigated or remedied to an acceptable degree. These evaluations are discussed in detail in the individual chapters of the report.
We also agree with Dr Layton that the Board is not a modern-day electricity planning committee deciding from all possible options what generation capacity is necessary; what kind of generation plants should be built; when a particular plant should be built (other than by setting an upper limit on the term of the consent); and that our responsibilities do not include reaching a conclusion by comparing the proposal before it with some other hypothetical competing proposal.
In its comments on the Draft Report, MRP contended that the NPSREG requires decision makers to ensure, as far as possible, that renewable energy projects for which they grant consent will be viable. We do not agree that the NPSREG elevates questions of economic viability in that way. There is no directive in the policy for a decision maker to have particular regard to economic viability or the deliberate promotion of that issue, least of all as a matter that might be accorded greater weight than landscape or other amenity values. Our awareness of viability issues was reflected in our Draft Report, where the location of every turbine was addressed individually.
In Chapter 19, we set out the findings of our overall Part 2 RMA evaluation of the project’s benefits and disbenefits. These identify that changes in the economics of the project are a matter properly for MRP, not the Board, which has much wider considerations to evaluate. The ‘cost’ of the turbines that we have deleted was such as to require their removal, regardless of the viability of the remaining turbines as a project for MRP.
Back to footnote reference 1 Witness for MRP on economic benefits.
Last updated: 6 September 2011
