Status Quo and Problem

Status Quo and Problem

A secure and reliable system of electricity generation and transmission is a central component of a modern prosperous society.  Demand for electricity is increasing as New Zealand’s population grows.  In simple terms, for New Zealand to meet growth in demand until 2025, around 175 MW of additional generation capacity will need to be constructed per annum. 

In New Zealand, fossil-fuel electricity generation has traditionally been used to account for shortfalls in electricity supply during dry years when hydro-generation capacity is constrained. Generating electricity from fossil-fuels releases significant quantities of GHGs into the atmosphere.  Assuming no change in New Zealand’s approach to electricity generation transmission and consumption, electricity-related GHG emissions are projected to rise by 50 per cent by 2030.  The government believes this would not only be environmentally irresponsible, but that it would place New Zealand exports at a disadvantage, increase the country’s exposure to the cost of imported fossil fuels and threaten New Zealand’s reputation as a clean, green tourist destination. 

In addition, New Zealand has also signed and ratified the Kyoto Protocol and by 2012 is obliged to have either reduced GHG emissions to 1990 levels, or to purchase carbon credits to offset post 1990 increases.  The government believes that there are obvious and low cost GHG reduction opportunities in the form of renewable electricity generation and seeks to increase the proportion of electricity generated from renewable energy sources in New Zealand in order to meet projected growth in electricity demand without increasing the country’s contribution to climate change or exposing the economy to economic risk. 

However, in the period from 1991 to mid-2006 only 17 per cent of electricity generation capacity consented was renewable and the total proportion of electricity generated in New Zealand from fossil fuels increased significantly.  Factors that have contributed to this trend include:

  • the short-term abundance of low-cost fossil fuel sources (particularly Maui gas)
  • rising international demand for the services of manufacturers of renewable electricity generation components
  • New Zealand’s unique renewable energy resource characteristics (particularly wind) requiring tailored design and manufacturing solutions
  • the small size of New Zealand’s market.

The section 32 evaluation accompanying the proposed NPS identified that market uncertainty created by the lack of clear government direction on the benefits of renewable electricity generation introduces a risk that generators will be unable to develop sufficient capacity to meet the government’s renewable electricity targets as expressed in the New Zealand Energy Strategy. 

Renewable electricity projects will in almost all instances require council officers and decision-makers to balance competing section 6 and 7 matters (nationally important matters and matters to which decision-makers must have particular regard) throughout the resource consent process.  Within a regulatory framework that does not clearly articulate the benefits of renewable electricity generation, or provide clear guidance on how to balance national versus local effects, these judgements are complicated and can take time for a responsible decision-maker to make.  The compounding effect of this will have a significant bearing on the time it takes to gain resource consent. 

It is considered that this pattern has emerged primarily because:

  • There is the potential for inconsistent recognition through the RMA decision making process of the nationally significant benefits of renewable electricity generation activities.
  • Local authorities have, in general, been slow to develop specific policy to address renewable electricity generation. The government believes that the amendments made to the RMA in 2004 relating to the effects of climate change and the benefits to be derived from the use and development of renewable energy sources need to be reflected in statutory RMA plans in order for these benefits to be given appropriate weight in the judgments of RMA decision-makers.
  • There is a lack of policy guidance across much of New Zealand in relation to renewable electricity generation, which can hinder innovation.
  • Disproportionate costs associated with acquiring resource consents for small-scale projects can discourage investment in these projects, which due to their limited scale will have limited adverse environmental effects.
  • The process of gaining consent for existing renewable generation activities can be unnecessarily onerous.  While it is necessary to re-evaluate the appropriateness of a project at the expiry of consent, this re-evaluation should perhaps emphasise efforts to improve environmental performance, and increase efficiency and the effective use of resources.
  • 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 balancing decisions will be required. 

he 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.  This has led to increasing uncertainty in the marketplace, which has potentially discouraged investment in some instances, and has the potential to frustrate development opportunities into the future