Need for new power source felt as uncertainty hovers over Tiwai aluminium smelter closure

Meridian Energy Ltd, New Zealand's leading electricity generator and retailer, said in a briefing for its annual report, it thinks New Zealand needs a new source of energy by 2019.

Earlier the corporation held that the country had adequate power sources and will not require additional power stations for years; however, with uncertainty hovering around demand for electricity which might arise from Tiwai Point aluminium smelter, the company has recently changed its outlook for the country's electricity requirement.

Tiwai Point aluminium smelter, controlled by Rio Tinto's subsidiary Pacific Aluminium uses one seventh of New Zealand's electricity. It has been long since talks are on regarding its prospective closure. Despite an agreement inked earlier this month, it could still operate till 2018. So, a lot depends on whether it closes or continues operation. In case it closes, there will be no need to come up with another power generation plant, but if it continues to operate, then new power stations have to be ramped up on an urgent basis to keep things going.

The need for new power stations was felt even more after the Electricity Authority of New Zealand zeroed upon scores of projects that were kept on hold in last one month even though most had received resource consent. The projects totalled 4500 megawatts of capacity, but they were not being built because there was already too much power available in the country. The only project actually being constructed has a capacity of just 7 megawatts, which is clearly insufficient to meet the rising demand for power.

To add to the shortfall, Genesis Energy has announced the closure of its last two coal burning plants at Huntly. These total 500 megawatts, and together with the two earlier closures, take 1000 megawatts of power out of the system. Next in line was Contact Energy who announced the closure of its 400 megawatt plant at Otahuhu last week, and earlier to that, Mighty River Power had announced the decommissioning of its 140 megawatt gas plant at Southdown in South Auckland.