Wind farms might keep the Tiwai Point aluminium smelter operational after 2024

Mike Fuge, the CEO of Contact Energy, New Zealand's largest electricity provider, predicts that Rio Tinto's Tiwai Point aluminium smelter might remain open beyond 2024 with investments in wind farms on the lower South Island.

The wind energy resource at the country's South Island is presently largely unexplored, as the wind farms predominance is moreover at the lower North Island.

On 15th August 2021, while communicating following the company's annual result, where Contact Energy also declared an investment of  $300 million in a new geothermal plant, the CEO said, "The undeveloped wind resource in Southland and Otago had been conservatively estimated at between 3 and 5 terawatt-hours (TWh) a year."

"All of that could come into play if the smelter stayed open. The country's total electricity demand currently stands at about 40TWh a year."

Mike Fuge added, "Contact was looking at a couple of sites for South Island wind farms but intended to take a balanced portfolio approach and was also evaluating sites in Northland and Taranaki. For the South Island, getting resolution on Tiwai is the key first step."

Dorian Devers, the CFO at Contact Energy, stated, "It is no longer economical to use gas or coal generation for baseload generation in New Zealand because of its high cost, meaning that was now only an option for covering short-term demand peaks."

Fuge said, "Coal and gas generators now generate electricity for about 25 cents per kilowatt hour, which is more than they can typically sell for it. Contact was now negotiating with the aluminium smelter over a new power supply agreement to replace its current deal, which terminates at the end of 2024."