The mothballing of the North Bank scheme on the lower Waitaki
River has raised questions about the future of large
electricity - and particularly hydro - projects in this
Meridian last week confirmed it was putting its
billion-dollar project on hold because of a nationwide slump
in electricity demand, believed to last at least five years.
While the exact figure spent so far is ''commercially
sensitive'', it is believed millions have already been spent
on the consents and appeals process and on acquiring 1000ha
of land for the project, which chief executive Mark Binns
says the energy company still regards as ''New Zealand's best
The scheme would incorporate a 34km tunnel and canal system
connecting two powerhouses and generate 260MW of electricity
- enough to power 140,000 homes - and was the successor to
Meridian's controversial $1.2 billion Project Aqua
hydroelectric canal scheme on the lower Waitaki, which was
abandoned in 2004 after the company had spent $95 million on
There are many in North Otago disappointed with the decision
to suspend the project. Supporters Waimate Mayor John Coles
and Waitaki Mayor Alex Familton remain hopeful it will be
revived, believing it will provide an economic boost to the
region, particularly in the short term through the creation
of hundreds of jobs during the construction phase. Landowners
and irrigators are frustrated about being left in limbo,
after what they say have been years of stressful,
time-consuming and costly land negotiations.
The scheme received considerable opposition initially, with
environmental concerns around river flow and levels, and the
impact on aquatic species and the lower Waitaki wetlands.
Hundreds of submissions against the project were received and
several appeals made to the Environment Court. But many of
the environmental effects were mitigated through hearings
with Environment Canterbury and the Environment Court,
conditions amended by Meridian, and water consents finally
issued after a four-year process. There remains opposition,
however, and there will be those who are hopeful the project
does not see the light of day.
In addition to the North Bank scheme and Project Aqua, in May
last year Meridian cancelled its $2 billion 630MW Project
Hayes wind farm on the Lammermoor Range after investing $8.9
million in it.
Although the company acknowledges the North Bank project can
be picked up at a time when new electricity generation is
required, the costs of such large projects and the vagaries
of demand show the considerable risks involved when
projections are made years in advance given the considerable
consenting and construction periods involved. Meridian's
figures when it first applied for water consents for the
project in 2006 show it anticipated increased electricity
demand at an annual rate of 2% as a result of the ''expanding
economy and growing population''.
A global financial crisis, thousands of national job losses,
many manufacturing sector closures, and the Canterbury
earthquakes later, national grid operator Transpower reported
the South Island's peak demand growth from 2006 to 2011 was
0.3% a year. Another factor causing uncertainty must be
Meridian's ongoing price discussions with Rio Tinto over the
Tiwai Point aluminium smelter, which has said it may be
forced to close if it cannot get cheaper power.
The smelter uses about 15% of New Zealand's power, which
would flood the market if it closed. Also in the mix and
creating further uncertainty is the Government's
controversial plan to partially privatise state-owned assets,
including Meridian. Legal challenges in relation to Maori
water rights are going through the courts at the moment.
Other power companies are making similar decisions regarding
major projects. Last year, Contact Energy pulled the plug on
plans for further hydro development on the Clutha River,
saying new geothermal and wind-generation options were more
economic. Trustpower says its future is in wind and
geothermal generation. Given the numerous factors, it does
appear the future for New Zealand - at least in the short to
medium term - is predominantly with smaller, lower-impact and
lower-risk renewable-energy schemes.