The cost of renewable energy

Greenpeace doesn’t think its important to address the costs in its report on on renewable energy.

In answer to a question from Nikki Kaye on advice he’d received on the proposition of a 40 percent reduction in emissions by 2020 and whether a 100 percent renewable electricity supply would be achievable then-Minister for Climate Change Issues, Nick Smith, said:

. . . I am advised that that would require, first, the writing-off of $4.5 billion of thermal generation assets. It would also require $11 billion for the replacement capacity of 2,500 megawatts, and $2 billion for additional renewable peaking stations needed to ensure security of supply in a dry year. This amounts to a total capital cost of $17.5 billion, excluding the additional transmission investment that would be required, and this would amount to a 30 percent increase in the power price for all consumers. Going 100 percent renewable would also require the equivalent of another seven Clyde Dams to be built by 2020. I do not describe $17.5 billion, a 30 percent power price increase, and seven Clyde Dams as being easy.

New Zealand is blessed with plentiful supplies of water and already have a high proportion of hydro electricity.

But many of the people who want more renewable energy are also opposed to more hydro generation and it would be difficult to find anyone who thought a 30% increase in power charges for everyone was acceptable.

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24 Responses to The cost of renewable energy

  1. robertguyton says:

    Our hydro electricity generators, what a boon to every New Zealander!
    You’d have to be a fool to sell those assets.

  2. TraceyS says:

    And a “30% increase in power charges” will be even more inconceivable if we are all forced to drive around in electric cars and have to swap fossil fuels used in home heating and industrial processes with electricity.

  3. homepaddock says:

    They will still be there, generating power when a minority share in the companies is sold.

  4. Mr E says:

    “spark a discussion rather than getting too bogged down in the numbers.”
    They only wanted to spark discussion? Oh dear. It seems this was more about enviromental hype than delivering solid alternatives.

  5. Bulaman says:

    Of course if we get the $25 per tonne of CO2 indulgence that is built into our power costs that will help. Likewise shutting Tiwai will create a rather large (hydro) electricity surplus and lower prices. Non conventional renewables (Wind/Solar) are a long last in the lifetime cost with current technology. They only exist with subsidy or market distortion (ETS)

  6. TraceyS says:

    No Robert, as a New Zealander, you’d have to be a fool not to buy some shares when they become available.

  7. robertguyton says:

    If you can’t afford those shares, are you a fool, Tracey?
    Charming.

  8. TraceyS says:

    Along with many others who have sizeable debt I probably can’t “afford” to buy some shares Robert. But I’m going to anyway. Does that make me a fool? Some might say it does, but I’m free to make my own decision (thankfully!).

    For those who decide they won’t or can’t buy shares, then the government still holds a slight majority of them. When the companies do well, as you have indicated they will, those profits can be redistributed.

  9. TraceyS says:

    Oh and thank you for saying my comment was “charming”. I noticed on your blog that you can be quite charming too when you want to be, so just wanted to pass on the compliment :)

  10. robertguyton says:

    51% of those profits will be redistributed? Hooray!
    100% would be considerably better.
    Seems stupid to choose 51 over 100.
    Who’s foolish idea was that?

  11. TraceyS says:

    You appear to be forgetting that those New Zealanders who HAVE purchased shares will receive some of the profits distributed via dividends. I guess that’s why it’s called the mixed ownership model.

  12. robertguyton says:

    Lovely. Those people who are wealthy enough to be able to invest, will reap greater rewards than their fellow New Zealanders who were not in a position to buy shares.
    I think the referendum will show that there are a very great number of New Zealanders who do not think that is fair.

  13. TraceyS says:

    No Robert. Those who have worked hard, made good decisions, saved, and paid taxes all their lives. Those who require good investment opportunities for their money, and would prefer those opportunities to be in New Zealand.

    But then, I suppose you’d prefer them invest in rental properties instead. Or alternatively just keep their money in the bank where it is locked away from the economy.

  14. robertguyton says:

    What percentage of adult New Zealanders do you expect will buy these shares, Tracey?

  15. Mr E says:

    I love the diversion tactics that can happen in blogging. Where did the debate go around the Greenpeace report? To me it appears as though the report even failed to ‘spark discussion’. Have Greenpeace failed on all fronts? I hope not. I hope they can retrofit the report with some numbers and facts so a discussion relating to the report can be held. If anyone can help I am all ears.

  16. TraceyS says:

    No Mr E. It did spark discussion. It’s just that Robert considers asset sales to be a more important topic for discussion.

  17. TraceyS says:

    No idea Robert. But I bet the percentage will be higher than the percentage of non-adults. What a silly question!

  18. robertguyton says:

    And so, Tracey, you say you have no idea what percentage of New Zealanders will buy shares. How about you have a guess? No harm in speculating, given the speculation you are already party to. My guess is that the percentage will be very low indeed. Most New Zealanders won’t invest, therefore most New Zealanders will be left receiving a considerably lessened share of the profits from what were our shared energy assets. That’s a shite deal for most New Zealanders, hence the outcome I expect from the referendum, that is, most New Zealanders will oppose it and say, NO to Key’s asset theftsales.

  19. TraceyS says:

    No one knows what the future holds for certain Robert. But I understand why you have difficulty with that concept.

  20. Andrei says:

    Providing an economically viable, reliable, power generation and grid system that can provide the electrical capacity needed at the times and places where it is needed is a significant engineering challenge.

    Politicians should be kept well away from making any decisions regarding it.

    Politicians are as useless as tits on a bull anyway, that is why they are politicians, useless for anything else

  21. homepaddock says:

    You are looking at only one side. We’ll all benefit from the proceeds of the partial sale being invested in new infrastructure without the need to increase public debt.

  22. robertguyton says:

    Well what’s it going to be, Ele? What will those proceeds be invested in? Is it paying off our overseas debt, as Key and English first claimed? Or hospitals and schools as they later claimed? Or the irrigation schemes in Canterbury as has become apparent more recently still? Do they know what they are doing, Ele? Are they sharing the real story with the public, or are they being sneaky? Or incompetent? Or all of the above? How you could expect anyone to have confidence in the Key Party over this debacle I cannot understand, Ele.

  23. TraceyS says:

    You are on to it in your first paragraph Andrei. A friend of mine is a very experienced hydro engineer. I listen to him. He is somewhat concerned about partial sale of hydro assets for the reasons you state. Not the red-herring “no fair” complaining that Robert is doing. Experienced, rational, knowledgeable people are seldom heard as loudly as they should be.

    It would be a shame if the potential for hydro generation was stunted in NZ because of factions that are opposed to some level of foreign investment in the industry which will only help in moving towards greater renewable energy production.

  24. TraceyS says:

    Why are the Green Party having a push on collecting signatures this weekend Robert? I thought they had already reached the threshold.

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