Parker David: Electricity (Renewable Preference) Repeal Bill — First Reading Second Reading In Committee Third Reading 
Parker David: Electricity (Renewable Preference) Repeal Bill — First Reading Second Reading In Committee Third Reading 
[Volume:651;Page:915] 
Hon DAVID PARKER (Labour) 
: 
 We heard the last speaker the Hon Gerry Brownlee and the Hon Dr Nick Smith saying that National believed in the 90 percent renewable generation target by 2025 set by the previous Government but that it is going to build more thermal generation. How does that work? How does one increase the percentage from currently two-thirds renewable generation to 90 percent by building more thermal generation? That is what the Electricity (Renewable Preference) Repeal Bill is about. It is about building more thermal generation. Those two propositions are just irreconcilable. Members opposite cannot say they want to get to 90 percent renewable generation but they are going to build more thermal generation too. They cannot do both. The two are absolutely irreconcilable. 
I want to deal with one of the other propositions put by the Hon Gerry Brownlee. He said that the legislation currently prevented retiring old inefficient thermal plant and replacing it with more efficient gas-fired plant. 
Hon Darren Hughes 
: Rubbish! 
Hon DAVID PARKER 
: That is rubbish. The legislation currently expressly allows that as one of the exemptions to the restriction. It expressly deals with it. Repeal the legislation I say to Mr Brownlee and what we get is the new gas-fired power station but not the retirement of Huntly. We get both—that is the problem you see. The problem is that if extra thermal generation is built and the old stuff is not retired we get extra thermal generation. We get increasing not decreasing greenhouse emissions because we have both. 
Hon Gerry Brownlee 
: Rubbish! 
Hon DAVID PARKER 
: “Rubbish!” he says. Well where is the control on Huntly staying when someone else builds a new gas-fired power station? 
Hon Gerry Brownlee 
: Price. 
Hon DAVID PARKER 
: Oh it is price. So why has price not already retired Huntly? The Minister of Energy and Resources cannot answer. 
Hon Gerry Brownlee 
: There’s nothing to replace it silly fellow. 
Hon DAVID PARKER 
: Goodness me! 
The other thing he says is that nowhere else in the world is doing this sort of thing. Again he is wrong. Lots of countries have virtually no renewable generation and have set legislated targets to increase from nothing or close to nothing to 20 or 30 percent. That is a 20 percent increase in renewable generation from nothing. What was the legislation doing? It was effectively legislating to go from our current two-thirds 66 percent renewable generation to 90 percent. That is a 24 percent increase which is not much different from the increase that has been legislated for in other countries when they use renewable preference methodologies to bring forward renewable generation that would not otherwise happen and to avoid increases in thermal-related greenhouse gas emissions. So again the Minister I am afraid will have to take responsibility for increases in thermal-related emissions. 
He said that somehow renewable generation is responsible for the increase in power prices in the last few years. I tell him that what has caused the increase in prices is the rising price of gas. The price at which electricity is dispatched sets the market price in New Zealand. Under our auction system the bid that is the highest of those for electricity that is dispatched is paid to everyone. What sets the price? It is never renewable generation that sets the market price because we all know that once a renewable power station is built its fuel is free. Whether it is water air or geothermal the fuel is free. Once those power stations are built they cost very little to run. Gas-fired and coal-fired power stations always have a fuel cost they have to recover so the gas and coal-fired bids into the market are always the bids that set the market price. It is because the price of gas has doubled following the lifting of price controls following the Maui gas running out. It is still a lot less than average prices for gas overseas. That is why even now New Zealand electricity prices are substantially lower than world averages. Indeed even now our industrial tariff is as cheap as Australia’s although our residential tariff has crept higher. So the idea that it is renewable generation that has bumped up the price of electricity is again wrong; it is the price of gas. Yet the Minister wants us to build more gas-fired power stations. 
The other thing the Minister mentioned was the risk of liquefied natural gas (LNG) importation. How does using more gas decrease the risk of reliance on LNG imports in the future? Is that not twisted logic? I think it is. It cannot be right. If we do not want to run out of gas we should use less not more. If we use more gas we are more likely to run out and to have to import LNG and if New Zealand imports LNG then its electricity prices will for the first time in our history be pegged to international fossil fuel prices. New Zealand’s electricity prices would go up by about double. They would probably be close to double if we had to import LNG. That would be the worst of all futures for New Zealand. Going to renewable generation of course avoids—or minimises—the risk of that being a future reality. 
In terms of constraints and where renewable generation is going to be built I tell members that there are already plans on the books of the major generators to build 1400 megawatts of new renewable generation over the next 5 years and the Minister knows that. 
Hon Gerry Brownlee 
: Where is it? Where are the pegs in the ground? 
Hon DAVID PARKER 
: The geothermal energy which is the biggest source of that new-load growth is in the central North Island. We had a 130-megawatt geothermal facility completed this year bearing in mind that demand growth in New Zealand is about 150 megawatts per annum. If we want to retire the likes of some of the Huntly generators we have to build about 175 megawatts per annum on average for the next period until 2025 to meet that 90 percent renewable figure. A big slice of it will be geothermal. It is already economic because that is what the major generators are investing in. 
Hon Gerry Brownlee 
: Why are they building it? 
Hon DAVID PARKER 
: They are building it. They have just finished one—130 megawatts—this year. There is another one of 200 megawatts already under construction by Mighty River Power. That is next year’s demand growth. Contact Energy has also committed to another large facility at Te Mihi. That is about 600 megawatts that I have just given you. That is 4 years’ demand growth at the rate of 150 megawatts per annum. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: Keep the Speaker out of it please. 
Hon DAVID PARKER 
: I apologise Mr Assistant Speaker. In addition we have large amounts of wind power consented. That was one of the successes of the Labour Party’s climate change policy. We brought forward wind power through the projects to reduce emissions. We made it economic before it would otherwise have been economic. It now stands on its own feet. It is economic. Where is it being built? I do not know whether Mr Brownlee has been to Palmerston North recently but if he had a look around there he would see some big wind farms on the horizon. That is one of the places they are being built. 
Hon Gerry Brownlee 
: They were there a long time before you were ever a Minister. 
Hon DAVID PARKER 
: They have been extended within the last year and if the member did not know that then he really needs to do his homework. Makara is the biggest wind farm built in New Zealand so far. It is under construction at the moment. I think its first windmills are due to be producing power early next year and it is set to be completed by the end of next year. 
David Garrett 
: What do the locals think about the Makara wind farm? 
Hon DAVID PARKER 
: Some of the locals did not like the idea but that is true of any project. Some of them did not like it. The wind farm got a consent though and from memory 150 megawatts is being built—but it might be bigger. There are consented sites throughout the South Island. Consents are being sought by Contact Energy for about 500 megawatts of wind power in the North Island. 
There is oodles of renewable generation. But do members know what the biggest risk is to that? The biggest risk is if Todd Energy or one of the other big owners of gas decides: “We’re better off turning that into electricity. We’re going to invest in a gas-fired power station.” If the Government is silly enough to let Genesis proceed with Rodney—it never came to the previous Government for shareholder approval and probably would not have got it; it never got to that point—and it builds a 400 megawatt gas-fired power station then it will close out renewable generation. It is that simple. We are at a fork in the road. If New Zealand goes down the path of more thermal generation we will close out the renewable sources. We will never get to the target National says it has adopted to have 90 percent renewable generation by 2025. There will be rising emissions from electricity when we could have emissions starting to go down from electricity. 
Again I say that if New Zealand cannot get this right there really is no hope that the world will. I find it very depressing to know that the National Government is once again as it was on biofuels the canary in the cage on these issues. If New Zealand does not get it right we have to conclude that there is very little hope that the world will. Our Labour Government was not ready to reach that conclusion. We knew it could be done we had the policy in place to do it and that member’s Government is irresponsibly reversing it.