Cheaper renewables force closure of NZ’s last coal-fired power units

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Utility-scale coal-fired power generation will soon be a thing of the past in New Zealand, after local gentailer Genesis Energy said it would close the last two coal-burning units at its coal and gas Huntly power station in Waikato, on the North Island, due to falling demand and lower-cost renewables.

1438838993169 reports that the 953MW plant’s remaining two coal-burning units – the two others have already been retired – will be shut down in 2018, after running “at the margin of the market” for a number of years, according to Genesis.

Indeed, the gentailer said it had been on track to retire the four coal/gas fired “Rankine” units – which were commissioned in the early 1908s, when they were seen as less expensive than building extra hydropower – since 2009.

“The development of lower cost renewable generation, principally wind and geothermal, investment in the HVDC link (the Cook Strait cable), and relatively flat growth in consumer and industrial demand for electricity have combined to reinforce the decision to retire the remaining Rankine units, which will deliver further operational efficiencies to Genesis Energy,” said Genesis chief executive Albert Brantley.


Closure of the coal units – which Genesis said would mark the end of large scale coal-fired generation in New Zealand – is expected to produce operational and capital cost savings for the company of approximately $20 to $25 million a year.

It will also cut the Huntly power station’s capacity by more than half (around 500MW), limiting it to the two existing gas-fuelled units – the high efficiency 400MW “Unit 5”, and the smaller 50MW open cycle “Unit 6″ – and shifting NZ’s electricity market further into renewables.

While this has concerned some analysts, who warned that future dry spells could lead to drastically reduced hydro capacity and, thus, to power shortages, Genesis said New Zealand’s power system was now better able to cope with dry years, even without coal.

“While there was a dry year in 2007/08 the extra generation required from Huntly came from Unit 5, not the Rankine coal fired units – their output decreased in this year from the previous year and kept on decreasing year on year to now,” a Genesis spokesman said.

The shuttering of the coal plants has been welcomed by NZ green groups, and – in stark contrast to Australian PM, Tony Abbott, and his response to the likely abandonment of the proposed Adani mega-coal mine project in Queensland – even by NZ Prime Minister John Key, who is reportedly “unsurprised” by the closures.

“I mean, in a lot of ways it’s unsurprising because the costs actually for Genesis, with the ETS and the likes, means that probably in the long-term coalfire power plants aren’t the most sensible plants to have,” Key said. “From New Zealand’s emissions perspective, this is actually probably a good thing.”  

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  • Rob G

    Further proof that right wing governments can show common sense on renewable energy. I recently traveled through the North Island and saw both geothermal power plants and the always spinning wind turbines in Wellington. It was an inspiration. And surrounding the geothermal stations are huge pine forests with proud signs about cleaning the worlds air. I think back to my childhood and remember how my father would point to the Huntly power station, in awe, saying how magnificent coal was… he has changed his mind on that today.

    • Barri Mundee

      Yes not all right wing governments are the same but the Abbott regime (does not deserve the title of government) is one of the most right-wing, ideologically-driven regimes in living memory in this country.

      Coal was “good for humanity” once, but no longer; it has now become a liability.

      • Believe it or not, we are in the 21st century and coal was the foundation of the industrial revolution starting in the 19th century! Surely it must be obvious that we are over due for another revolution in how we manage energy and that is exactly what is happening. The government can do what it likes but it will not stop evolution.

      • Jacob

        Abbott said instinct is as important as intellect!


  • john

    This is interesting as NZ does not rate highly on mitigation.

    Perhaps the Government on that island state has some grasp of the future one can only hope
    I think you can look at international on this site

    • Ronald Brakels

      Well, the NZ government has nothing to do with the decision as far as I am aware. The coal power stations simply aren’t economical now the cost of renewables have fallen so far. (And perhaps because their large aluminium smelter may shut down in a few years.) But in general the people of New Zealand would certainly prefer to contribute less to the destruction of the earth’s climate.

  • This is an interesting, but not unexpected development.
    Philip Smith-Lawrence

  • Chris Fraser

    Send this one straight to the PMO’s inbox … There is life after coal.

    • Jacob

      Not just that corrupt PM but rabid commentators, who do not understand how cheap batteries are today and keep saying we cannot get power 24×7 from wind and solar.

  • Ronald Brakels

    It looks likely (to me at least) that New Zealand’s single huge aluminium smelter will be shut down in 2018. Since, depending on production levels, it uses about 13% of New Zealand’s electricity, it would be quite easy for New Zealand’s electricity sector to go completely green when it closes. Especially considering their current very low penetration of solar power.

    • Coley

      Why should it close? It’s powered by hydro electricity.

      • Ronald Brakels

        The aluminium smelter is closing down because because world aluminium prices are horrible. Well, horrible for producers. For aluminium users it’s party time! And the smelter is like 44 years old while China is chock full of new smelters that probably won’t close down anytime soon. Firstly because newer smelters generally have a cost advantage. Secondly, while transport costs are only a small portion of total costs, shipping bauxite from Australia to New Zealand and then aluminium ingots from New Zealand to China doesn’t help. And thirdly, it is a game of chicken where if New Zealand politicians lose their job because they let unemployment get too high they won’t lose their heads while that might not be the case in China.

        • Ronald Brakels

          Why are aluminium prices so low? Well, the world may have reached peak aluminium. Because it is so recyclable the need for new aluminium diminishes as the world builds up its supply of aluminium stuff. We will reach the same point for steel a little later as it rusts and so is not quite as recyclable.

  • Leigh Ryan

    Another crown for NZ now able to target so many different markets with the clean green logo, knocking Australian Farmers out of the ballpark with vegetable produce,Grains, Dairy, Beef, Lamb and Pork being produced in a much healthier environment, if their marketing arm gets into action, only Tasmania will have a chance to compete but will probably be tainted with the Abbott Stain.

  • Jacob

    What do they mean by “at the margin of the market”?

  • Boon

    Refreshing to see the decision to move away from coal is based largely on sensible economic grounds.

    Free market principles in the energy sector are not compromised by implementation of emission standards. Many countries have achieved bipartisan support leading to stable implementation of effective policy in this area. They now reap innovation, investment and production rewards associated with a modern energy sector competitive in domestic and foreign markets.

    It is wrong to associate emissions standards with sovereign risk or refute the scientific consensus as we are accustomed in Australia. This has been a long run policy in many parts of the world, thankfully it is no longer taken seriously.

    The most damaging signals Australia has sent to foreign investors has come from adopting a technology specific approach or promoting one technology over another. This was best demonstrated by the attack on wind turbines due to their unproven impact on health and aesthetics.

    This specific line of policy can only be described as irrational in a market governed by the same regulations. Investors will be deterred by this policy as opposed to being reassured by a sensible response to domestic and foreign pressure on emissions.