Contact, Trustpower caution against subsidies
AUCKLAND: Politicians and regulators risk adding cost and complexity to the country’s emission reduction efforts if they start favouring technologies or fix on a particular view of the future, Contact Energy chief executive Dennis Barnes says.
If the country holds true to its 2050 emissions reduction target, and investors and customers receive the right price signals, capital will flow into lowercarbon generation and the technologies that will facilitate emissions reduction in transport and industry, he said.
New Zealand had an ‘‘excellent opportunity’’ to make that transition in a very lowcost way. The challenge was to look at that across the entire economy and resist the temptation to try to move faster in some areas, or to try to incentivise technologies or systems that ‘‘on the face of it look good’’ but might be less positive longterm.
He cited the example of Australia, where state and federal incentives programmes had in fact created instability for investors. In the UK, just six years ago, solar was being incentivised at a cost of $1000 a megawatthour, he said.
‘‘What happens with people worrying about the future, I think, and trying to solve it before the market solves it, is that you get undue cost and complexity into the system,’’ Mr Barnes said in a panel discussion at the Downstream electricity and gas sector conference in Auckland yesterday.
‘‘That is my fear: that a lot of advisory panels and multiple, disconnected government agencies don’t create that joinedup thinking,’’ he said.
‘‘Markets are really good at working out that joinedup thinking, with the right commercial incentives.’’
Mr Barnes was speaking with other sector chief executives and regulators on a panel that canvassed the country’s renewable energy targets, the recent electricity price review and the challenge and opportunities that new technologies will present.
The government is trying to win crossparty support for legislation to establish an independent Climate Change Commission to advise future governments on meeting the 2050 climate change target. The Labourled coalition favours a 2035 target for 100% renewable electricity generation and has also provided some early funding for hydrogen research.
But the Independent Climate Change Committee — ICCC — formed last year to help drive early climate policy development, has already signalled it favours an economywide renewable energy target and believes the government’s electricity target may be unaffordable and distracting. Analysts have also questioned the utility of hydrogen except in niche roles in transport and industry.
Trustpower chief executive Vince Hawksworth said the New Zealand energy industry has changed markedly in the past 25 years and will continue to evolve. New technologies are opening up opportunities for solar and electric transport and new retailers are helping bring new services and business models to the sector.
He said the future will be volatile and it’s important the industry and policymakers avoid ‘‘barking at every dog that goes past.’’
Joinedup thinking is key and the work of the ICCC will be important in providing that longerterm framework for investment, whether that be in largescale generation, transmission or ‘‘behindthemeter’’ solar panels and batteries, he said.