Uncertainty may delay power project
WELLINGTON: A project to reduce the impact of the potential closure of the Tiwai Point aluminium smelter or a major production cut there may be delayed, generators say.
National grid operator Transpower late last year accelerated work increasing the capacity of its lines from Southland up to the Waitaki Valley after smelter owner Rio Tinto announced a formal review of the operation — including potential closure.
Work is under way strengthening Transpower’s transmission towers between Roxburgh and Livingstone. But the next phase of work this summer, to double the lines on those towers, may be delayed after Meridian Energy and Contact Energy opted not to contribute more funds for the work.
That might mean the project does not meet its previous June 2022 completion date.
The review by Rio Tinto had been expected to be completed in the March quarter but remains unresolved.
The Covid19 pandemic has also disrupted Transpower’s maintenance and project schedule and is causing delays in international supply lines.
Contact and Meridian jointly invested $10 million for the tower work. Transpower previously said the rest of the work would cost less than $110 million.
Meridian said Transpower was seeking ‘‘substantial’’ additional funds to give the work priority and have it completed by mid2022.
‘‘The further funding Transpower sought from Meridian and Contact would have amounted to a considerable portion of the overall project costs and there is continued uncertainty about Covid19 impacts and a June 2022 completion,’’ Meridian said.
Contact Energy chief executive Mike Fuge said the firm remained committed to the CluthaUpper Waitaki lines project
[CUWLP] but would not be providing additional funds.
‘‘We’ll continue to work with Transpower to see whether aspects of the CUWLP work programme can be optimised to mitigate delays from the recent Covid19 restrictions,’’ he said in a statement on NZX.
‘‘The goal is still to help move renewable electricity generation in the lower South Island north as soon as possible if the smelter closes or curtails its operations.’’
Contact and Meridian are the largest generators in the South Island so are the most at risk from a slump in power prices there if the smelter was to shut and surplus electricity could not be moved north.
The smelter accounts for about 13% of the country’s total electricity use through a contract with Meridian for up to 632 megawatts of continuous load.
It has the option to reduce its take from Meridian to 400mW, or entirely, at 12 months’ notice. — BusinessDesk