The ghost of Project Aqua hangs over Meridian Energy as it enters a High Court battle over plans for the country's biggest wind farm.
The energy company is appealing an Environment Court decision stymieing Project Hayes in Central Otago. Justice John Fogarty begins presiding over the appeal in the High Court in Dunedin today .
While much of the legal argument is expected to be technical and dry – an appeal against an Environment Court decision can only be made on points of law – the outcome will be crucial in the quest to generate sufficient electricity in the South Island to meet rising power demands fuelled by economic growth, the dairying boom and irrigation.
The last major power station built in the South Island was Contact Energy's Clyde Dam on the Clutha River, a 432-megawatt scheme constructed during the 1980s and commissioned in 1992.
The High Court appeal follows the Environment Court ruling in November last year that overturned resource consents for Project Hayes issued by the Central Otago District Council and the Otago Regional Council, because it deemed the negative effects on the unique landscape were too high.
Meridian had already spent $10 million on the project.
Meridian chief executive Tim Lusk said then the decision would make it very difficult to get consent for other much-needed energy and infrastructure projects.
If the High Court accepts Meridian's appeal, Project Hayes will be able to produce enough electricity to power Christchurch and Dunedin.
If it doesn't, the pressure goes back on the state-owned generator and retailer to find other ways to meet consumer demand, rising up to 4 per cent a year, and provide the South Island with an alternative power source for dry winters when hydro-generation is constrained.
The 630MW Project Hayes is a successor to Project Aqua – a 524MW scheme to divert nearly 75 per cent of the lower Waitaki River through a 60km canal to drive six new power stations – scrapped by Meridian after fierce community opposition.
Meridian is still intent on generating extra power from the Waitaki. Its North Bank Tunnel project, which could produce between 250MW and 300MW of electricity, has already been granted water-only resource consents.
The state-owned enterprise would not comment on Project Hayes ahead of this week's hearing.
Wind Energy Association chief executive Fraser Clark said wind power was a good option for managing dry-year supply problems in New Zealand and Hayes could be a "stand-out" performer.
In the year to March, wind provided a record 3.7 per cent of the country's electricity.
"Increasing the amount of hydro just potentially compounds your problems in a dry year. Wind then stands out, especially in the South Island, where you don't get access to geothermal power and natural gas, and coal would be a carbon risk.
"South Island demand is increasing, with dairying, irrigation and new milk-powder factories popping up."
Of the 500MW of wind projects commissioned, only about 60MW of generation was in the South Island, Clark said.
"What's enabled most of that development in the North Island to occur is exceptional wind resources, in the Manawatu and now [Project] West Wind in Wellington, which are right up the very top of the scale in terms of performance.
"The North Island has windier sites. That's not to say the South Island sites people are now looking at are poor quality – in fact, they are very high quality in a global sense – but just not quite as exceptional as the Manawatu and Wellington.
"If you don't get Hayes, and continue as everyone seems to expect us to do, then those pressures on where our electricity is going to come from will only increase.
"It's hard for us to say that absolutely there should be a wind farm at that site. The challenge with Hayes was the way those benefits were assessed against those effects. That is the really interesting thing for the industry – the precedents that may have been set by some aspects of the Environment Court decision," Clark said.
Electricity industry consultant Bryan Leyland said of the options available in the South Island, Project Hayes would be "probably the most expensive and least effective" at solving supply problems.
"It was definitely not in the top 10 of the Electricity Commission's list of wind farms. The problem is, and it's coming through clearer and clearer, the wind flows in the spring time, when the snow's melting and it's usually raining, are about 10 per cent above average and in the autumn it's about 10 per cent below, which is when we need it.
"In the autumn, you often get several days of little or no wind, which would make it more difficult to meet peak demand.
"Nobody is suggesting wind as baseload power, but I'm saying what we desperately need is something we can rely on to be there to meet peak demand. If we had heaps more storage, it [wind] would be a lot better," Leyland said.
Opposition to Project Hayes was strong and led by Otago figureheads such as poet Brian Turner, landscape painter Grahame Sydney and former All Black Anton Oliver.
It even attracted the money of former All Black captain and high-flying Australian businessman David Kirk, who two years ago paid for a full-page advertisement in the Sunday Star-Times, believed to have cost about $28,000, featuring blood-red impressions of giant wind turbines and access roads daubed on to a brown Central Otago backdrop and the legend: "100% Pure Vandalism. Project Hayes – It'll Cost the Earth".
Kirk, a former chief executive of Fairfax Media, the publisher of The Press, said at the time he did it because he had "a real fondness" for the Central Otago landscape.
