Genesis Energy plans biggest NZ investment in solar power to date

Thursday, 12 August 2021

Between them, Genesis and Lodestone’s solar investments should meet more than 2.5 per cent of the country’s current power demand (file photo).

Genesis Energy plans to build enough solar energy farms over the next five years to meet a little under 2 per cent of the country’s current electricity demand.

The company said it was finalising a joint venture with overseas solar firms to generate about 750 gigawatt-hours of solar energy each year.

For comparison, last year, New Zealand’s total electricity demand was 43,500GWh.

Genesis chief executive Marc England said solar power made sense on a number of levels.

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“We believe there is an economic opportunity to develop utility-scale solar projects in New Zealand,” he said.

Earlier this year, a new company, Lodestone Energy, backed by investors including ‘‘rich lister’’ Gary Haddleton and Sir Stephen Tindall’s K1W1 venture capital fund committed to invest $300 million in five solar farms capable of producing 400GWh per year, or just under one per cent of the country’s demand.

However, Genesis’ plan would be the first major investment in grid-connected solar power by one of the majority state-owned gentailers.

Genesis’ major generating asset remains its thermal power station at Huntly.

Details of how many individual solar farms the joint venture would build and where they would be located have yet to be decided, spokeswoman Estelle Sarney said.

But they would be “predominantly” in the North Island.

She described the intent to build the capacity as firm.

Genesis said the joint venture could also consider incorporating battery storage for the power it generated, for flexibility.

Lodestone chief executive Gary Holden estimated its business could produce solar power from its planned farms at a similar price to wind power, which costs about 7 or 8 cents a kilowatt-hour to generate in New Zealand thanks to its high wind speeds.

Sarney said it was too soon for Genesis to make a similar estimate.

The planned investment is one of series of investments in new renewable capacity that have kicked off or are in the planning stages after a lull in activity lasting more than decade that left the country with little cover for “dry years” when hydro generation is low.

Much more will be needed to meet the country’s decarbonisation and electrification goals and to keep up with the expected natural increase in demand for power, according to official forecasts.

The Ministry of Business, Innovation and Employment has estimated the country will need about an extra annual 20,000 to 25,000GWh of generating capacity by 2050.

That is equivalent to about 30 of the five-year investments in solar slated by Genesis on Thursday.

BusinessNZ’s energy council has suggested up to 60,000GWh of extra annual capacity might be needed by then, which would require 80 such investments.

Genesis has separately announced that it will buy solar energy from two other renewable projects that were already in different stages of planning or development.

The company has agreed to buy 41 per cent of the output of Contact Energy’s Tauhara geothermal power plant that is expected to produce about 1300GWh of power each year when it comes online in 2023.

It will also buy all the power from Mercury Energy’s Kaiwaikawe Wind Farm near Dargaville, which is expected to produce about 230GWh of power each year after construction is complete in 2024.

Tilt Energy, which has been bought by Mercury, applied for resource consent for the wind farm last year.