Warning offshore wind could be off the table anywhere in NZ if seabed mining proceeds

Monday, 14 October 2024

A green light for ironsands mining off the coast of Taranaki could kill investors’ interest in building wind farms both there and offshore from Waikato, meaning they would give up on New Zealand completely in the near term, a developer has warned.

Copenhagen Offshore Partners director Giacomo Caleffi said the Government appeared to be hoping, despite earlier warnings, that the conflict between seabed mining and offshore wind would “go away of its own accord”.

The Danish firm has partnered with the NZ Super fund to establish Taranaki Offshore Partnership which has been hoping to build a case for investing about $5 billion in a giant wind farm in the South Taranaki Bight.

Caleffi said not only would that not be able to go ahead at the scale it wanted if Trans-Tasman Resources (TTR) got the green light to hoover up iron sands from the seabed in the same region, but it might take offshore wind off the table entirely for many years.

Advice provided to Resources Minister Shane Jones by the Ministry of Business Innovation and Employment (MBIE) stated there was “deeply held concern” in Taranaki that the offshore wind opportunity might be lost to Waikato without a clear statement of Government support.

The advice was obtained by the Green Party under the Official Information Act.

But Caleffi said building wind farms offshore from Waikato was “the second-best option and not necessarily a close second” because average wind speeds there were 20% lower than in the South Taranaki Bight.

“Our view at the moment is if South Taranaki becomes completely inhospitable for offshore wind operations, yes, Waikato will be the next one,” Caleffi said.

“Would we still then expect an offshore wind farm in Waikato to happen in 2034? There we have our doubts.”

That was not only because the opportunity in Waikato was less compelling but because of the message the seabed mine would send to investors, he said.

“It goes back to the signal of taking South Taranaki off the map for international investors who have come all the way around the world to explore the opportunity there.

“I think it would be a strong signal in the wrong direction. It would make us wonder whether we're here for the right reasons.”

Prime Minister Christopher Luxon announced last month that the Government would introduce legislation to make it easier to build offshore wind farms.

But both Taranaki Offshore Partnership and rival developer Bluefloat have warned their offshore wind turbines and electrical cables can’t be constructed in the same location as an active seabed mining operation.

A smaller offshore wind farm might be able to coexist with seabed mining on a neighbouring site offshore from Taranaki.

But that could be harder to stack up in part because of the fixed cost of upgrading the infrastructure at Port of Taranaki to act as a marshalling yard for turbines, Caleffi said.

The parent company of TTR last week withdrew a stock-market claim that its seabed mining operation would generate $1 billion in annual revenues, admitting it did not have a reasonable basis to provide that information to investors.

But Green Party MP Scott Willis believed the Government had made its choice by referring TTR’s proposed seabed mine to an expert panel for “fast-track” consenting approval.

“I think we can read between the lines and what we see from Shane Jones is a deep fascination for mining, for the ‘boom-bust’ extractive economy that is going to worsen the climate crisis.

“We have a government that is acting with total irresponsibility towards the decarbonisation journey.”

Caleffi was less certain the Government had made an active choice to proceed with the seabed mine at the expense of offshore wind, saying instead that it seemed to be hoping the conflict between the developments would “solve itself”.

“There just seems to be a kind of complete ‘hands-off’ attitude towards wanting to resolve this and to us that fits into this wider issue that there is no energy strategy — very little strategic approach to using energy resources”.

The documents released to Willis suggested MBIE officials saw ironsands extraction as the nearer-term opportunity.

“Offshore wind is widely held to be the single biggest opportunity for Taranaki’s future economic wellbeing,” officials advised Jones in June.

“However, there is some concern about the fact that it is likely to take some time before it is in place, and economic opportunities are needed before that.”

Caleffi questioned the suggestion seabed mining might provide the quicker economic boost.

“We're still looking at a final investment decision at the end of the decade and are already generating economic activity in the region.

“I'm not an expert on the seabed-mining project, but there's definitely a number of years before anything actually happens on that project — even if they get consent — so I doubt the timelines in terms of activities happening would be very different.”

MBIE advised Jones that Port of Taranaki would need to start work on upgrades soon to provide the infrastructure needed to support offshore wind.

“Preliminary analysis of the requirements for offshore wind estimates that these upgrades could cost up to $500 million,” it said.

“With developments targeting construction in the 2030s — and major port infrastructure projects taking up to 10 years to plan, consent and construct — rapid movement is required.”

Caleffi confirmed Port of Taranaki would need to act as a marshalling yard for its turbines to minimise the time an installation vessel “which is a very specialised, expensive one, needed to be hanging around”.

But he believed there might be lower-cost options for port upgrades that cost in the tens of millions.

While planning might need to start soon, much of the work at the port needn’t take place before its own final investment decision, he said.