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Distributed Smallscale Wind in New Zealand

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Distributed Smallscale Wind in New Zealand Distributed Small­Scale Wind in New Zealand: Advantages, Barriers and Policy Support Instruments A dissertation submitted in partial fulfilment of the requirements for the Degree of Master of Environmental Studies at Victoria University of Wellington By Martin Barry Victoria University of Wellington 2007 “If we want things to stay as they are, things will have to change” Giuseppe di Lampedusa, 1896 – 1957 ii ACKNOWLEDGEMENTS I would like to extend warm thanks to the following people who made contributions to this paper. To my supervisor Associate Professor Ralph Chapman, who gave up considerable amounts of his time for consultation, and provided solid support and guidance on pulling this thing together. Jesse Nichols and Philippa Le Couteur who gladly assisted with proofreading and editing, Ben Gleisner, who helped conceptualise the structure and layout, and to Clive Anstey who provided the frontispiece photo. Also, to those who helped with the rural survey. Ben Aicken, who created the photomontages and Colleen Kelly who helped with the statistical analysis. Finally, the School of Geography, Environment and Earth Sciences, and Greenpeace New Zealand, who provided the funding that made the survey possible. iii ABSTRACT Despite having one of the best wind resources in the world, New Zealand’s wind energy industry is growing at a slower rate than the OECD average. This is arguably due to a lack of appropriate government support, with industry development largely being left to the market. These conditions have created a wind industry with the following four characteristics: a trend toward large­scale wind farms (leading to increased local opposition), a small number of investors, a high geographic concentration of wind capacity and a limited local turbine manufacturing industry. These characteristics are arguably limiting the potential growth of New Zealand’s wind industry. This thesis investigates whether small­scale wind (SSW) farms can alleviate these limiting characteristics and thus provide for a higher rate of industry growth. The approach is to investigate the advantages of, barriers to, and most effective policy instruments for SSW internationally, and apply these to the New Zealand context. Local research was conducted through interviews with 19 energy industry stakeholders and a rural mail survey questionnaire, to which 338 people responded. Research found that SSW offers a number of advantages: significantly higher local public acceptance; facilitation of community ownership; the potential for distributed generation benefits and support for the local turbine manufacturing industry. Given these findings, it is argued that SSW can provide for a higher rate of industry growth in New Zealand. The key barriers constraining SSW in New Zealand are its high cost, obtaining resource consent, a high degree of perceived investment risk, the electricity pricing system and the electricity market structure. The feed­in tariff appears to be the best policy instrument to overcome these barriers, along with the provision of investment subsidies and the classification of SSW as a controlled activity under the Resource Management Act 1991 (RMA). iv TABLE OF CONTENTS Acknowledgements...............................................................................................................iii Abstract ............................................................................................................................... iv Table of Contents.................................................................................................................. v List of Tables ....................................................................................................................... vi List of Figures ......................................................................................................................vii Chapter 1: Introduction..........................................................................................................1 1.1 Aim .............................................................................................................................4 1.2 Scope .........................................................................................................................4 1.3 Objectives...................................................................................................................4 1.4 Method and Approach.................................................................................................5 1.5 Positionality and Disciplinary Context ........................................................................ 11 1.6 Summary .................................................................................................................. 12 Chapter 2: The New Zealand Situation................................................................................ 13 2.1 New Zealand’s Electricity Sector Framework............................................................. 13 2.2 New Zealand’s Wind Energy Industry........................................................................ 16 2.3 Relevant Policy and Legislative Framework............................................................... 29 2.4 Summary .................................................................................................................. 33 Chapter 3: The Advantages, Disadvantages and Barriers of Small­Scale Wind Internationally ........................................................................................................................................... 34 3.1 Advantages............................................................................................................... 34 3.2 Disadvantages .......................................................................................................... 44 3.3 Barriers..................................................................................................................... 47 Chapter 4: Public Policy Options for Supporting Small­Scale Wind ...................................... 54 4.1 Regulatory Mechanisms............................................................................................ 54 4.2 Fiscal Instruments..................................................................................................... 63 4.3 Legislative Tools ....................................................................................................... 66 4.4 Summary .................................................................................................................. 67 Chapter 5: Advantages and Disadvantages of SSW for New Zealand –............................... 68 Stakeholder Views .............................................................................................................. 68 5.1 Advantages............................................................................................................... 68 5.2 Disadvantages .......................................................................................................... 77 Chapter 6: Barriers to Small­Scale Wind in New Zealand –.................................................. 79 Stakeholder Views .............................................................................................................. 79 6.1 Cost and Discounting ................................................................................................ 80 6.2 Resource Management Act 1991 (RMA) ................................................................... 80 6.3 Investment Risk ........................................................................................................ 82 6.4 The Pricing System................................................................................................... 83 6.5 The Present Market Framework ................................................................................ 84 6.6 Summary .................................................................................................................. 85 Chapter 7: Policy Options for New Zealand ­ ....................................................................... 86 Stakeholder Views .............................................................................................................. 86 7.1 Regulatory Mechanisms............................................................................................ 86 7.2 Investment and Production Subsidies........................................................................ 88 7.3 Streamlining the Consents Process........................................................................... 90 7.4 Streamlining Grid Connection.................................................................................... 91 7.5 Summary .................................................................................................................. 91 Chapter 8: Discussion ......................................................................................................... 92 Chapter 9: Conclusion....................................................................................................... 107 Areas For Further Research.............................................................................................. 108 References ....................................................................................................................... 109 Appendix A: List of Industry Stakeholders Interviewed....................................................... 121 Appendix B: Ethics Application
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