Kerre Woodham: How long is a fix for the energy crisis going to take?

We're talking energy today, or rather the lack of it. New Zealand seems to have sleepwalked into an energy crisis, according to the Chairman of Open Country Dairy, the second biggest player in New Zealand's dairy export industry. Laurie Margrain said in a story the crisis is not coming, it's here. He said an example of its arrival is that the factory has had to incorporate standby coal-fired boilers into its brand-new Southland alternative-powered cheese factory, because of the certain risk of insufficient electricity generation.  

Another story out within the same 24 hours, the largest employer in the Ruapehu district has paused operations at its pulp mill and sawmill sites after a nearly 600% increase in energy costs since 2021. Wholesale prices have risen from $100 per megawatt hour (MWh) to an average of around $700 per MWh this week. The Chief Executive at Winstone Pulp International said the company has to think about its future now that energy costs have risen from 15% of total production to an excess of 40%. You cannot plan for that. They've done everything they can. They say they can't pass on the increases to customers because they sell into a commodity market where the price is the price.  

So this is affecting New Zealand. The overseas buyers don't give a fat rat's bum that we're being held over a barrel by the electricity generators and the retailers, the Gentailers. They don't care, they just want to look at the price. And so if they can't compete because energy costs have risen through the roof, what is their future? As a business, Mike Ryan says we've invested tens of millions into CapEx to improve production and energy efficiency. So they've reduced their energy use by 20 to 30% for every ton produced, they have done everything they can do and yet their future is uncertain.  

Minister for Regional Development and Associate Minister for Energy Shane Jones told Heather du Plessis-Allan last night that if prices of electricity are inordinately high, then there needs to be more electricity generated.  

“The difficulty is if we have a continually rising cost of electricity, then the only way to deal with that problem is to rapidly expand supply. And that's why the fast track legislation, I've no doubt in my mind, will prove to be incredibly useful so we can accelerate the development of wind farms, solar farms, hopefully some more hydro. And you know we have an inordinately rich resource in New Zealand, which is the geothermal energy, and geothermal energy drilling in other countries goes down 5 or 6 kilometres into the earth and you tap into what's called hot rock, not quite at the magma and that is a profound geothermal resource, but it will probably require the crown and the science institute owned by the Crown to do the exploratory work.” 

But for how long? I love the way he just casually says yes, hopefully another hydro dam. Hopefully another hydro dam?! How long would that take? How long would it take to get through even with the fast-track legislation? How long would it take to get through the red tape before there was a spade in the ground? We, along with just about every other nation, signed up to the Paris Accord to reduce emissions or face fines and sanctions, and that's fine. Let's look at alternative ways of doing things, better ways of doing things. But we can't just move away from traditional energy sources until we have another form of renewable, socially acceptable energy that is reliable.  

So the power companies say they're investing in alternatives and renewables, every single cent they have is being put back into investing in alternative sources of power. And that's one of the reasons why power is so expensive. But in the meantime, what are manufacturers to do while they wait for Shane Jones hydro dam to be built? I wonder if I'd

Episode Transcript

Speaker 1 (00:06):
You're listening to the Kerrywood of morning's podcast from News
Talk said, b.

Speaker 2 (00:12):
We're talking energy today, or rather the lack of it.
New Zealand seems to have sleep walked into an energy crisis.
According to the chairman of Open Country Dairy, the second
biggest player in New Zealand's dairy export industry, Laurie Margrain
said in a story, the crisis is not coming, it's here,

(00:34):
he said. An example of its arrival is that the
factory has had to incorporate standby coal fired boilers into
its brand new Southland Alternative powered cheese factory because of
the certain risk of insufficient electricity generation. Another story out
within the same twenty four hours, the largest employer in

(00:57):
the rue Pehu district has paused operations as its pulp
mill and sawmill sites after a nearly six one hundred
percent increase in energy costs. Since twenty twenty one, wholesale
prices have risen from one hundred dollars per megaw are
to an average of around seven hundred dollars per megawa

(01:20):
are this week, the chief executive at Winston Polp International
said the company has to think about its future now
that energy costs have risen from fifteen percent of total
production to an excess of forty percent. You cannot plan
for that. They've done everything they can. They say they

(01:41):
can't pass on the increases to customers because they sell
into a commodity market where the price is the price.
So this is affecting New Zealand. The overseas buyers don't
give a fat rats bum that we're being held over
a barrel by the electricity generators and the retailers, the
gent tailors, they don't care. They just want to look

(02:03):
at the price. And if they can't compete because energy
costs have risen through the roof, what is their future
as a business. Mike Ryan says, we've invested tens of
millions into KPEX to improve production and energy efficiency, so

(02:24):
they've reduced their energy use by twenty to thirty percent
for every ton produced. They have done everything they can do,
and yet their future is uncertain. Minister for Regional Development
and Associate Minister for Energy Shane Jones told hither to
Police Allen last night that if prices of electricity are

(02:45):
inordinately high, then there needs to be more electricity generated.

Speaker 3 (02:50):
The difficulty is if we have a continually rising cost
of electricity and the only way to deal with that
problem is to rapidly expand supply. And that's why the
past track leagis slash. I've no doubt in my mind,
will prove to be incredibly useful, so he can accelerate
the development of wood palms, solar farms, hopefully some more
hydro And you know, we have an inordinately rich resource

(03:14):
in New Zealand, which is the geothermal energy, and geothermal
energy drilling in other countries goes down five or six
kilometers into the earth and you tap into what's called
hot rock, not quite at the magma, and that is
a profound geothermal resource. But it will probably require the
Crown and the science Institute owned by the Crown to

(03:34):
do the exploratory work.

Speaker 2 (03:36):
But for how long? I love the way he just
casually says, yes, hopefully another hydro dam. Hopefully another hydro dam.
How long would that take from how long would it
even take to get through even with the fast track legislation?
How long would that take to get through the red tape?
Before there was a spade in the ground, We along

(04:02):
with just about every other nation, signed up to the
Paris accord to reduce emissions, face finds and sanctions, and
that's fine. Let's look at alternative ways of doing things
better ways of doing things. But we can't just move
away from traditional energy sources until we have another form
of renewable, socially acceptable energy that is reliable. So the

(04:26):
power companies say they're investing in alternatives and renewables, every
single cent they have is being put back into investing
in alternative sources of power. And that's one of the
reasons why power is so expensive. But in the meantime,
what are manufacturers to do while they wait for Shane
Jones hydro dam to be built. I mean, I wonder

(04:51):
if I'd even be alive to see it. While we
wait for offshore wind farms to arrive and start spinning.
I mean, this is pie in the sky. You can
want something, you can wish for something, you can hope
for something, you can even plan for something. But if

(05:12):
it's not here, how do the manufacturers switch on the
lights and turn on the machines. The manufacturing sector maintain
has maintained a contribution to GDP of about eleven percent
since twenty thirteen. So what that means is and it's
what we were talking about yesterday. Do you know how
New Zealand makes money? And no, it doesn't print it. No, no,

(05:37):
we've seen that that doesn't work. It sells stuff and
people buy it, and that gives us an income. So
for those of us who work, we sell our services,
we sell our goods. We get money and we can
pay the mortgage and we can buy nice things if
there's money left over. And that's how a country works.

(05:59):
We sell stuff, the world buys it, We pay our
bills and if we've got enough left where we can
all pay police more and build new hospitals and do
all those lovely things that civilized countries do. So if
the manufacturing sector isn't guaranteed supply of energy, it's going

(06:23):
to lose production, it's going to lose customers, and we're
going to lose money. We're also going to lose jobs.
Nine point four billion dollars worth of exports and the
sector employs nearly a quarter of a million people. It's
a big deal. And Shane Jones talked about sweetheart deals
and yes, the power companies could could play nice and

(06:46):
give the big manufacturers a sweat. Why would they they
have people to answer to as well. All of these
companies are responsible to their shareholders fifty one percent. Most
of them have fifty one percent with the New Zealand government.
But they can't be doing sweetheart deals and investing in

(07:09):
new power, new sources of supply. It's a bloody mess.
I mean yeah, Shane Jones saying, yeah, no hydro thermal.
How long is it going to take? The lovely people
at the pulp mill need to turn the lights on

(07:30):
now and they can't. It is simply unsustainable given the
increase in price. So where do we go from here?

Speaker 1 (07:38):
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