John Carnegie: Energy Resources Aotearoa CEO on the need for coal, gas to fill the gaps in electricity generation

The Energy Minister is being urged to take action as a winter electricity price spike looms. 

A newly released briefing to Minister Simon Watts shows supply is tight, and gas needs to be maintained until suitable alternatives are found. 

It also warns some households and businesses are finding energy unaffordable. 

Energy Resources Aotearoa Chief Executive John Carnegie told Mike Hosking it's clear we need an energy system backed with coal or natural gas. 

He says we can't keep relying on the weather and lurching from winter to winter without systemic action. 

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Episode Transcript

Speaker 1 (00:00):
So Simon Watts, who's the new Energy Minister as a
result of the summery shuffle. Of course, he was given
a briefing on his new portfolio. This is standard practice.
That particular document has been released in the last twenty
four hours. In a way, it tells us nothing we shouldn't
have known. We don't have enough power, renewables don't cover
the gap in the present point in time and what
needs to take a long term view of all of this. Anyway,
the energy resources are here to see. John Carnegie's with

(00:22):
us John morning. He's been fairly bullish on his talk
towards Gen Taylor's and the plan selling and spot prices
and stuff. You're happy with what's being said at least.

Speaker 2 (00:33):
No, Look, I think if everyone wants and deserves an
electricity market that's as competitive as possible, So it's useful
to shine the light every now and again and make
sure that that's exactly what's going on.

Speaker 1 (00:46):
We're in a better place, or so the industry keeps
saying this year than we were last. Is that luck
and rain or something more than that?

Speaker 2 (00:54):
Oh? Yeah, no, Look, New Zealand certainly just doesn't have
the nextural gas needed to run our elect of e system.
And actually I think you said it in the intro.
We just don't have the affordable alternates to fill a
massive energy gap that we now face, and so we're
starting to see elevated spot market electricity in spot market
prices as a result. And the upshot of us is

(01:17):
that relying on the weather isn't a great way to
run an economy, let alone an energy system, and we
can't keep on reaching from winter to winter without taking
some systemic action.

Speaker 1 (01:28):
Well, the systemic action comes from the power companies who
are had on the program, who say be patient, in time,
renewables will fill the gap. Are they wrong?

Speaker 2 (01:39):
Oh, well, they're certainly going to help. I mean, we've
kind of got an amazing problem to have. But what
we do have is an over reliance on weather dependent
sources of power generation that need to be backed by
coal or natural gas. And I think it's abundantly clear
for all to see that without new gas fields or

(02:00):
new permitted areas for expiration gas, and no longer fully
the hydro lake levels as they should, and that threatens
our economic resilience and energy security.

Speaker 1 (02:11):
That's what I can't understand. So even if we all
agree that renewables may one day be fantastic, and that's
fine and dandy right here, right now. It's surely it's
irrefutable we don't have enough gas, and it's irrefutable that. No,
we may not like coal, but it's the answer. Do
people argue against that?

Speaker 2 (02:30):
Oh yeah, no of course, because we get some who
say that we can have one hundred percent renewable electricity system.

Speaker 1 (02:38):
But sorry, but we don't. That's the point. I mean,
we don't.

Speaker 2 (02:42):
It's just not feasible. It's not feasible. Even the Climate
Change Commission argued against a one hundred percent renewable electricity
system because it is unreliable and it is too expensive.
And basically, when the sun doesn't shine, it doesn't rain,
and the wind doesn't. We need a system that is
resilient enough to fill the gaps, and that can only

(03:06):
come from natural gas. And unfortunately, now, yes, Cole.

Speaker 1 (03:10):
Right are, your voice is being heard at the highest
level so that something more sensible can be done as
opposed to having power outages.

Speaker 2 (03:20):
Look, you know, Minister Jones, Yes, we're working collaboratively with
Minister Jones and other ministers. You know, they're hard at
work on you know because of course, as I've said
a number of times on you show the problem with
the New Zealand energy system that because of the oil
and gas span of twenty eighteen, the sector now faces
massive sovereign risk, which means that investors are wary of investing,

(03:45):
and so Minister Jones and his colleagues are looking at
that and what's needed including actually I see just maybe
last week there was discussion about the Crown taking equity stakes,
so investing in new permit areas to actually take back
some of the risk inappropriately pushed onto the seeker, and
we welcome, we welcome those seditions.

Speaker 1 (04:07):
Good having the program as always, John Carnegie. For more
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