Stew Hamilton: Mercury CEO on the Huntly Power Station deal, road to renewable energy

Power companies are warning the road to fully renewable energy will be a bumpy one.  

The big four power companies will co-invest in an energy stockpile which will include 600-thousand tonnes of coal.  

Mercury Chief Executive Stew Hamilton says power companies have a commitment to renewables.  

He told Mike Hosking Mercury has invested a billion dollars into geothermal and wind power, but there needs to be a backup.  

Hamilton says when the wind isn't blowing and the sun isn't shining, there needs to be a more solid source of energy. 

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Episode Transcript

Speaker 1 (00:00):
Back to the business of the power. The Hopeles state
this country finds itself in every winter. The Big four
gin Tailor's asm hopefully you're sure you are aware, have
cut a deal to stockpile coal at Huntly for the
next decade. Anyway, Mercury says we need more than that.
Stuart Hamilton is the chief executive of Mercury and is
whether it's very good morning to you, but moning Mike,
can the Big four do what you're doing with coal
and not draw the attention of some sort of regulator

(00:21):
like the ComCom.

Speaker 2 (00:24):
I think there's a lot that's been done across the industry,
so I think for us, we know what we have
to do. We have to keep building renewables at pace
whilst we're also working out what we do when we
need to have the extra firming through dry years like
we've just experienced.

Speaker 1 (00:37):
And so having ten years worth of coal tho and
having this plan, what does that tell us about the
renewable journey and who's on track and whether we're spending
it up and doing the enough.

Speaker 2 (00:46):
It's definitely that the renewable journey can be a bit bumping,
as we've seen over the last couple of years with
a sudden and quite dramatic drop and gas applies in
New Zealand, we've realized that actually we need to keep
building at pace, but we also need to make sure
that we've got this firm in there so when the
winds stop blowing or the sun's not shining, we've got
the ability to be able to provide that powerful when you's.

Speaker 1 (01:05):
Yond okay, So do you see the transition working? I mean,
how would you describe the state of the market right now,
right here, right now for these past couple of winters
and our lack of supply, our lack of renewables, all
of that, Where are we at?

Speaker 2 (01:18):
I'd say there's definitely been a huge impact, right It's
been failed across the market, whether you're actually producing ultricty
or you're consuming it. And so there's no doubt there's
been an impact, and there's no doubt that we need
to be doing more than what we have been. And
so I think there's positive signs ahead of us. I
don't think we've been able to foresee the position we've
gotten into, particularly with the sudden drop off and gas.

(01:40):
A little while ago, we had this situation with TI
which is sort of a bit of an overhang. But
now if you look at the rate that things are growing,
getting pretty good and actually over the last of three
years we've built about the cab ten percent of New
Zeon's grid again, so there's a fair bit going on.
It's just ultimately, do we have the ability to be
able to build at the pace and firm it at

(02:01):
the pace that's going to write basically provide the confidence
for not only just households but also the small, medium
and large industrials in New Zealand.

Speaker 1 (02:10):
Answer your own question, can we we can?

Speaker 2 (02:13):
Yeah, but I think at the moment, for example, Mercury
we're investing a one billion dollars into geothermal and wind.
That's great. Other gent tailors and actually a number of
independents are now involved building as well, which is fantastic.
As she becomes. If we have dry periods like we
have over the last couple of years, how do we
make sure we've got power in those times? That's why
the hunting deal is great, but we need more Geoffrmal

(02:37):
we believe got a massive role to play, and so
for example ourselves, we're putting a fair bit of effort
into that.

Speaker 1 (02:43):
Also we had Jones on the program and the other
day about the geothermal thing. Is it easy, can it
be done? And wins it on stream? And what weight
do you place on geothermal in the mix?

Speaker 2 (02:54):
Geo Thermal has a huge role to play. About twenty
percent of the New Zealand's power comes of geo thermal and
that's worldlie, it's easy. It's not that easy. There's a
fair amount of drilling that needs to take place. It's
quite a lot of technical know how that needs to
be used. But New Zealand's world leading in that space.
We've got projects ahead of us to do that. But
it's going to be part of the mix, but not

(03:15):
the whole thing.

Speaker 1 (03:15):
If you go back to the onslow scrap, which was
it killed the desire to invest. Are the settings as
you sit here talking to us this morning, right.

Speaker 2 (03:25):
I believe. So there's definitely right market signals now. So
there's the signals being sent to say we need to
keep building and we are doing that. There's signals that
are being sent to say do it at pace, and
we're going at pace. That The issue is how long
does it take to actually bring some of those on streams.
So from the time we sort of press the button
to build a wind farm, you know, you press the

(03:46):
button and then it's sort of the machine starts to churn.
Over the space of a two or three years, a
wind farm will be built, but that obviously through that
time crat's an issue where you might not have the
power when you need it, and that's where you need it.
A suite or a portfolio offer mechanisms which include the
Huntley firming.

Speaker 1 (04:03):
In what year do I get you on this program
and we no longer need to talk about winter and
winter being a problem and having a production drag for
this country.

Speaker 2 (04:13):
I can't want an exact date, but I'd say over
the next few years we'll get there. There's certainly a
fair amount of energy being built now. The only thing
will happen is if something again suddenly comes out of
left field. But by the time you combine the wind
that's been built, the soul that's been built, the geo
therm or that's been built, back it up with the
Huntly firming options, I think we're putting ourselves in a

(04:33):
really good position. And you can see that at the
moment with there's green shoots. I'd say in terms of
industrial demand, we're seeing Fonteria electrifying. We've got great projects
with the likes of Busy who are committing to twenty years.
We've had TII, which is a globally significant industry committee
for twenty years and I think you combine that with

(04:54):
a number of interests from data centers, is a fearbit
coming at US, which is pretty exciting.

Speaker 1 (04:58):
Fantastic good insights. St appreciate your expertise, Stewart Hamilton, chief
executive of Mercury New Zealand. For more from The Mic
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