John Harbord: Major Electricity Users' Group Chair on the proposed special economic zones

Associate Energy Minister Shane Jones is floating the idea of special economic zones as an answer to New Zealand’s energy security.  

The Government's asking for feedback on its new long-term fuel strategy.  

The special economic zones are areas where businesses can get tailored policies on regulation, financial support, and access to infrastructure. 

Major Electricity Users' Group Chair John Harbord told Andrew Dickens it could give independent generators a better chance than they currently have. 

He says the only big players that independent generators can sell to are the big four gentailers, and it's just cheaper for the gentailers to make it themselves. 

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Episode Transcript

Speaker 1 (00:00):
Shange Jones pushing ahead with his desire to implement a
thing called special Economic Zones to boost electricity generation and
to secure fuel. Now the zones will create tailored regulation
policy and special access to financial support for those in
areas deemed desirable for generation. So John Harvard is the

(00:21):
chair of the Major Electricity Users Group, then joins who Now,
good warning to John?

Speaker 2 (00:25):
Good morning.

Speaker 1 (00:26):
So is Shane jones idea a good one? Will it
get more dams and wind farms built?

Speaker 2 (00:32):
Look? It certainly would help. One of the big problems
we have in New Zealand is it's very hard to
build things, and there's no question that we need a
lot more generation built. It doesn't remove issues around sort
of access to finance potentially, and it doesn't change sort
of the fundamental dynamic we have in New Zealand that
our large generators tend to only build new generation when

(00:53):
the demand is already there for the new build. So
we always sort of lag behind a little bit in
terms of very electricity generation and that's one of the
reasons why prices stay high.

Speaker 1 (01:02):
Do you think this might encourage more independent generators to
set up shop because we've got the big four gen tailors,
you know, and it's a bit like the supermarkets as well.
Would this actually create more competition.

Speaker 2 (01:12):
Well, it'd be really interesting to see what the Minister
is thinking about in terms of access to finance. So
the big problem for independent generators is raising the capital
they need to actually build the generation, so they look
for a long term, large contract to underpin that investment.
The problem is most of the generation is wind and solar,

(01:36):
so it's intermittent generation because the wind doesn't blow all
the time and the sun doesn't shine all the time.
But our large users like as steel makers and our
your minium makers, they need a really constant supply of
electricity all the time. So what tends to happen is
the only sort of big players that the independent generators
can sell to are the big four gentators, So you

(01:58):
don't fundamentally change the dynam and if you're a gentailor,
you're a lot of building it yourself than buying it
off someone else. So there's a real challenge there for
the independence to actually enter the market. So if the
Minister's got some good ideas around access to capital and
making that easier, that could make a difference.

Speaker 1 (02:15):
Yes, and when those people come into the market, and
this is advice for the gentailors as well. I mean,
what would you like them to be doing.

Speaker 2 (02:23):
Obviously we'd like them to be building a lot more generation.
They are building more at the moment, but we need
a step change in a large order of magnitude. To
put it in sort of perspective, is you know some
of the wind farms and the solar farms that are
being built, you know they might be twenty or thirty
megawatts of electricity a year. Well, we use about forty

(02:46):
five million megawats of electricity a year, so it gives
you an idea of how much we need to increase generation.

Speaker 1 (02:53):
All right, We're round about eighty two percent, and thank
you John Harvard for more from.

Speaker 2 (02:57):
Early Edition with Ryan Bridge.

Speaker 1 (02:59):
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