- Most of the good hydro resources in the country have already been developed and the few remaining good ones are unlikely to be developed because of opposition by environmental groups (no doubt the same groups that have lobbied the government for a ban on thermal generation).
- This means that most new generation built in NZ over the next 10 years will be wind with some geothermal and biomass to make up the balance.
- Wind despite all its promise is still much more expensive than thermal or hydro generation. (Actually this is the main cynical reason behind the governments policy - they even admit that thermal generation is too cheap and acts as a disincentive to building wind farms.)
So what will all this mean? Some people such as Brian Leyland have jumped on the scare tactic bandwagon asserting that blackouts could result from this policy. While I am less convinced of this, what is certain is that the price of electricity will rise in the next ten years.
Anyone who doubts that one of the foundations of western wealth and prosperity is cheap energy should go try run a business in the next ten years in NZ. Yes NZ is still based around primary industry and what does primary industry need to compete in a world market? Yes that's right, cheap electricity. Cheap electricity was one of the things that has enabled NZ in the past to offset its comparative distance from world markets. The government has just destroyed this advantage and NZs global competitiveness will soon follow. Irrigators, paper mills and milk drying plants don't run because we say they should, they run on cheap power.
So here are my predictions for NZ in the next ten years:
- A shortage in base load electricity in the medium term will result in a 50% increase in the price of electricity;
- Big industrial users such as the smelter in Invercargill will leave the country and go somewhere where cheap power is available;
- Unemployment will rise, meaning that fewer people will be able to afford the sudden increase in the price of electricity.
- Poverty will increase.
- After some years electricity prices may start to fall again as demand growth might start to go negative for the first time in history (due to the industrial exodus).
- Thousands more NZers will leave the country for Australia where they can get 30% more (and the gap is growing) money for the same work.
- NZ will become exactly what Jeanette Fitzsimons and her mob at the green party want - a beautiful natural backwater where the people live a backward lifestyle, lighting their homes with candles, shivering through cold winters without electric heat or hot showers and toiling away for hours each day to grow their own food. But hey it's really great because the natural environment will be untouched!
I am actually optimistic that someone in government in NZ will see sense soon enough before calamity. However citizens have to make them see the madness - make your viewpoint heard , get out in the street and protest, demand that the government keep its nose out of the electricity business and let businesses do what they do best. Demand freedom of thought and freedom of enterprise and most of all, demand a future for my home, the most beautiful country in the world.