Photo: Alexa Cook/RNZ
- Winstone Pulp International, which employs 230 workers across two large North Island mills, is looking at closing its entire NZ operation due to high wholesale power prices
- Local mayors are lobbying the government to crack down on "price gouging".
- Ministers have been meeting with several manufacturers this week.
Forestry manufacturers say there has been progress in talks with government ministers over the energy price crunch that threatens hundreds of jobs in the sector.
The energy sector argues it has been investing heavily - but some experts dispute that.
Several forestry product mills met with ministers this week urging the government to help bring wholesale energy costs under control otherwise hundreds of jobs will be lost.
Forestry companies struggle due to high power prices
Hawke's Bay forestry manufacturing company Pan Pac was part of the meetings, and Managing Director Tony Clifford told Morning Report they didn't ask for money from the minister.
"We were still very much about presenting and sharing our problem. I think the thinking and acceptance of the scale of the problem and potential contagion effect right through the forestry supply chain is now better understood," he said
'Terrifically inefficient' system
Economist Geoff Bertram told RNZ that a key issue was that many electricity companies were too focussed on making money.
Economist on energy infrastructure
"What the big gentailers did for about a decade is sit on their hands, take out huge dividends and do very little investing. Their excuse was that demand wasn't growing but in the process they just failed to look more than about a week or two ahead," he said.
He added that it's a historic issue.
"Through the 1990's there was huge under investment and we got a crisis in 2001, then there was a decade where everyone was rushing in to invest, then they stopped investing after 2010 and biyearly 2020's we had a crisis again.
"Now they're all rushing to invest again.. this is a terrifically inefficient way to organise the provision of an infrastructure service," said Bertram.
Figures from an MBIE report last month forecast electricity demand would rise by more than 80 percent by 2050.
Photo: MBIE/Supplied
Energy companies respond
Mercury Energy's Executive GM Phil Gibson said over the last five years, they have invested about the same amount in new and existing infrastructure as they've paid out in dividends.
"Every year we spend hundreds of millions of dollars building and upgrading wind, geothermal and hydro stations as well as drilling holes in order to bring more renewable energy on. Just over 40% of our FY24 earnings were reinvested into new and existing assets.
"All up we have about $1 billion investment in the works right now; including $700m committed to the expansions of Kaiwera Downs wind farm near Gore and Ngā Tamariki geothermal station near Taupō," he said.
While Meridian Energy Chief Executive Neal Barclay said it's unfair to say there's been a lack of investment.
He said New Zealand's had no growth in electricity demand since 2010.
"Despite that, the industry's invested around $10 billion over 15 years, mostly in new geothermal and wind projects to replace ageing coal and gas-fired plant. In the last five years, Meridian has invested around $1 billion. In July, we opened New Zealand's second-largest wind farm and we're currently building a grid-scale battery near Whangārei," said Barclay.
Meridian said it's currently developing other projects, including more solar, wind and batteries, and would invest around $3 billion more by the end of this decade.
Contact Energy said it's profit was also going back into building renewable energy infrastructure the country needs, and in the last financial year it's invested double its profit into renewable development.
"Presently, we have $1.8 billion of renewable energy development underway. Among them is our new geothermal power stations at Tauhara and Te Huka 3 in Taupō, our first grid-scale battery in Glenbrook, and our first solar farm at Kōwhai Park next to Christchurch Airport.
"Our new power stations at Tauhara and Te Huka 3 will deliver the equivalent renewable energy for 260,000 homes," it said.