Contact Energy has fleshed out its proposal to put all fossil fuel power stations into one company as a way to manage the move to total renewable energy.
File image. Photo: RNZ / Russell Palmer
The company floated the idea of 'ThermalCo' earlier this year as a way to provide security to the power grid when renewable generation is unable to meet demand, as well as a practical way to manage the decommissioning of thermal power stations over the next decade or so as the power system transitions to total renewables.
Contact has given more detail on the proposal, its rationale, how it would operate, potential ownership, and alternatives.
"Our proposal focuses on how we can expedite the transition away from the current reliance on electricity generated from fossil fuels, without disrupting the secure, affordable supply of electricity to New Zealanders," Contact chief executive Mike Fuge said.
"ThermalCo ... could own, operate and retire all of New Zealand's major thermal generation assets as new renewable generation is built, reducing carbon emissions into the atmosphere by 1.2 million tonnes per annum by 2030."
The country's biggest thermal power generator, Genesis Energy, has already dismissed the idea, and Mercury Energy has also been sceptical.
Fuge said Contact believed a market-led, co-operative approach would have significant and quick benefits, and it had received a wide range of responses as it approached other generators, regulators and politicians.
"We've had the full range of reactions, there's obviously some sensitivity in markets, there's some concerns around how does this happen from a commercial perspective, it's fair to say in the process people have become a lot more curious and a lot more supportive."
Contact wanted to avoid a disorderly retirement of thermal stations, Fuge said, and pushed back on suggestions it was a way of Contact masking decisions on its own thermal stations in Taranaki and elsewhere.
He also said Contact was "agnostic" about who should own ThermalCo.
The Contact discussion paper offered two other options to ThermalCo - a capacity market, in which generators bid to supply a set amount of power, and a government contracted strategic reserve supply mechanism.
Fuge said ThermalCo was preferable to both, which would take considerable time and require legal changes to put in place.
Contact would reassess progress and support for its proposal around the middle of next year, he said.