Sunday, January 20, 2013

Low demand for hydro projects on New Zealand

Hydropower isn't currently having its best days on New Zealand. The $993 million project hydro scheme on the Waitaki River in Canterbury that was expected to produce an additional 1100 to 1400 GWh and provide power for more than 140,000 homes, is said to be delayed indefinitely due to an reduced demand on hydropower market.

A couple of days ago Meridian announced the indefinite delay of this large hydropower project. The big hydro projects aren't enjoying their best days on global hydro market with many energy experts claiming that most of hydro projects in the near future will likely to be ones that are modifications or extensions to current projects, rather than brand new projects.

The main disadvantage of large hydropower projects are huge upfront costs (infrastructure). Once completed, hydroelectric power plants are not connected with large maintenance costs, and work highly efficiently but high infrastructure costs usually drive investors away from large hydropower projects.

Wind and geothermal projects are currently lot more popular than hydro on New Zealand and these two renewable energy sectors are expected to obtain the lion’s share of total renewable energy investment in the country.

The demand for major hydro projects is simply not present at this moment, and hydro sector will be forced to wait for better times.

Of course, hydropower is still extremely important renewable energy source in New Zealand, even despite not having its best days. At the end of 2010, hydroelectricity accounted for more than 56% of totally generated electricity in New Zealand (in the last 15 years the increase in coal and gas for electricity generation accounted for the decline in hydroelectricity as a percentage fell from 66% in 1997 to 56% in 2012).New Zealand’s totally installed hydropower capacity currently exceeds 5,000 MW.