Shane Jones: Associate Energy Minister reaffirms importance of gas, coal as renewable generation hits record high
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What record renewable milestones did the new MBIE report reveal?
So some more proof this morning that the electricity renewable story is starting to pay off financially. So we've got a new MB report. It shows renewables hit a June quarter record. We're at 92% of all electricity produced. Record geothermal sold is up 56%. The real key, of course, is the wholesale prices. They're down 66% on the same time last year. Shane Jones, Associate Minister of Energy, back with us this morning to you.
How much did wholesale electricity prices drop and why?
Hi. How much of that 66% is because it's rained a lot over winter and the hydro lakes are full?
It's totally a story about the positive connections between rain and wind. We are always going to generate a lot of our electricity from hydro, and this particular three-month period is a positive development,
but one swallow a summer does not make. No, indeed not, until I see it at my place. So the big users are starting to see a drop in their power bill. That's all good. Until you start to see it retail, it's not working for you, is it?
Why does Shane Jones say New Zealand still needs coal and gas backup?
Yeah, but the reality is most of us are on contracts. Those contracts have quite some way to expire. Look no further than the super profits of our gen tailors. I think it's a reasonable point, you've made it before, that there are costs associated with upgrading transmission, et cetera, and that's set by the Commerce Commission. But no, this does not change my attitude at all towards the gen tailors in one bit.
All right, let me come back to that. The anti-LNG crowd will say at 92% we don't need a backstop. Do you agree or not?
What are the arguments about “gen tailors” and their impact on prices?
Well, the sad fact of the matter is there comes a time in New Zealand where we do rely either on coal or natural gas because we don't have enough water in the lakes or we don't have enough battery storage. And I've grown quite tired of this sort of juvenile... tarping coming from the left of politics that we can have all these green accoutrements without a backup. The backup is gas. The backup is coal. That's a fact that's not going to change for the foreseeable future.
Exactly. All right.
How does the Auckland market illustrate competition versus the rest of NZ?
So the gen tailors, will there come a point where the price comes down and the renewable story becomes so apparent that maybe the gen tailor model isn't the bogey in the room that you think it is?
Well, I hope to see those facts reveal themselves on your power bill. And the factories and the industrial complexes, not the least of which is the whakatane mill, those areas, because they create products and services that are of strategic importance to New Zealand. Unless you want a model where you're going to import everything from overseas, worsening our current account deficit, and more importantly, turning us to some some form of dairy shed equivalent of Hawaii. I'm not up for that.
All right, nice to talk to you. Have a good weekend.
What are the long‑term implications for NZ’s energy security if renewables dominate?
Shane Jones, Associate Minister of Energy. So 66% down on this time last year. Actually, I ran into a guy at the... hairdressers yesterday who came up to me and he said he's in the supermarket game, which is sort of semi-related to power in the sense of competition and gen tailors and supermarkets and oligopolies and stuff. And he said, have a look at Auckland. In Auckland, the independents have got 30% of the market share. Woolworths have got 30% of the market share. If you want a model of supermarketing where there's genuine competition, and he's right, if you want to look at a market with genuine competition, Auckland is it. So you've got plenty of players in a major metro like Auckland. Do you notice your experience in Auckland to be profoundly different from the rest of the country?
Therefore is the whole argument null and void, which I thought was a very good point and not one I was expecting to be made to me at the
hairdressers.
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Chapters
6 chapters
1
What record renewable milestones did the new MBIE report reveal?
0:00–0:21
2
How much did wholesale electricity prices drop and why?
0:21–0:55
3
Why does Shane Jones say New Zealand still needs coal and gas backup?
0:55–1:26
4
What are the arguments about “gen tailors” and their impact on prices?
1:26–1:53
5
How does the Auckland market illustrate competition versus the rest of NZ?
1:53–2:35
6
What are the long‑term implications for NZ’s energy security if renewables dominate?
2:35–3:29
Speakers
2 identifiedMore from The Mike Hosking Breakfast
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