Govt to pay up to $180m/year or $2.7b over 15 years to lease LNG re-gasification plant, paid for by $15-$30 'levy' per household per year. That $2.7b would build four Benmore Dams worth of electricity
Where does the government’s obsession with LNG come from? Not taxpayers, I’d bet. Why does the government always take NZ back into the past for out-of-date solutions?
Thanks @bernard hickey and 100% on your comments about LNG plans by this gaslighting bunch of w&%#ers who are supposed to be leading the country. Interestingly, recent studies indicate that, if we consider overall greenhouse gas footprint - LNG is worse than coal over the medium-long term. Even over 100 years the footprint is about the same as coal. (https://news.cornell.edu/stories/2024/10/liquefied-natural-gas-carbon-footprint-worse-coal.) I listened to Simon Watts gaslighting listeners this morning about how this will help fund renewables!! FFS we need to turf this lot out in November before they do any more damage!! PLEASE!!
LNG ships are expensive so I expect LNG shipping companies wont have a lot of spare capacity just lying around doing nothing waiting for NZ to phone up - so how can we guarantee an LNG ship with regassification capability will be available when we need it, and can be tied up for weeks or months just for us? Of course, if you pay enough then one will be available, but what premium will we have to pay to have it when we want it, only every few years when there is a dry winter? If we needed it all the time it would be cheaper per kWh delivered, but small, irregular customers usually get the worst service and the highest prices - that is us!
I basically agree, this white elephant is the new Onslow. In both cases, what really disturbs me is that we have an electricity market where prices are determined by the highest price generation that is activated. Does that create a market that is determined to almost fail, by focusing on rarely used white elephants that dominate pricing both when activated and as a levy when they're not. More analysis of the alternatives seems important, as it feels to me like distributed renewables, holding hydro as a reserve (and beginning to have some smaller hydro-batteries like the rest of the world) is just intuitively far better. That said, Europe seems to have a different illness - difference contracts (which is doing the rounds now in this interesting substack https://www.siliconcontinent.com/p/the-trouble-with-wind).
While we endure the confusion of not really knowing how our energy system works and what it needs, the really interesting thing is the fascinatingly odd decision to undermine our energy independence.
And it is not just energy we’re acting to place ourself in a vassal state. The thing we need to decide is whether these people are making these decisions because they are stupid or - most likely - they think we (or enough of us) are that stupid.
You're right to point out the impact that gas has at the margin to set the overall market price for electricity. Think, too, what introducing vast new permanent supply via solar and battries would do to electricity auctions. This makes me wonder if we are missing the real lobbyists behind this move - the electricity oligopoly that wants to keep overall electricity prices high all year around.
When you look back, we've seen the 51% shareholder act as the passive rock that maintains the status quo rather than an activist shareholder critiquing decisions and leading change. That 51% has created the cosiest board environment in NZ. They must be lining up for this gig.
My option would be to ramp up geothermal generation (currently 25% I think, maybe aim for 50% through incentivization of the market players) - it will keep generating throughout winter and won't be affected and it would allow more water to be kept in the hydro dams from the lower inflows in a dry winter, to do more of the peaking function (similarly wind and solar generation in winter would enable more water to be held back in the hydro so that peaks can be met)
"...we have an electricity market where prices are determined by the highest price generation that is activated." Thanks Troy!
More people need to know about this ridiculous "market" process.
If we get this LNG facility I expect we will see the wholesale “market” working as the suppliers quietly hold back their cheap renewable generation at each 30 min auction just enough to ensure that there is “no alternative” but to use just a little of the expensive LNG. This means that ALL suppliers are paid the massive LNG price for ALL of their renewable cheap generation in that 30 minute period.
Believe it not, that’s how the wholesale “market” works. It’s already happening with the coal stockpile bought by the generators. Why else are we seeing a little coal being used every day even while the hydro lakes are full.
The answer...
"We must treat the electricity market as a public utility, not a source of profit"
The Electricity Authority website contains the following statement:
"We are an efficient and effective regulator. Our work contributes to electricity policy and regulatory reform that leads to better outcomes for all New Zealanders."
that statement is obviously false, because they are failing to prevent the (morally) criminal practice that you have described/explained.
It’s especially sad as the government has such a long time horizon for investment which makes things like solar stack up even better and with certainty instead of volatile uncertainty you get from these sort of decisions.
I mean, besides the obvious vested interests of the oil and gas lobby in this decision-making it does feel or look like they’re just banking on good old fashioned culture war against the ‘woke climate change warriors’ to secure support.
Australia are limiting exports as they dont have more to spare. NZ imports would be probably coming from UAE ( hello recent FTA) West coast Canada or from dirty old uncle Sam.
Aus has soooo much gas (it either No. 2 or 3 biggest exporter in the world) ... it's just that the (overseas) Gas companies would rather export it and earn far more om the international market than allow Aus to use it's own resource - this is especially prevalent on teh East coast where I live. WA doesn't have this problem as their state Govt was sensible enough to institute a reservation policy for local needs.
We should be very clear on what this is - a subsidy: the state is taking on capital cost and risk to make imported gas infrastructure viable when firms would not build it unaided. That is a structural choice to use public funds to extend the fossil‑gas era and shift transition risk from producers and generators onto taxpayers and all of us. Not what most people would vote for.
Masterful as usual. As usual with this Three-Headed Taniwha they are ignoring the bottom 80-90% of the population to Pander to fossil fuel lobbies for their own enrichment. It is not necessary, more expensive than Solar and Batteries,polluting the air and increasing greenhouse gases. It is blatantly corrupt following the “Trumpian “playbook of Atlas. I will apologise again to Abraham Lincoln’s Gettysberg address “ so that government of rich pricks, by rich pricks for rich pricks shall not perish from this earth” . Heads should roll!
Geothermal came immediately to my mind - especially as it does not suffer any effects from winter, and especially not from a dry winter - in fact, given the need for a lot of cooling at geothermal plant, efficiency will go up (slightly) during winter compared to summer. I do recall the Wairakei geothermal plant having to be "turned down" at times during summer as it was overheating the Waikato River, that it used for cooling purposes - less of a problem in winter. Another benefit of geothermal is that it is in the North Island where the bulk of demand is, so less need to upgrade (or rely on!) the HVDC cable between islands
People can avoid paying for the cost and operation of this stoopid dinosaur LNG terminal by putting solar on their roofs. Yes I know this costs money but the loans are super cheap.
Green Loans for those with a mortgage are often interest free for 5 years - if you dont have solar, check with your bank to see what they are offering! Personally, I would not have a battery (yet), unless you live in an area lots of blackouts - just invest in an "over-sized" solar PV system with more panels than you need - export the excess summer electricity to the grid - have a retailer offering a decent buy-back rate like Merdian/Octopus offering 17c/kWh for export - build up money in summer and use it to buy electricity in winter when your panels produce less
Sometimes the hard part is convincing the rest of the household that it's a good investment. I would love to do it... and (not to brag) we do have the means... not everyone is onboard unfortunately.
It is important that electricity users are paying the levy, but not gas users - given Methanex uses something like 40% of our gas when going full speed, they surely should be paying a levy to secure the gas supply
Look, ok guys, ok - we've successfully designed an electricity market that rewards choking off extra investment in generation for decades, so the power companies can thrive in permanent knife-edge winter-crisis mode, and the majority shareholder (ahem, Treasury) gets a huge slice of the action each time that happens.
Look, I know, I get you, I used to run an airline. We understand the issues confronting ordinary kiwis. Well not me per se, obviously. I'm sorted as you know. Electricity bills aren't really a factor for me, and I always spend my holidays somewhere warm, so, yeah.
Look, people are pissed - we hear you. Old blue rinse National party stalwarts keep writing letters to me complaining about this all the time. At least, I think they are complaints - it's hard to tell with the handwriting sometimes, you know, what with the cold hands in the fingerless mittens.
But do you know who nobody ever thinks about? Do you know who nobody ever takes a moment to consider the impacts of this on?
That's right, the petro-chemical industry. Who's looking after them? That's my question to you!
But good news for every hard battling Kiwi mum and dad across the land! We have a plan!
We are going to lease (over the long term mind you) an emergency floating plant to burn fossil fuels, lock in our dependence on an increasingly irrelevant industry and continue to contribute to the warming that is setting the globe on fire (I told you I went somewhere warm on holiday, but I can always afford the aircon).
Wait, it gets better! We will on-charge you to PAY for that lease even if it is never needed in a way that is absolutely not a tax.
No, don't clap yet! It's already $1 billion up front - but we will structure the deal, so the nation pays for it in a way that makes it at least twice as expensive! And you thought we were only financial wizards when it came to ferries!
Then, and this is the kicker I know you'll love, you will pay for it when you DO actually need it as well.
And all the while - and this is a solemn promise here - we will absolutely, resolutely, determinedly NOT look to the future, to renewables, to energy independence, our climate impact or to any form of actual strategic thinking.
It's accelerated to roughly-weekly now, that the Taxpayers "Union" are in agreement with the woke-Marxist-progressive-communist-snowflakes about how this Government are behaving like a bunch of deluded numpties... It's hard to get much more humiliating than that!
The cartoon pretty well sums it up, nothing to add to previous comments, apart from once again floored by yet another mind blowing decision by this government. Maybe this one go out to everyone?
No one in this government seems to do cost/benefit ratio checks. See the RONS debacle.
While DCF (discounted cash flow), is apparently unknown to Ms Willis to our detriment.
To build an extremely expensive LNG facility to augment electricity supply in dry Alpine years is stupid.
I'm not bothering to restate the good arguments above but rather to compare likely DCFs of two projects.
First, the LNG installation and subsequent infrastructure will occur over a short period thus will require a large immediate payment. If the project's life is limited by future supply or cost upward spiral ( similar to the fossil fuel shock caused by Russian attack on Ukraine for example) then we would be left with a redundant derelict terminal. Not to mention that such burning can only add more CO2 to our already excessive overdraft
On the other hand, a fully subsidised PV and battery for all suitable houses would be seriously more beneficial. An installation workforce can be relatively easily assembled, unemployment reduced, cheaper components got from China helping our trade balance and future maintenance and repair would have a skilled workforce.
As for the DCF, incremental expenditure over say a similar life to that adopted for the LNG facility would almost certainly reveal a better superior result.
They really don't want to win the election do they?
God help us Caroline , that’s what I thought about Trump the pedophile when he stood
Where does the government’s obsession with LNG come from? Not taxpayers, I’d bet. Why does the government always take NZ back into the past for out-of-date solutions?
Call me cynical but it’s entirely possible that’s it’s a long term donor support project
💯‼️ look no further ! The only reason stupidly of this calibre can exist in2026
Nicola Willis's father was a chairman of New Zealand Energy Corporation, an active oil and gas exploration company.
Thanks @bernard hickey and 100% on your comments about LNG plans by this gaslighting bunch of w&%#ers who are supposed to be leading the country. Interestingly, recent studies indicate that, if we consider overall greenhouse gas footprint - LNG is worse than coal over the medium-long term. Even over 100 years the footprint is about the same as coal. (https://news.cornell.edu/stories/2024/10/liquefied-natural-gas-carbon-footprint-worse-coal.) I listened to Simon Watts gaslighting listeners this morning about how this will help fund renewables!! FFS we need to turf this lot out in November before they do any more damage!! PLEASE!!
Absolutely! ...And even if they genuinely were so dense as to believe the increasingly-extreme weather is all just a fluke, the 'funding' argument is utter drivel - https://reneweconomy.com.au/tesla-big-battery-in-south-australia-delivers-stunning-windfall-profits-77644/
I hope you uses "gaslighting" punintentionally, David
I had another thought to add to the madness.
LNG ships are expensive so I expect LNG shipping companies wont have a lot of spare capacity just lying around doing nothing waiting for NZ to phone up - so how can we guarantee an LNG ship with regassification capability will be available when we need it, and can be tied up for weeks or months just for us? Of course, if you pay enough then one will be available, but what premium will we have to pay to have it when we want it, only every few years when there is a dry winter? If we needed it all the time it would be cheaper per kWh delivered, but small, irregular customers usually get the worst service and the highest prices - that is us!
Turf them out! Yes please!! They are horrifying!
I basically agree, this white elephant is the new Onslow. In both cases, what really disturbs me is that we have an electricity market where prices are determined by the highest price generation that is activated. Does that create a market that is determined to almost fail, by focusing on rarely used white elephants that dominate pricing both when activated and as a levy when they're not. More analysis of the alternatives seems important, as it feels to me like distributed renewables, holding hydro as a reserve (and beginning to have some smaller hydro-batteries like the rest of the world) is just intuitively far better. That said, Europe seems to have a different illness - difference contracts (which is doing the rounds now in this interesting substack https://www.siliconcontinent.com/p/the-trouble-with-wind).
While we endure the confusion of not really knowing how our energy system works and what it needs, the really interesting thing is the fascinatingly odd decision to undermine our energy independence.
And it is not just energy we’re acting to place ourself in a vassal state. The thing we need to decide is whether these people are making these decisions because they are stupid or - most likely - they think we (or enough of us) are that stupid.
You're right to point out the impact that gas has at the margin to set the overall market price for electricity. Think, too, what introducing vast new permanent supply via solar and battries would do to electricity auctions. This makes me wonder if we are missing the real lobbyists behind this move - the electricity oligopoly that wants to keep overall electricity prices high all year around.
When we consider that this oligopoly is essentially our government, it sounds even crazier.
When you look back, we've seen the 51% shareholder act as the passive rock that maintains the status quo rather than an activist shareholder critiquing decisions and leading change. That 51% has created the cosiest board environment in NZ. They must be lining up for this gig.
My option would be to ramp up geothermal generation (currently 25% I think, maybe aim for 50% through incentivization of the market players) - it will keep generating throughout winter and won't be affected and it would allow more water to be kept in the hydro dams from the lower inflows in a dry winter, to do more of the peaking function (similarly wind and solar generation in winter would enable more water to be held back in the hydro so that peaks can be met)
"...we have an electricity market where prices are determined by the highest price generation that is activated." Thanks Troy!
More people need to know about this ridiculous "market" process.
If we get this LNG facility I expect we will see the wholesale “market” working as the suppliers quietly hold back their cheap renewable generation at each 30 min auction just enough to ensure that there is “no alternative” but to use just a little of the expensive LNG. This means that ALL suppliers are paid the massive LNG price for ALL of their renewable cheap generation in that 30 minute period.
Believe it not, that’s how the wholesale “market” works. It’s already happening with the coal stockpile bought by the generators. Why else are we seeing a little coal being used every day even while the hydro lakes are full.
The answer...
"We must treat the electricity market as a public utility, not a source of profit"
https://www.reimagineaotearoa.nz/publicly_owned_electricity
The Electricity Authority is supposed to prevent the criminal activity you have explained.
I am perplexed that no political party has taken any action to stop the criminal activity you have described/explained.
The Electricity Authority website contains the following statement:
"We are an efficient and effective regulator. Our work contributes to electricity policy and regulatory reform that leads to better outcomes for all New Zealanders."
that statement is obviously false, because they are failing to prevent the (morally) criminal practice that you have described/explained.
It’s especially sad as the government has such a long time horizon for investment which makes things like solar stack up even better and with certainty instead of volatile uncertainty you get from these sort of decisions.
I mean, besides the obvious vested interests of the oil and gas lobby in this decision-making it does feel or look like they’re just banking on good old fashioned culture war against the ‘woke climate change warriors’ to secure support.
What’s wrong with these politicians! Are they simply tooo close to big business??
Yes. They have been captured by wealthy lobbying.
Nicola Willis's father was a chairman of New Zealand Energy Corporation, an active oil and gas exploration company.
I find it telling that Australia - an LNG exporter - is investing heavily in their own solar and battery storage. How are we so short-sighted?
Indeed - that will give Australi the opportunity to sell us expensive LNG to fund their transition to renewable electricity -awesome!
Australia are limiting exports as they dont have more to spare. NZ imports would be probably coming from UAE ( hello recent FTA) West coast Canada or from dirty old uncle Sam.
Aus has soooo much gas (it either No. 2 or 3 biggest exporter in the world) ... it's just that the (overseas) Gas companies would rather export it and earn far more om the international market than allow Aus to use it's own resource - this is especially prevalent on teh East coast where I live. WA doesn't have this problem as their state Govt was sensible enough to institute a reservation policy for local needs.
We should be very clear on what this is - a subsidy: the state is taking on capital cost and risk to make imported gas infrastructure viable when firms would not build it unaided. That is a structural choice to use public funds to extend the fossil‑gas era and shift transition risk from producers and generators onto taxpayers and all of us. Not what most people would vote for.
Privatise the profits but socialise the risks...
💯
Hi Bernard,
Masterful as usual. As usual with this Three-Headed Taniwha they are ignoring the bottom 80-90% of the population to Pander to fossil fuel lobbies for their own enrichment. It is not necessary, more expensive than Solar and Batteries,polluting the air and increasing greenhouse gases. It is blatantly corrupt following the “Trumpian “playbook of Atlas. I will apologise again to Abraham Lincoln’s Gettysberg address “ so that government of rich pricks, by rich pricks for rich pricks shall not perish from this earth” . Heads should roll!
Patrick Medlicott
Geothermal - still missing from the list of better alternatives than LNG. But geothermal has way, way more potential.
Geothermal came immediately to my mind - especially as it does not suffer any effects from winter, and especially not from a dry winter - in fact, given the need for a lot of cooling at geothermal plant, efficiency will go up (slightly) during winter compared to summer. I do recall the Wairakei geothermal plant having to be "turned down" at times during summer as it was overheating the Waikato River, that it used for cooling purposes - less of a problem in winter. Another benefit of geothermal is that it is in the North Island where the bulk of demand is, so less need to upgrade (or rely on!) the HVDC cable between islands
People can avoid paying for the cost and operation of this stoopid dinosaur LNG terminal by putting solar on their roofs. Yes I know this costs money but the loans are super cheap.
Green Loans for those with a mortgage are often interest free for 5 years - if you dont have solar, check with your bank to see what they are offering! Personally, I would not have a battery (yet), unless you live in an area lots of blackouts - just invest in an "over-sized" solar PV system with more panels than you need - export the excess summer electricity to the grid - have a retailer offering a decent buy-back rate like Merdian/Octopus offering 17c/kWh for export - build up money in summer and use it to buy electricity in winter when your panels produce less
Sometimes the hard part is convincing the rest of the household that it's a good investment. I would love to do it... and (not to brag) we do have the means... not everyone is onboard unfortunately.
Get good advice; you’ll never go back!
To paraphrase Nicola Willis why do we need this Rolls Royce LNG system when a perfectly good Toyota Corolla solar option is available?
Secondly, how much of this LNG will be syphoned off to keep current gas users running as local gas runs out? And at a subsidised cost.
It is important that electricity users are paying the levy, but not gas users - given Methanex uses something like 40% of our gas when going full speed, they surely should be paying a levy to secure the gas supply
Scene - a Press Conference Briefing Room...
Look, ok guys, ok - we've successfully designed an electricity market that rewards choking off extra investment in generation for decades, so the power companies can thrive in permanent knife-edge winter-crisis mode, and the majority shareholder (ahem, Treasury) gets a huge slice of the action each time that happens.
Look, I know, I get you, I used to run an airline. We understand the issues confronting ordinary kiwis. Well not me per se, obviously. I'm sorted as you know. Electricity bills aren't really a factor for me, and I always spend my holidays somewhere warm, so, yeah.
Look, people are pissed - we hear you. Old blue rinse National party stalwarts keep writing letters to me complaining about this all the time. At least, I think they are complaints - it's hard to tell with the handwriting sometimes, you know, what with the cold hands in the fingerless mittens.
But do you know who nobody ever thinks about? Do you know who nobody ever takes a moment to consider the impacts of this on?
That's right, the petro-chemical industry. Who's looking after them? That's my question to you!
But good news for every hard battling Kiwi mum and dad across the land! We have a plan!
We are going to lease (over the long term mind you) an emergency floating plant to burn fossil fuels, lock in our dependence on an increasingly irrelevant industry and continue to contribute to the warming that is setting the globe on fire (I told you I went somewhere warm on holiday, but I can always afford the aircon).
Wait, it gets better! We will on-charge you to PAY for that lease even if it is never needed in a way that is absolutely not a tax.
No, don't clap yet! It's already $1 billion up front - but we will structure the deal, so the nation pays for it in a way that makes it at least twice as expensive! And you thought we were only financial wizards when it came to ferries!
Then, and this is the kicker I know you'll love, you will pay for it when you DO actually need it as well.
And all the while - and this is a solemn promise here - we will absolutely, resolutely, determinedly NOT look to the future, to renewables, to energy independence, our climate impact or to any form of actual strategic thinking.
You have my word on that New Zealand!
Outstanding!!
PM Luxon should be knighted for finding the cure for insomnia 😐🥱😴
It's accelerated to roughly-weekly now, that the Taxpayers "Union" are in agreement with the woke-Marxist-progressive-communist-snowflakes about how this Government are behaving like a bunch of deluded numpties... It's hard to get much more humiliating than that!
The cartoon pretty well sums it up, nothing to add to previous comments, apart from once again floored by yet another mind blowing decision by this government. Maybe this one go out to everyone?
Kia ora e hoa.
No one in this government seems to do cost/benefit ratio checks. See the RONS debacle.
While DCF (discounted cash flow), is apparently unknown to Ms Willis to our detriment.
To build an extremely expensive LNG facility to augment electricity supply in dry Alpine years is stupid.
I'm not bothering to restate the good arguments above but rather to compare likely DCFs of two projects.
First, the LNG installation and subsequent infrastructure will occur over a short period thus will require a large immediate payment. If the project's life is limited by future supply or cost upward spiral ( similar to the fossil fuel shock caused by Russian attack on Ukraine for example) then we would be left with a redundant derelict terminal. Not to mention that such burning can only add more CO2 to our already excessive overdraft
On the other hand, a fully subsidised PV and battery for all suitable houses would be seriously more beneficial. An installation workforce can be relatively easily assembled, unemployment reduced, cheaper components got from China helping our trade balance and future maintenance and repair would have a skilled workforce.
As for the DCF, incremental expenditure over say a similar life to that adopted for the LNG facility would almost certainly reveal a better superior result.
I rest my case.