5 Mar 2021

'Sharp pricing' spurs Meridian customers to cut carbon emissions

4:26 pm on 5 March 2021

Meridian Energy is targeting 100,000 tonnes of carbon reduction from boilers run on fossil fuels, primarily coal fired but also diesel and gas.

14596413 - smoking industrial chimneys against a blue sky

Fifteen thousand tonnes of carbon emissions will be removed from the atmosphere once three companies have cheap electricity, Meridian says. (file pic) Photo: 123RF

It is starting on its quest by assisting three companies to change over and between them remove more than 15,000 tonnes of carbon emissions from their process heat production per year, the equivalent Meridian said of removing more than 8000 cars from New Zealand roads.

Meridian is offering the companies a combination of long-term supply contracts and highly competitive electricity pricing.

Chief executive Neal Barclay said the proviso is that customers use the electricity to help replace fossil fuels and reduce carbon emissions.

Meridian is in talks with meat company ANZCO and Meadow Mushrooms and one other yet to be named company as pilot customers.

''These businesses are showing real climate leadership at a time when domestic customers are making an effort to reduce their environmental impact and international customers are demanding action on sustainability.''

Barclay said the programme is transformational for businesses that would otherwise struggle to commit to electrifying their process heat.

''We are in a fortunate position to be able to materially help in accelerating New Zealand's transition away from fossil fuels.

''Converting boilers to electricity has been challenging for many businesses due to the new capital investment required and the sunk investments they've already made in assets that use significant amounts of fossil fuels.''

Barclay said when talking with customers they have said there are three impediments to changing from fossil fuel based systems to electric.

''First off the cost so electrics was struggling to compete particularly with coal. There was uncertainty around future pricing and the availability of capital to make the change to new electric systems was an impediment.''

He said Meridian has put together a product that deals with a lot of the concerns.

Barclay said they are providing ''pretty sharp pricing''.

''We are able to provide that pricing over 10 years which gives the customers price certainty for a reasonable period of time and we also have a capital fund of up to $4 million that we will pitch in and help with the conversion costs.''

Barclay said power pricing will vary by customer, location and by how big the installation is.

''To be brutally frank we are able to offer this product because we know the aluminium smelter (Tiwai Point) is closing in four years' time, so we have more energy to sell, particularly in the South Island at cheaper prices.

''These customers can expect pricing similar to what the aluminium smelter used to pay in their contract.''

When asked if this was between 4 and 5 cents, Barclay said that information has always been confidential.

''It's very sharp pricing at a level that makes the economics work.''

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