3 Apr 2013

Closing Tiwai Point could be hugely beneficial - consultant

4:06 pm on 3 April 2013

An energy consultant says if the Tiwai Point aluminium smelter is closed and the Manapouri hydro lake is made available it would be a huge boon for the country.

The plant is under threat of closure because its owners say the price they pay for electricity is too high and the operation is not economic.

Wayne Cartwright says worldwide demand for energy will rise substantially over the next few years and with some investment from the Government, power from Manapouri could be siphoned to the national grid.

He says if that happens the price of energy won't soar as much in New Zealand as it could around the world.

"We're looking at a substantial rise in global prices of energy, particularly oil and gas, and if the substitution of hydro electricity for those requirements in New Zealand that need at the present time oil-based energy ... can be made then this will be a great advantage to New Zealand because of the lower cost.

Dr Cartwright says although the investment is likely to cost the Government a lot now, the long-term benefits would make it worthwhile.

However, Southland Chamber of Commerce chief executive Richard Hay describes the initial cost as colossal.

"If the smelter was to close down, if Manapouri was not to close down, then a whole infrastructure has to be built ... to get the electricity north. Now that's a colossal cost to the country."

Mr Hay says he's not sure if anyone has calculated what sort of investment would be needed but if they have it has not been made public.

Energy analyst Grant Swanepoel of Craigs Investment Partners says if the smelter closes, electricity generators will have time to reconfigure their plants to manage the surplus electricity.

Wholesale electricity prices would come down gradually, he says, but it would take longer for residential prices to follow.