6 Aug 2015

Huntly's last coal boilers to close

10:49 am on 6 August 2015

Genesis Energy says it will close down its last two coal-fired boilers at the Huntly Power Station.

It said they would be permanently withdrawn from the market by the end of 2018, ending large-scale coal-fired generation in New Zealand.

The other two boilers at the power plant were closed down last year.

Genesis Energy chairperson Dame Jenny Shipley said Huntly had been a great asset for Genesis Energy.

"But the board has taken the decision to retire the remaining units." she said.

"New Zealand's changing electricity market has seen improvements in the management of dry year events, along with a significant decrease in coal-fired generation, and by 2018 the two coal units will no longer be required unless market conditions change significantly."

170414. Photo Diego Opatowski / RNZ. Genesis Energy first day of trading on the NZX.  Dame Jenny Shipley.

Dame Jenny Shipley Photo: RNZ / Diego Opatowski

Genesis chief executive Albert Brantley said the company had been on track to retire the four units since 2009.

"The development of lower cost renewable generation, principally wind and geothermal, investment in the HVDC link, (across Cook Strait) and relatively flat growth in consumer and industrial demand for electricity have combined to reinforce the decision to retire the remaining Rankine units, which will deliver further operational efficiencies to Genesis Energy," he said.

"The decision to close the units has been taken after significant assessment of the company's generation position, our ability to meet our ongoing commitments to our customers, and the impact on our loyal employees who have skilfully run these units for many years, as well as external stakeholders."

He said the units had been under-utilised for a number of years.

"We expect this decision to produce operational and capital cost savings of approximately $20 to $25 million per annum," Mr Brantley said.

Genesis chief executive Albert Brantley.

Genesis chief executive Albert Brantley. Photo: Supplied

Gas fired power plants at the site will continue to operate. The closure will have a positive impact on overall CO2 emissions in New Zealand.

At their peak, the units emitted around 5,000 kilotonnes of CO2 per year - amounting to around 5 percent of New Zealand's total greenhouse gas emissions.

Recently, the plant has been producing less than half that.

Genesis Energy's coal supply contract with Solid Energy expires in June 2017.

With around 700,000 tonnes of coal in its own stockpiles, ongoing coal deliveries until June 2017 and ample supplies of natural gas, Genesis Energy has no fuel availability issues at the station.

The two units will continue to burn scheduled coal deliveries and coal stockpiled at Huntly until coal is exhausted and will then operate solely on gas, if required, for the remainder of their operational life.