The rising cost of wholesale power is forcing some businesses to consider investing in solar energy, writes Nicholas Pointon.
Many firms are facing significant hikes to renew their fixed power contracts, as dry weather, low hydro lake levels and a shortage of natural gas puts upward pressure on prices.
Christchurch-based manufacturing firm, Enztec, usually operates on a fixed power contract from its suppliers to avoid the volatility of spot prices.
Enztec chief executive Iain McMillan said it had struggled to renew its deal because several large suppliers said they did not have any spare capacity.
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The firm is now paying spot prices which had doubled its monthly power bill.
McMillan said it was unable to pass the cost increases onto its customers, so it would have to reduce spending on research and development.
“We will probably take the step of investing into solar generation very heavily to try and offset [the price increases] and while that’s going to be a really good story and outcome for us, and obviously for the wider community, it’s not really a good use of our capital when we’re trying to grow a business and recover from [the] Covid impact.”
“We are working with all of our stores and sites to reduce our energy consumption.”
– Chris Quin, Foodstuffs North Island
He said solar energy would not be a silver bullet to its power price woes.
“One of the big factors for us is just how much reliability we can get out of that, being a high energy user, you don’t get to pick and choose when you run the plant and if it’s not sunny … we’re still going to be exposed.”
RNZ understands that supermarket operator Foodstuffs had seen a 70 percent rise in its new power contract.
The company did not comment on the specifics, but in a statement its North Island chief executive Chris Quin said it had experienced a significant increase in its power bill.
“We are working with all of our stores and sites to reduce our energy consumption and a recent highlight was the creation of one of the largest solar panel installations in the country on top of our new Foodstuffs North Island Landing Drive distribution centre.
“The solar panel array produces enough power to run the 5 Greenstar New Zealand Green Building Council rated support centre and is a major step forward in our ability to do business more sustainably into the future,” he said.
Quin said there needed to be more support from the government to fund these types of developments for businesses.
“Any other solutions that could smooth the cost to electricity users and help prevent price shocks such as we are seeing currently would also be welcomed.”
Energy Minister Megan Woods was approached for comment.
Funding for these sorts of projects did appear to be available in the market.
In its half-year result, ASB Bank announced it had accessed the Reserve Bank’s Funding for Lending Programme to offer low-interest rate loans to businesses to fund projects that would lower emissions.