A community-owned power company in the Far North is meeting 125% of the region’s electricity needs and is on track to becoming carbon zero.

It’s a remarkable achievement made all the more remarkable by the fact that just three years ago the Climate Change Commission was recommending its high-emitting geothermal power station at Ngāwhā, near Kaikohe, be closed by 2030.

Top Energy has an exemption from the Electricity Authority that allows it to be both a lines company and a generator.

Thanks to the exemption it has been producing electricity at Ngāwhā since 1998 and in 2021 it opened its fourth plant at a cost of $189 million.

That same year, in its draft advice, the commission said the Ngāwhā plant and Contact Energy’s Ohaaki geothermal generator should be closed by 2030.

It pointed out that their closure would result in a 25% drop in the geothermal sector’s emissions but only a 6% drop in generation.

The commission later dropped the recommendation in its final report.

Ray Robinson, general manager of Ngāwhā Generation (part of the Top Energy group), says the commission’s interim report had zeroed in on geothermal being the next problem – after coal and gas – that needed to be tackled in terms of CO2 emissions from the generation of electricity.

And Robinson says it had a point. Ngāwhā had the country’s highest emissions per megawatt of energy. In total it was emitting 128,000 tonnes per annum.

That level of emissions meant that the plant was on track to becoming uneconomic in the event that the price of carbon continued to climb. It was already spending about 30% of its revenue on meeting its ETS obligations.

Ngāwhā Generation assistant plant manager Fabian Hanik says he had staff who had come from the Marsden Point oil refinery thinking they were leaving the dying fossil fuel sector for a secure future in renewable electricity.

Fabian Hanik

Then the commission declared Ngāwhā a dinosaur. “It was a bit of kick in the guts.”

Robinson adds that it’s important to remember that Top Energy isn’t a corporate company banking a profit. 

This year it returned $10 million in dividends and discounts to households and businesses connected to its network.

Hanik chips in that incomes in the Far North are way below those of the rest of the country, and having spent a sizeable amount of the community’s money on building up its generation business it would have been devastating if the company had just thrown in the towel like the commission was suggesting.

“I don’t think the commission fully comprehended the damage to morale that they caused by putting out a report like that without consulting with us.

“But we’re quite a small family and so we were actually quite motivated by that.”

One thing the commission is aware of is the success Ngāwhā Generation has had in reinjecting gases back into the ground.

After watching a video on the Top Energy Zero Carbon project Commission chair Rod Carr sent the following note to the New Zealand Geothermal Association:

“That is awesome!

“The team at the Commission have told me the story but the video is a story all New Zealand should see.

“You all have much to be proud of. Instead of behaving like a powerless victim of emissions pricing seeking exemptions, free allocations and subsidies, you took on the challenge and solved the problem permanently. Better for the business, the country and the planet. Well done. And thank you.”

Hanik and his team of 14 were told they had a budget of up to $6 million to come up with a way to reinject the gases back into the field.

He says there was talk of taking on high-paid consultants in the background but the company ended up backing a bottom-up approach - and it’s paid off big time.

For just a couple of hundred thousand dollars the team have managed to reduce that 128,000 tonnes to almost zero – saving the company, and the community, millions of dollars annually in ETS obligations.

Lack of exemption cast shadow on solar plans

Top Energy applied to the Electricity Authority for a further exemption to allow it to build a consented solar power plant on the Ngāwhā site but it was declined on the grounds the authority doesn’t have jurisdiction to grant it.

Geothermal and solar are complementary technologies. Geothermal generation is less efficient and produces less during the peak of hot summer days. This is when solar reaches its peak output. So solar compensates perfectly.

Top Energy already exports 25% of its electricity south via the national grid and the extra profits provided by solar would have been distributed to the households and business of the Far North.

Economist and energy expert Geoff Bertram says Top Energy is a success story that illustrates the idiocy of the reforms of the 1990s creating the lines-generator split.

“It was a bad idea from the start, driven by ideology, overseas-derived slogans, and lack of understanding of basic electricity economics. It is now a massive fetter on sensible local initiative.”

Hanik says if New Zealand really wants to tackle climate change we need to stop being so scared of giving things a go and trust people on the ground.

He says they used to have a chart on the wall of the GIDI (government investment in decarbonising industry) grants and be motivated by the fact that they weren’t taking any public money to do what needed to be done.

“Some of the grants sort of made you grin because the carbon saving worked out at thousands of dollars a tonne."

But, he says, the prospect of much higher NZU prices was a motivator and he worries that at the current price businesses would put off innovating and doing what needs to be done.