Infrastructure Sector – Infracom to factor Tiwai closure in Infrastructure Strategy

Today’s announcement of the potential closure of the Tiwai aluminium smelter by Rio Tinto has very significant implications for the economy and energy market. This will be a key consideration in Infracom’s thinking as it develops New Zealand’s 30 year Infrastructure Strategy.

Chief Executive of Infracom (New Zealand Infrastructure Commission, Te Waihanga) Ross Copland said: “The potential closure of the Tiwai aluminium smelter has been on the table since 2011, so today’s announcement is not a complete surprise. However, that does not minimise the far reaching impacts the closure could have on the Southland people, economy and the energy market in New Zealand.

“The closure of Tiwai Point is likely to create excess short-term supply causing downward pressure on the electricity market. It’s possible that generators will postpone planned investment in new generation assets until the price effects are fully understood and market conditions stabilise.

“If confirmed the closure could accelerate the need to increase transmission capacity from the South to the North Island. We are fortunate to have a very capable operator in Transpower who have already made investment decisions in preparation for this possible outcome with the continuation of the Clutha Upper Waitaki Lines Project.

“The closure has a raft of other implications including some possible benefits such as decarbonisation of electricity in NZ as marginal thermal generation is retired.

“Infracom will be taking into consideration all of these potential impacts as we continue our work on the 30 year infrastructure strategy which will be completed by September 2021.

“Having grown up in Southland, I know that the closure of Tiwai would be a massive blow to the local people and economy, they will be hurting.”

Infracom seeks to lift infrastructure planning and delivery to a more strategic level, to improve New Zealanders’ long-term economic performance and social wellbeing. Together with stakeholders, Infracom is developing a 30-year infrastructure strategy and maintains a pipeline of infrastructure projects. It also provides procurement and delivery advice and support for major projects.