Deep Dive #9: Waitaki Hydropower Scheme

Over the last few years, we have been building up our expertise in the Renewable Energy sector from a sustainability perspective.  This may sound strange – what is there to learn you may ask?  The primary elements involved in renewable energy are themselves finite, at least in human terms: heat from the sun or the depths of the earth for solar and geothermal energy; wind created by differing atmospheric pressures for turbines; the gravitational pull of the moon for tidal power; and the water cycle for hydro power.

From these natural processes, humans interfere to transfer energy into a format that we use to power our modern world.  How humans harness nature’s renewable power involves processes that may not themselves be clean or “sustainable”: the extraction of minerals for wind turbines; components manufactured for solar panels; building materials such as concrete used to make dams; biodiversity impacts; social effects and consequences.

As one of my favourite bloggers put, “in order for an energy source to be sustainable, it has to be both renewable and clean, which I’m not sure everyone realises are different things—i.e. A) renewable so it won’t run out and B) clean so it won’t throw garbage into the atmosphere”[1].

At Montanaro, when we invest in a renewable energy company, we want to try to understand its full impact – not just of its products and services – but also its operational footprint and its impact on stakeholders.  We do this so we can understand the “net” impact of the company.  It is no good installing a field of deep-sea wind turbines if the machines need so much maintenance that their consumption of precious metals outweighs the positive production of wind power.

During a series of engagements encompassing renewable companies in the UK, Japan, Greece and the US, we have set out to understand the complexities surrounding these issues.  We have met with biomass companies; wind turbine manufacturers; wind field operators; solar power companies; and installers and operators of innovative renewable assets.

Across two weeks in October and November 2022, two members of our Investment Team went to New Zealand and Australia to meet with some of our investee companies.  We spent time with Meridian Energy, the New Zealand energy company that operates some of the country’s hydro assets.  In this note we share what we learned as we spent time in Queenstown and the surrounding area on a tour of the Waitaki Hydro Scheme.

We would like to express our thanks to Meridian Energy and in particular their Head of Investor Relations, Owen Hackston, for arranging such an educational and unique visit.

Read the full report here

[1] “The Deal With Solar”, Wait But Why, T. Urban, 2015

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