It will take a whole lot of money to get to 100% renewable energy in New Zealand, but is Blackrock the right way to get there?
On the one hand …
Ernest Rutherford almost said “We haven’t got the money, so we’ll have to think.” He didn’t say “…so we’ll have to hire Blackrock.” But that was when we thought independently. We appear to have cut out the thinking part and actually for a country not endowed with thinkers or intellectual contest that’s quite lovely. Relax, everything is done for you: here’s the announcement. Be honest it’s just easier to just have all the hard work of thinking taken over by someone else.
Our big Gentailers are already investing massively in wind energy. Our public sector fund managers in NZSuperFund are already partnering with European expert energy fund managers on massive offshore wind. Smaller local entities like Nova are really getting into solar investment. Isn’t the market doing a reasonable job already? Nothing wrong with a bit more market if that’s the case.
The larger point is to quote Richard III, ‘we are so far in that sin must pluck on sin’, meaning: private capital has been by necessity propping us up for a while so we had better get used to it. The classic cases being the two big PPP highways of Transmission Gully and Puhoi-Wellsford which have a mix of local and international funders, and local and international constructors, to take the debt servicing load.
We have been since National part-privatised our electricity companies already deploying private capital to make huge wind farms and geothermal plants and solar arrays, often in partnership with local iwi entities or companies. You’re soaking in it.
Maybe our ambition towards the next step in necessary infrastructure in energy means facing that we can’t afford it. If we really are going to shift to 100% Zero Combustion engine and 100% renewable generation, we just don’t have th money here to pay for it, let alone much incentive. Small relatively weak states with weak savings are simply like the Bennets sisters of Jane Austen and frankly have to marry up, or be more and more reliant on charity to exist. Jane Austen died young and pretty much broke and lonely.
On the other hand…
We should prefer local capital over international capital because then wealth gained gets to circulate here not back to foreign hands. Does government actively weight its investment decisions to secure local funders first over international ones? It certainly does require locals in all sorts of other projects and services. Just check out Amotai.
Was it really necessary, when it’s only $2 billion, to pull in Blackrock? Sure everyone’s got to make money, but did we really have to choose one of the largest and most rapacious fund managers in existence?
Proposing to bring in external funders did not work well for Labour in 2018 for light rail. It was in fact a complete disaster. Can we show we’ve learned?
How come New Zealand got to build an entire electricity generating system that lasted for 70 years without much private capital from one massive dam to geothermal and all those pylons and substations and network systems without Blackrock? Is this moment so special that the private sector is inherently superior to the public sector funders and implementers?
Also, the government would be able to afford to do more of its own investment rather than pull in private capital if it actually taxed capital. Government showed through the unplanned COVID response that it was quite happy to go large on public debt funded by future taxes. So go tax more. A political choice to consistently prefer external private funders and hence part owners over changing or increasing the tax base is a political choice that ought to be put to us as a public. Like in an election.
We ought to be allowed the debate at least, before the rest of what we have is privatised.
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