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The parties were handed a 350- page decision yesterday, which upheld the appeal against an earlier consent from local councils for the project. Environmental groups are claiming a "comprehensive victory" against the Central Otago project.
Project Hayes aimed for 176-turbines on the Lammermoor Range, which would have been the biggest in New Zealand, producing more than 630 megawatts of power. Each turbine would have been 160 metres tall.
An electricity industry source said the Environment Court "slammed Meridian".
The decision has gone to all the parties, but has not been released to the media.
The wind farm was opposed on landscape values, but other opponents argued that it was "hopelessly uneconomic" compared with other forms of generation.
Past submissions suggested power from Hayes would cost about 12c a kilowatt hour. But adding in back-up generation for when the wind did not blow would take the cost to about 15c. That was about 50 per cent more than for other viable power generation sources, such as a big base load geothermal power station. One opponent said if the Environment Court understood the argument that Project Hayes was uneconomic compared with other forms of power, the implication was that the only reason to build it was to save the planet from global warming.
If the economic argument was accepted, it would be "very difficult to get any other wind farm in New Zealand through", one power industry expert said.
If people behaved rationally about the economics, other big potential wind farms were "all dead", he said. However, if the decision was more about protecting the landscape, then each would have to be dealt with on a case-by-case basis.
Another source said the decision also showed that any power generation, from wind, to hydro, or geothermal, was invasive on the environment, but some places like the Maniatoto, Central Otago, did not suit an industrial project.
The ruling also showed power companies who went to the Environment Court needed to "get their act together" to make a case. It is understood the Court found Meridian had not made a "comprehensive case".
The project has cost Meridian about $8 million, so it will look at the Environment Court decision closely to see if there are any grounds for appeal.
But it can only appeal to the High Court on points of law.
MERIDIAN spokesman Alan Seay said they were "very disappointed", but it would consider the document, and the implications for Project Hayes and other possible power proposals.
Supporters have said it would be on an extraordinary site, with compelling commercial logic because of its huge scale and good wind speeds. The cost of generation would be competitive with other sources. The idea was to use the wind when it blew and save the water in nearby hydro power lakes for when it did not blow.
Ad Feedback Wind Energy Association chief executive Fraser Clark said the Environment Court hearing identified the area as an "outstanding landscape", which had raised the bar on environmental issues.
The Court also considered Hayes was not the next best option for new generation, so it would be better to look at other options first. But it would be impossible for Meridian, or anyone else, to present an evaluation of all other potential projects and rank them.
There was an acknowledgement that Hayes would help New Zealand's security of power supply in dry years when hydro lake levels were low, but that was given no value, Mr Clark said. He argued that any decision on the commercial case for the wind farm should be left to the Meridian board rather than the Environment Court.
The country's other big wind farm proposal, in the Waikato is on ice, but being worked on behind the scenes.
Contact Energy last month admitted that at present the economics for that farm did not stack up, though it still hoped to get a consent for the project next year.
In the middle of the year, a board of inquiry considering Contact's application for the 180-turbine wind farm on Waikato's west coast agreed to adjourn the hearing for 12 months at Contact's request.
The Hayes decision means opponents of Meridian's possible wind farm near Martinborough in the Wairarapa can sleep easier tonight - the bar has been raised a lot higher.
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