Power price rises are starting to settle, and the South Island’s largest solar farm will add more downward pressure, Contact Energy chief executive Mike Fuge says.

The $273 million Kōwhai Park solar farm near Christchurch Airport was officially opened by Prime Minister Christopher Luxon today. Its roughly 300,000 panels are expected to generate enough electricity for the equivalent of about 36,000 homes a year.

The farm was switched on in August and has been gradually increasing the amount of electricity it sends into the national grid. It is Contact’s first completed solar farm.

Contact’s latest price increase, recently notified to customers, was well below the rate of inflation, Fuge said. “We don’t need drama. We don’t need these very steep price increases. It just destroys confidence,” he said.

“If you just have nice steady prices that are at or below inflation, then that gives consumers confidence to switch off coal and other carbon forms of energy, and it gives investors confidence. Calm and steady is the way we like it.”

Every new power station put downward pressure on prices, and that had shown up in the wholesale and futures markets over the last nine months, he said.

“The pace of build is finally matching the demand as people decarbonise and switch to electricity.”

The credit for the project belonged to Christchurch Airport, which had a lot of spare land beside the runways and wanted to use it without interfering with aircraft, Fuge said.

The airport also wanted to decarbonise its own operations, and developed the opportunity before Contact picked it up and took it to completion.

The farm is connected to Orion’s local network, so most of the electricity it produces will be used in Christchurch.

Christchurch Airport and Synlait have signed agreements to buy power from the development, with Synlait taking a quarter of the output for its Dunsandel and Dairyworks sites.

Canterbury’s demand for electricity was an ideal fit for solar, because the region’s food and dairy processing peaked over spring and summer, when solar output was highest, Fuge said.

“It matches the dairy season, and so that match is actually perfect for the Canterbury region.”

A dry, sunny summer would be good for the farm, and would also help the rest of the system, he said.

South Island hydro lakes traditionally filled with the spring melt and were run down from January, leaving generators burning thermal fuel, mostly in the North Island, by April, May and June.

“What solar enables you to do is to hold that water back over summer, and that water is then available for those higher price periods in April, May, June, which brings more downward pressure on wholesale prices and makes the system much more robust.”

Battery storage was also important, because wind and solar power had to be used when it was generated, Fuge said. Contact was happy with its investment in the Glenbrook Ohurua battery in South Auckland, and customers were already asking to buy products from it.

New Zealand had identified more than 50 terawatt hours of potential renewable generation, well above the country’s current demand of 42 terawatt hours, Fuge said. That figure excluded offshore wind and hydro.

“It’s some of the highest quality, best priced in the world. As a nation we need to be grabbing that opportunity. We shouldn’t be shy about pushing on and building more.”

Acknowledging that people were doing it tough, he said New Zealand’s electricity prices were already in the bottom third of the OECD, and cheaper than Australia’s.

“If we can bring that confidence that, hey New Zealand, we’ve got your back, and here are electricity prices that are very internationally competitive, the nation can thrive off that,” he said.

“It gives us independence as a nation from these terrible political and energy shocks that are coming into the nation at the moment. Just as we’re getting back on our feet, they knock us off again.”