Solid Energy released its Energy Options report on Monday with the support of the New Zealand Institute of Economic Research and Concept Consulting. The report says wind power will not solve security of electricity supply problems in the longer term because it cannot provide enough power.

Solid Energy's views seem to contradict fellow government-owned Meridian Energy which says wind power is economic, cheap and attractive, although not the whole answer to power shortages.

Solid Energy says a carbon tax favours renewable power (wind, hydro, geothermal) but could cause electricity prices to increase by up to 20%. "Coal is best positioned to provide energy security for New Zealand at the lowest total cost."

Even "aggressive implementation" of renewables would not be enough to meet electricity demand in any situation except the medium term and low growth in electricity demand, the report says.

Coal-fired power stations could produce electricity reasonably cheaply, at 6-7 cents per unit, but carbon taxes could add another 1.5 cents to that cost.

Solid Energy chief executive Don Elder said only a small amount of wind power could be economically produced at less than 6.5c a unit. Without a carbon tax, coal would be cheaper and even with a carbon tax it would be cheaper than a reasonable amount of renewable power.

However, Meridian chief executive Keith Turner disagreed, saying wind could play a big part in meeting future electricity needs, up to 20% of this country's electricity supply.

Wind power was economic now, with Meridian's 90MW Te Apiti wind farm in Manawatu, the biggest in Australasia, producing electricity for less than 6c a unit.