Are there more power cuts in our future?

Friday, 30 September 2022

Transpower chief executive Alison Andrew (centre) says power supplies next winter may be as tight as this winter.

This story was first published on October 2 but is being republished after a grid emergency on Friday morning. Power equipment carrying power from the South Island failed at one of the worst possible times.

Transpower chief executive Alison Andrew is increasingly confident that the lights and heat pumps will stay on across New Zealand this year.

That is after admitting electricity demand and supply got tighter than the national grid operator would have liked this winter.

“Barring something unusual happening, we pretty much think we’re through the winter but give us a couple more weeks, and we'll be more confident,” she says.

The state-owned enterprise called on power companies to up their generation several times over the past few months.

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But Andrew says the industry responded on each occasion and there was only one day, on June 23, when it had to curtail demand by asking lines companies to remotely turn off some customers’ hot water cylinders.

The turbines at Genesis’ Huntly coal and gas power station can take 12 hours to ramp up to full generation.

Andrew says no-one should have noticed that intervention and “consumers wouldn't have been affected”, although there were a few reports of families being inconvenienced when their cylinders didn’t turn back on as they should.

Just how close the country came to power cuts has to be a matter of conjecture, given it would have taken an event that didn’t happen, such as at least one failure at a major plant power plant at the wrong time, to send the market into deficit.

The nervousness over electricity supplies this winter was largely down to a still-unexplained 3% increase in peak electricity demand that came after a long period when little new generating capacity has been added to the grid to cope with that.

Despite it being a relatively mild winter, the last 10 highest peaks on the electricity system during the last 10 years all occurred in the past 12 months, Andrew says.

Transpower is not sure exactly what was behind that, but population growth, the number of people working from home while their workplaces were also being heated, and a switch to electricity from other power sources such as gas could all be factors.

Transpower’s grid emergency notices are the surest sign of a power crunch, but haven’t often been followed by actual power cuts.

Andrew says Transpower is not expecting a lot of new generating capacity to be available next winter, with the possible exception of some power from Meridian Energy’s $498 million Harapaki wind farm, which is scheduled to start to come on stream from June.

But there appears to be no simple answer whether the risk of power cuts will increase significantly or not.

“We may be as tight as this winter. To be honest I would like it to be less tight,” Andrew says.

But she says Transpower is confident there would be enough generation to see the market through next winter if generators made all their power plants available.

Energy Minister Megan Woods says grid emergency shows we can't rely on thermal plants for power security. NZ Parliament

Andrew points out that, at present, no-one including Transpower can force generators to keep their power plants online to provide a buffer for unexpected events.

“At the end of the day, their decision what they put out into the market is up to them.

“My view is that there's a strong service ethic in the industry to keep the lights on for consumers and we do know that we all have to work together to make that happen.”

Ironically, the risk of electricity supply being squeezed can rise if the weather is either very wet or very dry, she says.

If there is a drought and hydro lakes are running low that is an obvious problem.

But if it is very wet and hydro plants are generating at full tilt to avoid spilling water, that means wholesale electricity prices will tend to be low.

That in turn makes it harder for generators to justify having their coal and gas plants ticking over and ready to kick in if the wind drops or there are unexpected outages, especially given surging coal prices.

Andrew notes it can take 12 hours for the coal turbines at Genesis’ Huntly power station to ramp up to full output.

In fact, of the country’s 2 gigawatts of thermal generation, Transpower classifies three-quarters as being “slow start”.

Transpower’s 10-year planning documents suggest a possible crunch from 2025 onwards when – in Transpower’s techno-speak – its reference case for the winter capacity margin in the North Island is currently forecast to fall below its “upper security standard”.

But that point could be pushed out until 2028 if all currently-consented power projects got the green light, it forecasts.

“Yes, we do see some shortfalls. But that's not unexpected, because five or six years out you have still got time for people to respond,” Andrew says.