Genesis Energy is looking to build fast-start capacity at Huntly. Photo / Michael Craig
Genesis Energy is actively exploring options to build a new fast-start generation plant at its Huntly Power Station.
The plant would potentially provide an additional capacity of 50 to 100 megawatts (MW) of electricity and be available from winter 2027, Genesis said.
It could run on a variety of fuels, including natural gas, diesel and liquefied natural gas, the company said.
The fast-start option would be capable of firing up within minutes, as opposed to coal- and gas-fired generation, which can take eight to 12 hours to get going.
Genesis Energy’s coal- and gas-fired thermal plant at Huntly provides crucial back-up for the hydro-dominated national grid by supplying power in times of high demand or when hydro and wind conditions fall short.
Chief operating officer Tracey Hickman said the last few winters and future forecasts suggest the need for additional firming capacity to ensure security of supply as the market became more reliant on intermittent renewable generation.
This included “peaker” plant that could start quickly to meet peaks in demand.
“Strategically, installing new peaking generation plant at Huntly aligns with our Gen35 pillar of maximising the Huntly site to support more intermittent renewables and provide extra supply at short notice during peak demand,” Hickman said.
Genesis was exploring a variety of technologies, including a new single unit or modular options.
The ability of the plant to run on a variety of fuels was important for security to avoid supply chain disruption and support energy resilience.
“The Huntly site is best suited to house this additional plant, both in terms of its location and proximity to key infrastructure,” Hickman said.
Huntly has existing connections to the national grid, is close to the high-demand centres of Auckland, Hamilton and Tauranga, and has the space to accommodate new plant.
Hickman said as available options were evaluated, Genesis would approach the market to gauge interest in capacity products such as Huntly Firming Options (HFOs) to support development, operation and fuelling of the plant.
Genesis’ HFOs – a derivative product – provide counter-parties with greater flexibility to help hedge price risk.
Additional flexible generation capacity would support greater availability of risk management products that independent retailers, generators and large industrial users have struggled to access while this capacity has been in short supply.
Ultimately, the appetite to enter into these contracts would be a key consideration in deciding to proceed with the investment that new flexible capacity would entail, the company said.
“To stand up a new multi-fuel peaker or peakers at Huntly will require market support in the form of capacity contracts from other participants, such as other generators, new renewables investors or large industrials who see value in long-term energy security and risk management options,” Genesis said.
Genesis has just started construction of a battery project at Huntly.
The electricity sector is still reeling from last year’s big price spike, during which constrained gas supply, low hydro lake levels and calm wind conditions conspired to drive wholesale power prices up to $820 per megawatt hour, forcing the closure of some energy-intensive manufacturing plants.
Separately, the big four power generators are getting closer to doing a deal to support Genesis Energy’s thermal generation at Huntly to offset dry-year risk.
The four – Genesis, Mercury, Meridian and Contact – have signed a detailed non-binding term sheet as a basis for establishing a strategic energy reserve centred on Huntly to support security of supply.
The poor medium-term outlook for gas supply was also a key factor behind the four getting together.
Genesis already has fast-start capacity at Huntly in the form of Unit 6 – a 50.8MW open-cycle gas turbine commissioned in 2004.
The unit can run on gas or diesel to generate electricity.
Unit 6 is operated as a peaking unit when wholesale electricity prices reach high levels or when it is economic to operate it over short periods.
Todd Corporation’s Nova operates two fast-start natural gas power plants – Junction Road and McKee – in Taranaki.
Contact Energy has two fast-start gas peakers near Stratford.
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.