Executive general manager of operations Chantelle Bramley said hydro lake levels now sit at just 55% of the average - one of the lowest levels seen at this time of year, based on historical records.
“We’ve done a lot of work in recent weeks to assess the implications of the worsening hydro situation,” she said.
“In response to it we’re stepping up our security of supply reporting and are working closely with MBIE [the Ministry of Business, Industry and Employement], the Electricity Authority and industry on managing the situation,” she said.
“Contingent storage” refers to stored hydro that is only made available for generation at specific times to mitigate the risk of shortage.
The conditions that allow contingent storage to be used differ with each hydro lake and are governed by resource consents between the relevant local authority and generators.
“The immediate issue is that if these generators can’t access their contingent storage, they will have limited generation capability, which will increase system security risks,” she said.
Transpower released a consultation paper to seek feedback on its draft decision to bring forward access to contingent storage.
While storage levels tend to increase in spring as rain falls, moving the alert level forward will give industry increased flexibility to respond to the situation and reduce system security risks.
In its submission, Meridian said it “strongly supports” Transpower’s draft decision to exercise its discretion to publish a different buffer.
“However, we do not think the draft decision goes far enough to resolve the potential contingent storage access infeasibility attributable to the environmental limitations on use of the low ranges of the lakes in the Waiau catchment - Manapōuri and Te Anau,” it said.
Contact Energy, in its submission, proposed that Transpower conduct a wider review of the electricity risk framework, and its implementation, “to identify why it has failed to signal the current high-risk market conditions”.
The Major Energy Users Group (MEUG) said there was no doubt that the electricity system is currently under stress.
“We consider that the system operator’s proposal to allow generators to access contingent storage is a prudent decision, that should release water for lower cost hydrogeneration, addressing the energy and capacity security risks that the system operator has outlined in the short-term,” MEUG said.
“What is missing from discussion is the acknowledgment by regulators that the electricity system is actually in a crisis situation, not just approaching one - customers are already having to curtail their demand,” it said.
A range of measures have already been implemented to take pressure off the grid.
New Zealand Aluminium Smelter (NZAS) today agreed to reduce electricity consumption by another 20 megawatts (MW) to further help New Zealand’s national grid through the energy squeeze. This is in addition to the 185MW demand reduction the smelter recently initiated.
Wholesale power prices have fallen after peaking at over $800/megawatt-hours (MWh) this month, but they remain elevated at around $450/MWh.
Last week, Methanex, the country’s largest natural gas buyer, temporarily mothballed its remaining operations at Motunui in the midst of an acute gas supply shortage.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
