State grid operator Transpower said the actions of thousands of people, along with big industrial electricity users, dialled back demand, andgenerators who worked to make as much generation available as possible, to avoid a grid emergency and the risk of power cuts.
With lines companies actively managing or on standby to switch off hot water systems to further reduce demand if necessary, a grid emergency that could have impacted consumers’ electricity supply was avoided through the collective response, Transpower said.
Chief executive Alison Andrew said that detailed analysis still needed to be done but early indications were that efforts to conserve electricity reduced demand by around 260 megawatts from what Transpower had forecast.
At one stage during the cold snap, the spot price for electricity spiked to over $2,000 a megawatt hour before settling back to around $400.
“Given that the agreement we have with NZAS for a short notice demand response doesn’t commence until June, we reached a quick agreement to undertake 20 megawatts of load response to support New Zealand this morning,” Meridian Energy’s general manager wholesale, Chris Ewers, said.
Contact Energy, which has gas-powered peaking assets in Taranaki, said it generated as much energy as it could this morning.
This included running Contact’s thermal power stations Taranaki Combined Cycle (TCC) and Whirinaki Power Plant.
“We are in the process of commissioning our new geothermal power station Tauhara in Taupō, and this was also able to contribute to demand this morning,” the company said.
Security of supply has become a political football, with the National-led coalition Government blaming the previous Labour Government’s ban on oil and gas exploration for the shortage.
Energy analyst Greg Sise says it’s not as simple as that.
Sise, who is managing director of consultancy Energy Link, expects to see more collaboration between the grid operator, generators, lines companies and consumers to deal with future power shortages, as and when they arise in the future.
He said the industrial reduction of demand was ideal.
“What people don’t really understand is that as we get closer to 100 per cent renewables, unless we build more gas peakers that will sit around for most of the time, demand has to become more responsive to these types of situations,” he said.
Sise said the exploration ban could not be fully blamed for the situation.
“It’s really easy to blame these things and it is always a bit more complicated.
“One of the issues that we have had in New Zealand is that we just don’t have a very high success rate in terms of finding new fields,” he said.
“The last commercial field was developed back in 2005 and there was a lot of drilling going on for almost a decade after that.
“You have got that underlying everything else, but the ban on exploration certainly did not help anything,” Sise said.
“It dampened down the willingness of participants to invest.”
Industry participants have long been saying that the system faces challenges.
Last year, Genesis Energy’s chief executive Malcolm Johns warned of potential problems.
Malcolm Johns, CEO of Genesis Energy. Photo / NZME
Johns - a former chief executive of Christchurch Airport - said the level of risk inherent in New Zealand’s electricity system would not be tolerated in the aviation world.
“I think that one of the big learnings that I have had has been that system risk, as managed in electricity, is very different to aviation, and aviation would not tolerate the system risk that is sitting in electricity at the moment,” Johns told the Herald in December.
In February, Transpower warned that New Zealand needed to up its investment in flexible power systems if it was to meet increased demand this winter.
And in April, Transpower said the system typically faces two types of security of supply risk.
The first is energy risk - or how much fuel is required to power New Zealand across a period, such as the whole of winter.
This week - just before the cold snap - Genesis Energy’s Johns said the company - which runs the coal and gas-fired Huntly Power Station - expects to be buying coal again by the end of this year, in part due to a quickly diminishing gas supply.
Genesis said it aimed to maintain its solid fuel stockpile “to keep the lights on” for its customers through the “yo-yo” effects of the energy transition away from carbon dioxide emission.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
