Power squeeze prompts Tīwai Point aluminium smelter to cut production again

New Zealand Aluminium Smelter has agreed to reduce electricity consumption to help take pressure off the national grid. Photo / Graham Dainty

New Zealand Aluminium Smelter (NZAS) has agreed to reduce electricity consumption by another 20 megawatts 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.

Tiwai is easily the country’s biggest power user, taking about 13% of production in more normal times.

The agreement signed with Meridian Energy will make 20MW of electricity available to the national grid during an estimated five-week period, including ramp down and ramp up.

The agreement is separate from the demand response agreements in place with Meridian Energy and Contact Energy and highlights the severity of the energy situation in New Zealand, NZAS said.

“While the smelter has had to make a difficult decision to reduce aluminium production, we are pleased to be able to offer this additional support for New Zealand’s power grid at this time of energy constraint,” the company said.

“As a large electricity user, we recognise the responsibility we have in contributing towards keeping the lights on across New Zealand when needed.

“We have taken off 185MW already, which we achieved nine days earlier than planned.

“That is having a positive impact, and this additional 20MW will further assist the country’s national grid,” NZAS external affairs director Simon King said.

King said 20MW was about the equivalent of the electricity needed to power all the homes in the city of Napier.

Meridian chief executive Neal Barclay said the company appreciated the additional support from NZAS.

“New Zealand is currently in a period of high spot prices and tight electricity supply,” he said.

“Being able to call on our groundbreaking demand response agreement has already provided important relief, and NZAS has once again stepped up to sign an agreement that will provide further security of supply,” Barclay said.

Wholesale power prices have come back sharply after peaking at over $800/megawatt-hour this month, but they remain elevated near $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.

The Vancouver-based company, with plants in Taranaki, manufactures methanol from natural gas and has agreed to sell its contracted gas supply to electricity providers Contact Energy and Genesis Energy.

The gas released by Methanex will result in the closure of its own plants, where production was already heavily curtailed.