Transpower has announced it will bring forward the ability of generators to access water storage to alleviate risks to the power supply because of historically low lake levels.
The decision was announced on Thursday morning.
Transpower said hydro storage was at just 55%, among the lowest levels in around 90 years of historic records.
Executive general manager of operations Chantelle Bramley said the decision was largely supported by industry and will allow generators to access contingent storage at Lakes Tekapo, Pūkaki, and Hāwea if what is called a security of supply alert status is triggered.
Transpower wanted to increase the buffer applied in calculating the Contingent Storage Release Boundary (CSRB) from 50 GWh to 320 GWh from 1 September 2024 until 1 October 2024.
Electricity Retailers’ Association chief executive Bridget Abernethy said her body supported the proposal.
“We have to look at all options to provide the flexibility that we need at the moment.”
Referring to the Methanex deal to allow more gas for electricity generation and a supply cutback at Tiwai Point aluminium smelter, she welcomed them saying: “It’s all hands on decks to try and find solutions.”
It was unfair to say the generators had been sitting on consents and not been investing their huge profits in new sources of generation, Abernethy said.
“Investment in new generation has doubled in the past 18 months,” she said, adding that the gas supply reduction and a dry year had made for a challenging year.
The uncertainty around the Labour government’s plans for the Onslow battery farm was among the uncertainties the sector had faced in the last five years.
“These are really big long-term investments, and I think certainty and stability is exactly what is required for those companies to make those long-term investments.”
The Electricity Authority says more generation is needed rather than a campaign to save power.
Chief executive Sarah Gillies told Morning Report she shares the minister’s concerns about the state of the industry, and the situation is not sustainable.
But she said it has already made recommendations on how to address the supply challenge, and prices have come down.
The energy sector was in a transition period with more generation needing to come to the market, especially in light of the rapidly dimishing gas supplies.
“We are in a very difficult part of the transition but we do have a plan for that, and with the transition accelerating we, as the regulator, are working with the industry and other agencies to make sure everybody accelerates their response to that increasing pace of transition.”
However, there was “no quick fix” to the supply challenges.
The Electricity Authority was tracking whether what the companies say they are going to do in terms of new generation was happening, and if not, why not.
On the looming Transpower decision on whether to allow generators to take more water from the storage lakes, she said it was one tool in the toolkit that could be considered.
‘Severe effects’ on the environment
The idea was open for consultation, with 11 submissions made in total.
One was from The Guardians of Lake Hāwea, a group who ensure that Lake Hāwea’s water quality, biodiversity and ecosystems are maintained and managed sustainable and safely.
Chair Geoff Kernick said the group did not agree lifting the buffer was the best solution and said it was likely to have “severe effects on the local environment, with dust storms already occurring each time there is a north westerly wind”.
Spring snow melt and normal summer rainfall would not be enough to raise the lake to average levels by next winter meaning inadequate water storage to meet national electricity requirements next winter as well, he said.
There were also concerns with gravel and silt, he said.
“There can be a lot of issues with this silt… picking it up with the wind and blowing it down towards town and this has a very negative impact on people, on what people can do, but also on the environment,” Kernick said.
“It is a possibility that they lake level may not recover very quickly if we don’t get normal spring rains, the lake level could stay low for a long time, so these aquatic plants would die.”
Sector at ‘crisis point’
Auckland University Associate Economics Professor Stephen Poletti was hoping it went ahead.
“We’re in a situation which is a bit of a crisis really, I mean we’ve got top companies actually shutting down, not just shutting down temporarily, but shutting down permanently so its having a big impact on the economy.
“So I hope they do relax those contingent reserves, but it’s like the ambulance at the bottom of the cliff, we never should have got to this situation.” he said.
However, he said there needed to be more long-term solutions put in place.
One option would be to prioritise the expansion of rooftop solar throughout New Zealand.
Poletti said this would only add significantly to the overall electricity supply, but also help bring down prices.
Snow melt may boost lake levels
NIWA meteorologist Chris Brandolino said rainfall stretching back to the start of autumn has been “sub-par” in parts of the South Island.
Queenstown, for example, has had barely half of its usual rainfall.
“Many locations across the interior of the South Island, West Coast, rainfall has been sub-optimal.”
The snow at high elevations was in above normal supply so that would be helpful when it came to snow melt for the lakes.
However, temperatures would be warmer than usual over the next few weeks and these would be accompanied by a lot of rain, Brandolino said.
During spring La Niña would emerge and historically it meant drier conditions in the south.
“It’s kind of good news and … uncertain news as we look forward.”
‘Use your powers’ – Minister
The Associate Energy Minister Shane Jones said the Electricity Authority needed to “man up” and use its full powers to rein in electricity companies over skyrocketing prices, which has forced at least one large manufacturer to shut down its operations.
Shane Jones told RNZ on Wednesday that power companies had celebrating huge profits and the Authority had not been properly exercising its powers over them to ensure proper electricity supply and affordability.
rnz.co.nz