Genesis Energy is facing scrutiny for not having all available units at the Huntly Power Station burning on Monday evening. Photo / Doug Sherring
Genesis Energy is facing scrutiny for not having all available units at the Huntly Power Station burning on Monday evening. Photo / Doug Sherring
OPINION:
Monday night's rolling blackouts were far from the first sign that New Zealand's electricity system is struggling to cope, but it does take the issue to a whole new level.
With the Government squarely blaming the problems on commercial decisions of the electricity generators, the sector faces increasing riskof a shake-up.
"If we are going to have a market-oriented system providing security of supply, then that market must deliver," Energy Minister Megan Woods told Parliament.
For months, major industrial users have been warning that the industry was under such strain that thousands of jobs are at risk.
Already Taranaki's Methanex has idled one of its plants, the Norske Skog pulp and paper mill in Kawerau has closed, other paper plants are said to be precarious and even New Zealand Steel has dropped hints about the future of its operations at Glenbrook.
Energy Minister Megan Woods has blamed market failure for rolling blackouts across the North Island on Monday evening. Photo / Mark Mitchell
As well as low hydro lake levels, the system does not have nearly enough gas to provide the resilience needed to keep the system at capacity.
Recent rain in hydro catchments made it appear that the problem had gone away. But an unusual series of events put the issue back in the headlines.
It is one thing for politicians to explain away factories shutting down. Explaining why households are in the cold is quite another, and accordingly an inquiry has been called.
Tuesday morning opened with questions of why generators had apparently not responded to an urgent call by network operator Transpower on Monday that supply may not meet demand.
Although the high-voltage direct current line that exports electricity between the North and South Islands was running well within its capacity, Meridian and Contact Energy, which generate almost all of the South Island's capacity, quickly said they were generating all they could on Monday night.
Attention quickly turned to why Genesis did not have all units at the coal and gas-fired Huntly Power Station turned on.
The company has explained that it did not appear on Monday that this capacity was needed as it had enough wind and hydro generation to meet demand, and Huntly needed a number of hours to fire up.
However, at about the same time the intake at one of its Tongariro hydro stations became clogged by weeds and a sudden drop in wind led to a drop in generation from wind farms across the North Island.
Genesis appears to be the early contender to shoulder the blame for Monday's issues.
Wind is known to drop unexpectedly from time to time, and the fact that hydro generation was disrupted by weeds during stormy conditions in winter should not have come as a surprise.
The fact that market pricing did not suggest the unit was needed - and nor did Transpower's earlier warning - blackouts are political and someone will be blamed. Given the rising risk of regulatory intervention on the sector, extra prudence would be wise.
But for the Government to simply blame this on a bad decision on a given night would be to take a conveniently narrow view of the sector's problems.
Transpower appears to have misread demand and when the situation became critical, it has a fairly blunt mechanism to shed load from the electricity network. Some networks could respond by not heating water, some had to turn the lights and heating out entirely.
The Government's role in the sector also deserves attention, as does the question of whether it has been focused enough on the risks to supply.
When Act MP Simon Court asked Woods in June about whether the Government may intervene in the gas market to try to prevent power outages, Woods responded with reference to the NZ Battery Project, a massively ambitious project that is unlikely to be built before 2030, if it is progressed at all.
Woods has been at huge pains to insist the problems are nothing to do with her Government's move to ban oil and gas exploration. But part of Monday's night problems were caused by the fact that New Zealand's gas-fired power stations are ageing.
Contact faces a question over whether it will refurbish the Taranaki Combined Cycle Plant, and Todd is yet to decide whether it will build a new gas-fired peaker plant it has had consented for several years. Had that plant been available, last night's problem would not have happened.
As has happened before, Woods blamed the issue on commercial decisions by private companies. That does not get us very far. Of course companies make commercial decisions.
Between the decision to rip up the rules on the gas market, to the difficulty consenting renewables projects, to the threat to build hydro storage at Lake Onslow, the market is simply responding to the signals that the Government is sending it.
