The system won a reprieve in the form of increased inflows, lower demand with warmer weather and decreased industrial load, record wind generation, and the response from Transpower’s industry partners to cut back power use.
The system has turned around sharply since early August, when wholesale prices spiked to over $800 a megawatt hour.
The ink on a May 31 demand response agreement between NZ Aluminium Smelter (NZAS) and Meridian had barely dried before the generator called on the smelter to taper off its demand to help the system through the dry spell.
Under the agreement, four demand response options are exercisable by Meridian, and stand-down periods apply between the exercise of options.
Transpower said in its report that with conditions improving, it was switching its focus towards the supply outlook for 2025.
“While aggregate hydro storage has recovered to above historic mean levels for the time of year, storage remains below mean in key catchments Pūkaki, Hāwea and Taupō,” it says.
“These three catchments are particularly important, comprising around 72% of available national storage when full.”
In the Herald’s latest Mood of the Boardoom survey, executives rated security of energy supply as a major concern, second only to inflation and cost of living pressures.
This followed news that two central North Island mills, and Oji Fibre Solutions, had shut down, due in part to very high spot prices in August.
Transpower expects power demand to trend lower over the coming months heading into spring, summer and the holiday period.
It noted while Tiwai will not be fully operational until early next year, other industrial demand reductions were likely to be more permanent.
Having called the largest Tiwai demand response option in 2024, neither of the two largest options (reduced Tiwai demand of 100 MW and 185 MW) are available in 2025.
On the supply side, Transpower said completion of Meridian’s Harapaki wind farm in July had increased the total installed capacity of market-offered wind generation to around 1250 megawatts, which together with 50MW of installed solar generation brings total installed intermittent generation capacity to 100 MW.
Over the next three to six months, Transpower expects five new generation stations to complete commissioning, with the potential to bring up to 250 MW of new capacity to the market.
This comprised 51 MW geothermal, 100 MW battery energy storage system (BESS) and 96 MW solar.
Transpower also expects the return to service of 290 MW of generation capacity.
“However, these increases would be offset with Contact signalling the decommissioning of the Taranaki Combined Cycle generator (330 MW) by the end of 2024.
“The decommissioning of firm generation capacity increases supply-side risks in 2025 for both capacity and energy and will be exacerbated if there are project commissioning delays, return-to-service delays of long-term outage plant and other unplanned outages,” it said.
“As noted in our 2024 Security of Supply Assessment published in June, until we get sufficient flexible capacity investments committed, commissioned and operating in the market, we are dependent on thermal generation to help meet the energy and capacity requirements on the system,” it said.
“This includes a reliance on slow-start thermal generation that increases security of supply risks during unseasonable cold snaps in all seasons.”
Jamie Gray is an Auckland-based journalist, covering the financial markets, along with the primary and sectors. He joined the Herald in 2011.
