Grid warnings — what they tell us

Transpower alerts point to reliance on renewable energy

Last week’s event was

unusual.

Transpower’s power supply warnings have highlighted the system’s reliance on renewable energy sources, particularly as the country aims to cut its carbon emissions, analysts said.

On Tuesday, grid operator Transpower issued a consumer advice notice (Can), a routine measure aimed at letting generators know that there is a low level of residual generation in the tank for expected evening peak demand.

Last week, Transpower issued a “grid emergency” after Contact Energy’s 105 megawatt peaker at Stratford failed to start, one of Genesis Energy’s units at Huntly had to temporarily reduce output by 150 megawatts, and wind generation dropped from a forecast 90 megawatts to 30 megawatts.

Normal power supply was maintained throughout both events.

About 85 per cent of New Zealand’s power supply comes from renewable sources, with the figure expected to hit 96 per cent by 2030.

As it stands, the country’s thermal generators step in during times of high demand.

Greg Sise, managing director of Dunedin-based consultants Energylink, said Can notices were not unusual and were a successful way of managing the system.

Last week’s event, however, was a bit more out of left field.

“It’s not unusual for Transpower to issue Can notices advising that there is not enough generation in reserve — it does happen reasonably often,” he told the Herald.

He said the ratio between peak demand and average demand is usually fairly static.

“But it feels like the peak is picking up relative to the average, which is probably a sign of some underlying demand growth to come.

“Last week’s event was unusual because thermal plant is very well maintained,” Sise said.

Wholesale power prices are elevated — this week reaching $215 a megawatt hour.

Sise said hydro lake water levels were looking “quite reasonable” but tight gas supply and higher coal prices — US$250 a tonne from $125/tonne — had put upward pressure on spot power prices.

He said it was likely this week’s Can notice had been given more attention because of last week’s event, and the August 9 event which saw 34,000 customers lose electricity during a cold snap.

“People are getting their head around how the system works,” Sis said. “It’s not that anything has changed — it’s just that people are taking more interest in it.”

Analysts said the system was likely to be challenged as the country progressively used less thermal generated power and more renewablesgenerated.

“That’s a big question,” Sise said. “A lot of people are looking at this to look at how this is going to be managed, especially as New Zealand

approaches 100 per cent renewables.”

Jarden director of equity research Grant Swanepoel said this week’s Can notice from Transpower may have been out of “an abundance of caution” after recent events.

New Zealand has several renewable power projects — mostly wind generation — under way.

“Until the next few thousand megawatts comes on stream in two years’ time, we probably are going to have the odd capacity issue while some of the thermal kit is out for maintenance,” Swanepoel said.

The Electricity Authority has said

Transpower’s lack of co-ordination and communication failures meant thousands of consumers were disconnected unnecessarily on August 9.

Greg Sise, Energylink

Transpower chief executive Alison Andrew said she had confidence in the system, which had worked as it was supposed to do.

“The number of times we’ve [had] insufficient generation to meet supply is roughly once every five years and in all those situations, except for 9 August . . . we’ve managed to get through by controlling the demand, and consumers had not had their supply interrupted,” she told RNZ.

“The grid emergency that happened last week was that we actually had an issue on the morning peak on Thursday morning just before 8am and in order for us to maintain adequate security we had a problem because we’d lost generation from three sources,” Andrew said.

Andrew added that it was up to the industry and regulators to determine whether that capacity needed increasing.