Growing risk of blackouts need policy changes

The risk of electricity shortages next winter has increased following damage to one of Contact Energy’s gas turbine peaking units in Stratford.

This unplanned outage means that even under best case scenarios, New Zealand will run very close to its minimum acceptable generation capacity, if not falling below. Analysis indicates that any additional outages would push the electricity sector into very high-risk territory.

Responding to the outage, Energy Resources Aotearoa Chief Executive John Carnegie says:

"New Zealand’s increasingly renewable electricity system is reliant upon just a few gas peaking plants to keep the lights on when the lakes are low, the sun isn’t shining, or the wind isn’t blowing. They play a crucial role in delivering more electricity to the grid at times of peak demand.

"There is consensus across the electricity sector that we need gas peakers. As recently as last week, Meridian Energy’s Chief Executive called for more investment in gas storage and gas peaking generation capacity over the next 10 to 15 years.

"Without these plants, we lack system diversity, risk the prospect of blackouts and stall the electrification of key sectors such as transport. Equipment issues happen from time to time - this is why we need more fuel and technology diversity in the system. We desperately need more gas-fired peaking plants.

"But at the moment we have the absurd situation where we have sites consented and ready to be built, but firms are so worried about the Government’s policy settings that they are unwilling to take the risk in building them."

Carnegie says that getting the right policy settings in place will help reduce investment risk to the gas peakers that New Zealand needs built.

"Two big policies are hindering New Zealand’s electricity security. They are the prospect of the Lake Onslow pumped hydro scheme going forward, and the Government’s target of having a 100% renewable electricity system.

"Both of these policies are conspiring to threaten New Zealand’s electricity security and increase the risk of blackouts in winter.

"Whoever finds themselves as Minister of Energy following the October election will need to move at a furious pace to reverse the terrible investment signals that these two policies have created."