Former New Zealand energy minister Trevor Mallard said earlier this year that the government wanted to emphasise renewable energy in order to encourage sustainability.
"This government is clear on its objective,” Mallard said. “It wants to see the bulk of new generation investment go into renewable sources of power, as a central part of our move towards a sustainable energy future."
But in the September quarter, New Zealand’s power generation from fossil fuels was at its highest-ever level, according to Statistics New Zealand. Overall electricity use was up, so wind and hydro generation levels also grew, but the proportion of power generated by fossil fuels rose, while the proportion from renewable sources fell.
This could continue into next year as the average capacity of lakes this year looks similar to the levels of 1991, which led to a power crisis in 1992.
Two weeks of good rain could solve the problem but summer weather forecasts are not predicting heavy rain.
Contact Energy has started running the country’s only standby dry-year power plant – the 155MW oil-fired station at Whirinaki, near Napier, Hawke’s Bay – amid increasing concerns about whether there will be enough power generation capability next winter. Contact operates Whirinaki on behalf of the government, which owns the plant.
Whirinaki ran for one-and-a-half hours on Monday and for about five hours yesterday in response to spot market electricity prices of more than NZ$200 per megawatt hour (MWh), under an established protocol set by the Electricity Commission.
Commission chairman Roy Hemmingway said the climb in spot electricity prices – which a month ago were about NZ$65/MWh – signalled generators’ concerns about low hydro storage and outages of gas, coal or oil power plants.
Usually at this time of year New Zealand’s hydro lakes – which can supply up to 70% of this country’s electricity – are filling with water from winter snow melts and spring rains. But hydro storage is presently falling and only about two-thirds of normal, with the two months before the most recent rainfalls this week being the third driest October and November for 78 years.
The situation is compounded by Contact having its 380MW Otahuhu-B combined cycle gas-fired power station out for major maintenance until just before Christmas and Genesis Energy last week taking out one of Huntly’s four 250MW units for a three-month scheduled maintenance program.
Genesis Energy chief executive Murray Jackson yesterday said one Huntly unit was taken out of service each year for essential maintenance and recertification.
Summer suits long-term maintenance as demand is lower and the warmer temperature of the Waikato River constrains the ability to cool the power station, so that output falls with at least one unit unable to be used.
But a new cooling tower currently nearing completion would enable up to 250MW of additional generation from one of the four units at the dual-fuelled (gas or coal) station – the biggest in New Zealand – irrespective of the summer river temperatures.
“While summer rains may yet remove the risk of a dry year in 2006, Genesis Energy will be running at full available capacity throughout 2006 when supply and demand is expected to be at its most critical phase ahead of commissioning e3p, the new 385MW gas-fired turbine in construction at Huntly,” Jackson said.
Genesis had several coal and gas contracts in place to ensure Huntly generation in 2006 would not be affected by fuel issues. The company had contracted to receive 1.2 million tonnes of domestic coal during 2006, mainly from government-owned Solid Energy, and a further 1.2 million tonnes would be imported from Indonesia – an increase of 200,000 tonnes over 2005, Jackson added.
Contact Energy corporate communications manager Pattrick Smellie told EnergyReview.net that his company’s Taranaki Combined Cycle (TCC) 367MW gas-fired station was running at capacity and the older gas-fired New Plymouth power station was currently running on all three available 120MW units. This is unusual at any time of the year, let alone summer.
The country’s largest power user, New Zealand Aluminium Smelters, which owns the Tiwai Point smelter in Southland, is no longer buying 5% of its power on the spot market because of the rapidly rising prices and has accordingly cut production by 5%. The rest of its power needs are fixed through long-term supply deals with leading hydro player Meridian Energy and hedge contracts.
