As winter looms, the energy sector is throwing everything it has at ensuring the lights stay on while the Government looks at updating legislation.
Documents released to 1News under the Official Information Act from Simeon Brown’s office show officials have been regularly briefing the Energy Minister ahead of this winter.
In one briefing, they said, “‘supply was very tight on some occasions in 2022 and 2023” and “five of the top ten daily demand peaks on record occurred in 2023”.
The documents used the example of August 2 last year when it was snowing in the South Island — putting pressure on the system.
‘All available generation was committed’
“This was a very tight supply situation; all available generation was committed to the market, meaning no additional generation could have been offered if demand had been higher or there had been another fault on the system.”
The briefings show a range of possibilities for this winter including that “energy demand risk may be elevated in 2024”.
While gas production was down, the rain last week would have helped water levels in the country’s hydro lakes.
The minister said he’s been told this winter and next will both be challenging. “There’s a whole range of variability in terms of the risks, and there certainly are risks”.
What are the answers?
Brown says a top priority for the Government is updating the legislation around power lines. “It’s one of the biggest reasons power goes out, because trees fall on the line. At the moment, those tools aren’t necessarily right so we’re working that through”.
Other options outlined by officials weren’t as straightforward. They included financial support for new power infrastructure and paying companies for the power they make available, not just what’s used.
Officials noted, “the interventions described above would be significant departures from the current market”.
Major Electricity Users’ Group chairman John Harbord said there was merit in exploring all options. The biggest issue his members, which includes Fonterra and Woolworths, had at the moment was cost.
“A number of them are paying tens of millions of dollars a year or, in some cases, over a hundred million dollars a year in electricity. Five years ago, the price doubled. And now it’s about 50% more than it was just a couple of months ago”.
Harbord said those cost increases would eventually be passed on to New Zealanders.
Octopus Energy chief operating officer Margaret Cooney said a better option would be following the UK and paying Kiwis for saving power.
“It involves texting your customer base and saying, ‘look, in a couple of hours we think we’re going to have a real issue… if you reduce your consumption in this period we will pay you’.”
Cooney said other countries were also having issues with power supply but New Zealand’s problem was under investment. “What has failed to happen is there hasn’t been investment in the new generation to keep up with that growing demand.”