So far in 2023 electricity supply has run uncomfortably close to the safety margin almost as often as it did for the whole of last year, which is putting the electricity industry on edge

New Zealand has veered towards a potential electricity shortage 11 times so far this year.  

That is a worry to managers at Transpower because winter has really only just got underway. 

The 11 incidents so far in 2023 compare with 12 incidents for all of 2022. 

One of this year’s events was a near miss. After all the lights, heaters and TV sets were turned on, New Zealand had just 50 megawatts of spare generating capacity left in the bank to provide a buffer.

This information was among a raft of detail provided by Transpower during a briefing for stakeholders in Wellington. 

This meeting updated a public warning issued via media statement on May 23.  

On that occasion, Transpower’s chief executive, Alison Andrew, warned of a tight supply of electricity this winter which could result in people having their power turned off.

“If we face a situation where there isn’t enough electricity to meet demand for any reason, we will need to work quickly with lines companies to disconnect some consumers for a short time,” Andrew said then. 

“This will be a last resort ……and will prevent the risk of grid collapse, which would result in widespread uncontrolled outages that would last significantly longer.”  

The cause of this problem is rising demand for electricity, coupled with intermittent supply from generating equipment such as wind turbines. 

“Higher volumes of renewable but intermittent generation like wind have left the electricity system susceptible to equipment faults,” Andrew said in the May statement.  

Her comments reflect a long-standing problem with New Zealand’s electricity system. It has spare capacity lying idle for most times of the day. But it can be stretched to the limit at 6pm on a freezing night in winter.  

This problem matters to Transpower because it does not just administer the national grid. It has another role – as the so-called system operator. This gives it ultimate responsibility for the technical and economic operation of the electricity system hour by hour. 

That means it must do something if things go wrong.  And in a background briefing, Transpower managers indicate things are going wrong this winter, and they are going right at the same time.   

The right part is that heavy rainfall has left the hydro lakes brimming with water. That means plenty of electricity is available, it is renewable and it is cheap. 

But the wrong part is that plentiful hydro power means thermal power plants are used less, so their fixed costs go high relative to their actual earnings.

In addition, 55% of all thermal plants are slow to get started, and in some cases can take 36 hours to move from inert to fully functional.  

This is way too slow when the supply of electricity can rise and fall quickly, due to intermittent generation from wind turbines.  And when the supply of electricity drops suddenly, it can cause a loss of frequency that can damage sensitive equipment. 

The 11 incidents so far this year are known as low residual customer advice notices. They warn customers of Transpower such as local lines companies and large-scale industry that unused, residual power supplies are running low. 

The safety margin is officially 200 megawatts.   

Sometimes, Transpower’s problem can graduate from low residual notice to a grid emergency.   

One of these happened in June last year when a fast-reacting gas turbine in Taranaki failed to start, wind generation slipped to a third of capacity and one of the thermal plants at Huntly had to reduce production.  

Another grid emergency happened when Cyclone Gabrielle damaged electricity equipment, blacking out some parts of Hawke's Bay and Gisborne.

There were five grid emergencies during 2021 and 2022, when equipment failures exacerbated tight supply situations.  

The way grid emergencies are managed is that lines companies are asked to reduce electricity usage by using ripple control, which turns off people’s hot water cylinders from a distance for a few hours at a time. 

An alternative message is to make use of demand management techniques such as paying industries to shift their production to unsociable hours when the demand for electricity is low.  

According to Transpower officials, New Zealand has ample generation capacity, but some of it is slow-to-start thermal generators, powered by coal or gas.

Sometimes the proprietors of this generating equipment are reluctant to produce electricity for the market even though it could turn out later to be badly needed.    

The reason is that it can be uneconomic to offer thermal electricity when hydro lakes are full and wind turbines are spinning fast. 

But the wind can suddenly drop, leaving electricity in short supply while the lumbering thermal plants are forced to slowly gather pace. 

If the wind starts up again, the thermal plant operators can find they have spent tens of thousands of dollars getting going, which they will not earn back, because their electricity will be too expensive compared with power from the newly revived windfarms. 

Andrew thinks the long-term answer is to have more so-called peaking plants, which are powered by natural gas and can be turned on and off quickly. 

She says these exist already but New Zealand needs more of them.

In the meantime, a senior Transpower executive, Stephen Jay, says his team are constantly on the alert to keep the supply of power assured.  

This involves working with lines companies and large industrial users to prevent a low residual notice from becoming a grid emergency, or worse still, a system collapse.

This problem is being made worse by climate change. Although this induces global warming on average, the process is erratic, and it can be accompanied by unexpected spells of extreme cold.