National grid owner and electricity system operator Transpower is warning of electricity worries next year which could be as bad or worse than those during the winter that's just ended.
This concern is raised in Transpower's latest Whakamana i te Mauri Hiko (WiTMH) - which is a six-monthly report on the status of the overall industry.
It says 2024 - just like 2023 - will be vulnerable because of increased electricity generation by wind turbines. It argues wind can blow strongly one moment and drop the next, making generation highly variable.
This problem brought several close shaves in the winter just ended. Transpower issued warnings in May, in June and again in August about those risks. It now says next winter could be "similar or worse."
"With intermittent wind generation up more than 50% since 2019, electricity supply can be squeezed when the wind drops at the same time as cold weather sends peak demand soaring," the Transpower report says.
The report goes on to describe how the electricity industry was forced to scramble to avert blackouts, and on one occasion did so with some agility.
It says on August 2nd, New Zealand's total electricity demand came within seven megawatts of the crisis of August 9th 2021.
That 2021 incident led to 34,000 homes being blacked out. It produced intense criticism and put Transpower into a defendant's dock, leading to a $150,000 fine.
The August 2023 shortage could have generated a similar crisis. But this time, the hydro electric industry system had enough capacity to ride to the rescue, and pump in enough power to keep the electricity system operating within safety margins.
"This shows that the industry is working well," says the Transpower report.
"But equally, it shows that margins remain tight with similar or worse pressure expected in 2024."
Transpower adds demand for electricity is growing at peak times.
"Six of the highest peaks on record occurred in 2023......peak demand growth has risen 2% annually on average since 2021....due to the growing electrification of transport, process heat, and space heating."
But the thermal electricity that is supposed to fill in the gaps does not always work effectively.
"Around half of New Zealand’s thermal generation capacity is slow-start and not designed for these peak capacity requirements. This means thermal generators need early notice that they will be needed so that they can be warm and ready to offer.
"With winter capacity challenges set to persist, we have signalled an urgent need for investment in flexible resources including fast-start generation, (energy) storage, or demand (management)."
Another aspect of the Transpower report shows hydro lakes which were filled up by heavy rain earlier in the year have used up that buffer, and are now lower than average, though still above the risk curve.
It also says the industry is expanding, with just under 1.2 gigawatts of generation projects having reached the application stage or later. Approximately half of this is for grid scale solar, followed by wind generation.
Electricity demand was stable for the 10 years up till 2020, but then declined in the industrial, agricultural, forestry and fishing sectors, due to closure of plant, curtailed operations due to higher electricity prices, and the effect of COVID-19.
On the flipside, residential demand has been growing by around 2% per annum over the prior two years.
The report adds the New Zealand economy is using energy more efficiently.
This means less energy needs to be consumed to produce the same economic production, which has an environmental benefit.
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