Transpower warns of potential tight power supply as New Zealand heads into winter

Transpower is warning there may be a tight winter power supply as New Zealand heads into winter, but it says it's working with the electricity sector to manage this.

The national grid operator said tight supply situations during short periods of peak demand are a result of increasing electricity demand as well as New Zealand's transition to a future with a decarbonised economy powered by renewable electricity generation.  

Transpower CEO Alison Andrew said higher volumes of renewable but intermittent generation, like wind, have left the electricity system susceptible to equipment faults and changing weather conditions at times of high peak demand, particularly during winter cold snaps.  

"The transition to higher levels of renewables is critical but we also need other flexible generation capacity or demand response that can react quickly to support it during times of high usage," she said. 

"Transpower is committed to doing what it can to ensure that consumers are not disconnected due to an electricity supply shortfall at these times, and we are working with the sector and government to put in place solutions." 

Transpower, in its role as system operator, highlighted these winter capacity risks in a paper last year. It came after it was forced to call five separate grid emergencies during 2021 and 2022 when equipment failures exacerbated tight supply situations.  

Andrew said this showed how demand at peak times in the mornings and evenings has grown significantly in the last two years, increasing the amount of electricity generation required for short periods. It also showed that New Zealand has sufficient generation capacity, but slow-start thermal (coal and gas) generation is not always offered in the market during peak demand periods.

"This is especially true when full hydro lakes and wind generators are running at maximum capacity and depressing wholesale spot prices, as was often the case last winter," Andrew said.

"If conditions change, such as the wind dropping and demand spiking, this can squeeze the buffer we keep in the system for security reasons, known as residual generation."   

Transpower general manager operations Dr Stephen Jay said if they do face tight spots, they're able to work with the industry as well as lines companies and large industrial users to switch off discretionary demand to get through.

"Hot water systems are regularly switched on and off by lines companies to manage peak demand, and people will not notice this," he said.

"We may also ask New Zealanders to help by switching off power in rooms they are not using and doing washing and charging devices and electric vehicles outside of peak times." 

Dr Jay said where there is an electricity supply shortfall as a result of a transmission or generation issue and discretionary demand is not enough to balance the system, Transpower may be forced to work with lines companies to switch off the power for a short time to some customers. 

"We will continue to work with industry to ensure that we have enough residual generation as we go into periods of peak demand," he said.

"But 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. 

"This will be a last resort until peak demand passes or until the electricity supply shortfall is restored and will prevent the risk of grid collapse, which would result in widespread uncontrolled outages that would last significantly longer." 

Transpower warns of potential tight power supply as New Zealand heads into winter
Photo credit: Getty Images

Transpower called for generators to make more electricity available on numerous occasions in 2021 and 2022 where forecast residual generation dropped below the minimum 200 MW buffer it aims to keep in the system, Andrew said.

"When this happens, often the only generation that is not already committed is slow-start thermal generation, and this typically requires a number of hours to start up," she said.

"Generators need to make a decision on whether to start up their plants to provide residual generation just in case it is needed, which can cost tens of thousands of dollars that they will not recover if it is not needed."  

Around 1100 MW of New Zealand's 2000 MW of thermal generation capacity is from slow-start units, which typically take six to 12 hours to start generating, or significantly longer if they are cold, making them unsuitable for managing winter peaks.

In its winter capacity paper, Transpower identified the need for additional flexible generation capacity or demand response to alleviate these winter capacity risks.  

It has also been working with the Electricity Authority and the rest of the sector on a range of initiatives to better manage winter peak capacity risks including making better information available on residual generation and wind forecasts.  

The Authority has also made a change to the Electricity Industry Participation Code to improve visibility and management of discretionary demand, or controllable load, in the system. These are typically residential and business hot water systems that local lines companies can switch off to lower demand when required by the System Operator during a grid emergency.