'Tight' electricity supply situations may become more frequent, government briefing warns

By Phil Pennington of RNZ

The government is being warned that tight electricity supply situations could become more frequent, especially on cold winter mornings and evenings.

A briefing to the incoming energy minister says the country was electrifying further while relying more on intermittent generation such as wind and solar.

"Our most immediate challenge is to ensure sufficient electricity generation to meet peak demand during cold winter mornings and evenings," the Ministry of Business, Innovation and Employment said.

"These tight periods can last minutes or hours and are a particular challenge at times when our thermal generators are not already running to provide baseload electricity supply, when the wind drops, or when the weather is colder than forecast."

A chart showed many more warnings to customers since winter 2021.

MBIE promised Energy Minister Simeon Brown another briefing soon on the elevated risks of tight supply as it looked at trade-offs around cost, technology and sustainability in tackling it.

The latest briefing showed local lines outages have remained pretty steady in the last decade - at around two per customer per year.

The briefing said the government's dumping the aspirational goal of 100 percent renewable electricity by 2030 - and the Lake Onslow 'battery' project along with it - gave the ministry more room to work on the problem.

Keeping gas supplies going would be "critical ... for some time" in coping with growing peak demand, it said.

"It is possible that enabling further exploration will extend our oil and gas future" but risks and impediments - such as "long-term policy uncertainty" - would likely deter investment.

The ministry has been consulting about how to maintain security of gas supply, alongside a whole raft of consultation about energy transition that closed last November.

"The government has indicated it wishes to plan for transitional low carbon fuels, including the infrastructure needed to increase the use of methanol and hydrogen to achieve sovereign fuel resilience.

"There are some complex trade-offs and system-wide implications to consider.

"For example, large-scale domestic green hydrogen production as an input to sustainable aviation fuels would increase electricity demand very substantially (at a time when we are already needing to significantly increase electricity generation)."

Detailed briefings from that process have been done - but are not available here - that cover the likes of what costs consumers will face in future, how to safeguard petrol and other fuel supplies, and climate change.

The ministry was seeking talks with Brown over ways to increase the role of Emissions Trading Scheme pricing, to provide incentives to firms to cut emissions. It also wanted talks on whether a national energy strategy is needed - some industry player say it is vital.

"The energy system will provide the biggest opportunity for meeting our emissions reduction targets."

The briefing contains a forecast of a 70 percent rise in electricity demand by 2050. However, overall the country continues to depend mostly on oil to meet its energy demands, with geothermal second, far ahead of hydro.

The government has split the energy and resources portfolio into two. Shane Jones is Resources Minister.