Drought could plunge New Zealand into winter power crisis

Jun 11, 2008 - Power News

New Zealand's electric industry is bracing for possible blackouts this winter as hydro-storage lake levels have plummeted 55% below average, the lowest levels since the country suffered its last power crisis in 1992.

The country is heading into a cold, still winter after a significant summer drought on the North Island and low rainfall on the South Island. The low hydro-lake levels are compounded by numerous technical issues such as the forced retirement of a 300-MW gas-fired New Plymouth plant last year because of asbestos contamination and limited transfer of energy across the high-voltage DC link between the islands.

Five major power companies and national grid operator Transpower have set up a coalition, the Winter Power Group, to oversee electric supplies this winter. The group has published a web site to inform New Zealanders of developments and to remind them to be prudent with their electricity use.

Fears of a winter crisis have driven power prices above $235/MWh, prompting Contact Energy, owner of the mothballed New Plymouth plant, to crank up a 100-MW unit there. The Sunday Star-Times reported that Contact Energy's motives to close down the plant in the first place were being questioned and suggested that asbestos was "convenient excuse" to take "unpopular action" and close the plant, knowing that the closure would impact the market.

Contact said it had discovered asbestos at New Plymouth plant while examining deteriorating insulation material around turbines, boiler, and pipework last September. The company announced the plant, which had provided only reserve capacity for some time, would be decommissioned in December.

Meanwhile the New Zealand government, which is in the process of enabling a moratorium on thermal generation to combat climate change, was being accused of ignoring the power crisis, because this year is an election year. It was being accused of celebrating the partial recommissioning of a thermal power plant instead of launching a power-saving campaign, The New Zealand Herald reported.

New Zealand's market structure offers few rewards to generators for maintaining capacity in excess of demand and relies heavily on a 155-MW diesel-fueled power station built in 2004 and owned by the government for reserve power.

The country's peak demand is about 5,970 MW. A significant amount of the nation's power is generated by hydroelectric sources, and it has a range of renewable energy at its disposal.

Hydro-lake water levels were the lowest since 1992 - when a similar severe drought caused blackouts and water-heating cuts - but they were still well above 1992 levels. Energy consultants gauged the risk of 1992-type blackouts at 10% to 30%.

Sources: Winterpower.co.nz, Sunday Star-Times, The New Zealand Herald