Security of supply report released in response to generator closures

09 December 2015

Transpower, as the System Operator, today published a report outlining the potential impacts of the planned closures of a number of generation plants on the operation of New Zealand’s power system.

The report follows three major electricity generators announcing the retirement of their thermal (gas or coal) generation plants. These include Contact Energy's Otahuhu B gas-fired power station in September 2015, Mighty River Power’s gas-fired Southdown power station on 1 January 2016 and two coal-fired units at Huntly in December 2018.

The report outlines a number of security of supply challenges, primarily from 2019, following the planned retirement of two 250 MW Huntly units.

Transpower Chief Executive Alison Andrew said that there are a number of challenges facing the industry over the coming decade and it is becoming increasingly difficult to predict what New Zealand’s 2019 energy environment might look like.

“With uncertainty around demand growth, emerging consumer technologies, New Zealand’s large industrial loads and the mix of generation that will be available, we need to ensure we are able to keep abreast of potential risks to security of supply and signal these to the industry so that there is an opportunity to respond to them,” she said.

“We have already put in place a number of changes for how we operate the Upper North Island grid in response to the Otahuhu B shutdown last month, which has kept the level of security of supply unchanged. We expect to also be able to manage the system well with the closure of Southdown in January,” she said.

“The challenge is from 2019, where we forecast a higher level of risk around meeting the energy needs of the country should no further generation be commissioned to replace the retiring Huntly units.”

“Although there is limited future generation investment committed, we believe that the current wholesale energy market operates effectively, and will respond appropriately to this situation. The benefit of forward planning is that we have the time to plan for and work as an industry to address these potential challenges. We will continue our discussions with industry participants and provide up-to-date information as further analysis occurs.”

“As transmission owner, we are also reviewing if any further transmission investment could be made to alleviate the level of security of supply risk in 2019 – a further report on grid investment is due out in early 2016.” she said.

The full Security of Supply Analysis Findings and Implications of Thermal De-commissioning report can be found at:
https://www.systemoperator.co.nz/activites/current-projects/impact-thermal-generator-decommissioning

For further information, please contact:
Rebecca Wilson, Corporate Communications Manager; 04 590 6695 or 021 578 608.