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New Zealand's security of electricity supply is entering a crunch period with three major generators being decommissioned from the national grid by 2019.
The loss of the three major electricity generators is raising concerns with national grid operator Transpower, which says in three years there was increased risk of meeting the country's energy demand.
As had been the case for the past two years, the future of Rio Tinto-owned Tiwai Point aluminium smelter at Bluff also complicates supply and demand forecasts - given it soaks up about 14% of the country's energy output, all from Manapouri.
In Transpower's ‘‘security of supply'' report released yesterday, in response to generator closures, Transpower chief executive Alison Andrew said there were a number of challenges facing the industry during the coming decade.
‘‘It is becoming increasingly difficult to predict what New Zealand's 2019 energy environment might look like,'' she said.
With uncertainty around demand growth, emerging consumer technologies, New Zealand's large industrial loads and the mix of generation which will be available, Transpower had to ensure it kept abreast of potential risks to security of supply, and signal those to the industry, 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,'' Ms Andrew said.
The future of the ageing, 44-year-old Tiwai Point plant remains in the balance. Rio Tinto retains an option to sell it after January 2017.
Ms Andrew said in an interview Tiwai was ‘‘one of a number of uncertainties'' to be considered in transmission around the lower South Island.
While there was not the infrastructure in place to ‘‘flick the switch'' and have Manapouri's supply diverted to the national grid overnight, Transpower had a design to enable it switch over in time, if required, she said.
There was already a ‘‘de-bottling'' programme of the lower South Island network under way; in transmitting between Clyde and the other Waitaki generators.
Ms Andrew said the cost to get Manapouri on to the national grid, so long as it stacked up commercially, would be in a $100million to $200million range, but winter weather conditions and access to farms could potentially raise those estimates.
‘‘Should Tiwai go, or a new windfarm come on [stream], the grid would have to be reinforced. We've got the design ... The programme could be accelerated,'' she said.
In early August, New Zealand Aluminium Smelters Limited (NZAS) announced a deal with energy supplier Meridian Energy for 572MW of electricity until 2030, which will allow the smelter's three potlines to remain fully operational.
At the same time, Contact Energy announced it had signed a deal with Meridian to supply 80MW of energy to the smelter.
However, NZAS retains all its termination rights from the earlier 2013 round of negotiations, which includes a 12 month notice of termination which can be given any time from January 1 2017.
With the likelihood of a bigger El Nino weather event affecting New Zealand, Ms Andrew said Transpower was relying on decades of records, and the hydrology curves spread over all the dry and wet years.
A revised ‘‘dry year operational issues'' report from last month was also posted yesterday, noting in dry years South Island hydro storage can be preserved, by transferring North Island power, via the HVDC (high voltage direct current) link, to help meet South Island demand.
However, there were three major power system constraints for the North to supply the South, in power transfers from Taranaki to Bunnythorpe, Whakamaru to Bunnythorpe and Bunnythorpe to Haywards; mainly by the need to avoid voltage instability.
The end of the HVDC link is at Waitaki, and the amount of power that can be transferred from Waitaki to Otago and Southland is limited by three major constraints, in the transfers between Waitaki to Naseby, Twizel to Roxburgh and Roxburgh to Invercargill
‘‘The order in which the constraints bind is dependent on power system conditions, especially the amount of generation at Clyde, Roxburgh, and Manapouri,'' the report said.
Ms Andrew said as transmission owner, Transpower was reviewing if any further transmission investment could be made to alleviate the level of security of supply risk in 2019; with a further report on grid investment due out in early 2016.
Transpower had already put in place several changes on how it operates 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 benefit of forward planning is that we have the time to plan for and work as an industry to address these potential challenges,'' she said