Slim Chance Of Hydro Storage Failing This Winter
May 21st, 2008
The Electricity Commission says there’s only a 5% chance the country will run out of water from its hydro lakes this winter, with the Commission needing to call on consumers to go without electricity. Commission chairman David Caygill gave this assessment of the country’s electricity supply position to the WEL Networks Major Customer Forum. Responding to the challenge of National’s energy spokesman Gerry Brownlee, who asked why, four years after the Commission was set up to take responsibility for security of supply, NZ is again facing the possibility of power cuts, Caygill agreed views differ on how soon to call for rationing or even to be prudent. “Some have said the commission doesn’t want to embarrass the Govt in election year. The only embarrassment would be actually running out of power. The reasons the commission hasn’t call for cutbacks are (a) because we haven’t judged them to be necessary and (b) because past experience has suggested such campaigns don’t work until the public is convinced there really is a crisis and in any event don’t work for very long. Today, storage sits at roughly 2000 GWh or about 64% of average for this time of year. Based on past inflow records (over 77 years), there is less than a 5% chance we will run out of water and need to call on consumers to go without.”
Caygill said it’s not no chance, but it’s better than it was two weeks ago. The Commission is continuing to monitor the situation every day. Caygill says he disagrees with the view expressed in one newspaper it’s the Govt’s responsibility to ensure there will always be sufficient power for the needs of private households, businesses and industry all the year round. “I disagree because this is too absolute a position. Instead, in my view, a sensible trade-off must be made between security and cost.” It doesn’t necessarily make sense to keep multiple plants idle, just in case they should be needed.0
Referring to claims NZ would be better served if there were a single central planned or a single generator/supplier, Caygill says this also makes little or no sense. The big disadvantage of stepping away from the wholesale market, with five main generator/retailers competing to dispatch their generation plant and competing for retail customers, is it would reduce pressure on what might be thought of as “production” costs. He says the EC is currently reviewing the wholesale market, and will shortly release an options paper which identifies ways in which more competition might be encouraged, as well as ways in which security of supply might be improved. “The sensible options do not, in the commission’s view, include ‘putting everything back together again’. But we will be happy to receive public input.”
On the issue of whether more generation should have been built, Caygill says on average demand grows at more than 1.5% a year, meaning NZ needs 130-140MW of additional generation per year to keep up. Since 2000 more than 1200MW has been built. More is on its way and most of it is renewable.
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