Recriminations flew after the power blackout on Monday, one of the coldest nights in New Zealand.
Energy Minister Megan Woods blamed a market failure and “commercial decisions”. According to the Dominion-Post, she pointed the finger at Genesis Energy, which had not turned on one of the Huntly power station’s units.
The government is said to be demanding answers from the industry.
Genesis chief executive Mark England said the company had been made a scapegoat and he will be asking the minister why.
Transpower has apologised after it asked lines companies to cut power in some areas to handle all-time-high demand for electricity, combined with insufficient generation, on one of the coldest nights of the year.
Transpower CEO Alison Andrew said there was enough generation to cover predicted demand on Monday evening.
“It was going to be tight but we felt we’d make it through. But then between 6pm and 7pm we had an equipment failure. We lost 170 megawatts of generation which is about 2.5% of generation. That’s enough to power about 170,000 homes.”
The failure was caused by weeds in the dam at Genesis Energy’s Tokaanu hydro plant near Taupō.
“When you have equipment failure you just have to respond. We escalated communication over the day to warn the market that the situation was tight.”
Transpower can only instruct the industry to respond once there is an emergency, Andrew said. Up until hat point it can only request more generation or load shedding.
Andrew said this was a good opportunity to review how it is allowed to communicate and what reserves it carries.
“As we start to carry more renewable and intermittent generation in the system it’s going to be really important that we take the time to review these processes.”
The electricity industry can carry more capacity and have higher risk margins, but that would come at a cost, she said.
Meanwhile National’s Judith Collins says the minister should have known about the problem sooner.
“There’s clearly a massive breakdown from the minister to Transpower and Transpower to the generators.”
Competition is not the problem – generators weren’t given information that they needed more power, Collins said.
“It’s not like you can just take the coal, suddenly make it hot and just get on with it.”
Collins said that natural gas – unlike coal – was the perfect peak fuel because it can be switched on and off very fast.
“I wouldn’t have had an offshore gas ban, exploration ban.”
In the NZ Herald, Hamish Rutherford cited other issues arising from Monday night’s rolling blackouts.
He says they are far from the first sign that NZ’s electricity system is struggling to cope, but it does take the issue to a whole new level.
“With the government squarely blaming the problems on commercial decisions of the electricity generators, the sector faces increasing risk of a shake-up”.
He noted Megan Woods telling Parliament:
“If we are going to have a market-oriented system providing security of supply, then that market must deliver, The market failed in this respect.”
For months, Rutherford said, major industrial users have been warning that the industry was under such strain that thousands of jobs are at risk.
Already Taranaki’s Methanex has idled one of its plants, the Norske Skog pulp and paper mill in Kawerau has closed, other paper plants are said to be precarious and even New Zealand Steel has dropped hints about the future of its operations at Glenbrook.
As well as low hydro lake levels, the system does not have nearly enough gas to provide the resilience needed to keep the system at capacity, Rutherford said.
The Dominion-Post, which seldom criticises the Ardern government in editorials, headed up its Wednesday leader as “Power failure’s perfect storm” and two of its feature writers offered their views, one under the heading “The market has created scarcity in land of plenty” while the other was headed “Was the oil and gas ban to blame?”.
Look to the page containing letters to the editor and there was a more forthright opinion. It came from one of the country’s most formidable business leaders, now retired, Kerry McDonald:
“Given the importance of the electricity sector to the economy and society, a number of people should be removed from their roles, including the minister and her key advisers, and the chairs and CEOs of the Electricity Authority and Transpower. They all had plenty of warning but showed a lack of leadership and abandoned consumers to their costly and risky fates”.
That’s putting things bluntly – but we don’t expect the advice to be heeded.