The electricity generation game

All across the nation’s spa pools, electric-vehicle chargers, clothes-driers and heated towel rails, the cry goes up: not another power crisis, they yell.

As you plug in the kettle, the toaster, the fan heaters, switch on the heat pumps and the lights, set the dishwasher going and get another load of washing under way, spare a thought for the poor molecule of water which less than a second ago gave its life so you can enjoy a comfortable, modern-day existence.

This winter, billions of those molecules in our rivers and lakes have been fighting back. We’re a scarce commodity, they say, we’re in demand, we can put our prices up. Look after us better, you need us.

And as the tail-end of an El Nino over the past few months has left the South Island hydro-generating system significantly depleted, the country has, once again, begun to realise that our lovely, clean and green, renewable hydro power isn’t infinite and should not be taken for granted.

What is interesting is how long it seems to have taken for some in government and around New Zealand to realise a cliff-edge was rushing towards them. Since mid-July, the high-voltage, direct-current cables across Cook Strait have been sending electricity largely one way — south.

We have been here before, but have we learnt the lessons of the major power crises of 1992, especially, and 2001 and 2003? Even before that, during the mid-1970s, there were frequent calls for voluntary power savings, and examples of supply not being able to keep up with demand can be found going right back to the 1940s.

This winter, manufacturers have borne the brunt of high spot prices, a direct consequence of the electricity market pricing a scarcer resource more highly. While that sounds like a logical outcome of economics, the bigger issue is that the current market can make it more profitable for generator-retailer companies to operate the system on the verge of a crisis.

Finally, in the past week, the rains have come. For several months there had barely been a decent nor’wester, the ideal meteorological set-up to replenish the catchments of the Mackenzie Basin and southern hydro lakes.

Dunedin boutique electricity retailer Payless Energy moving up the ranks; pictured, starlings on...
Starlings on power lines at dusk in Highcliff Rd, Dunedin. Photo: Stephen Jaquiery.
Wholesale electricity prices have now eased considerably from earlier this month and, as hydro generators have scaled back, geothermal and, unfortunately thermal, power has picked up the load.

The rains don’t appear to be done yet, which is an encouraging sign for the South Island lakes. The weather forecasts indicate at least another week of strong west or northwest winds across the island, with a high chance of further heavy rain along the main divide and significant spillover on to this side. The generators are cautiously optimistic the worst might be over.

Prompted by Associate Energy Minister Shane Jones’ angry words about generation companies, the Electricity Authority, and high spot prices in recent weeks, the government on Monday announced a range of initiatives to bolster our fragile energy security.

Energy Minister Simeon Brown and Mr Jones say the government is going to fast-track the development of an lng (liquefied natural gas) terminal to ensure a back-up supply. It will also ease restrictions on lines companies owning generation assets, review whether the hydro lakes’ consented operating ranges could be lowered further during shortages, and assess if the electricity market is still fit-for-purpose.

Those moves are in addition to the previously espoused move to reverse the ban on offshore oil and gas exploration. They point out natural gas is currently essential to meet peak consumer demand on the coldest winter mornings and evenings.

It appears the authority may also be in for a shock. Mr Brown wants to ensure looming vacancies on its board are replaced by people with the "right skills". Mr Jones last week threatened the authority would "end up as roadkill" if it didn’t flex its muscles on behalf of consumers.

One thing is missing, though — some leadership when it comes to conserving power use. Is it too much to ask these days for the most electricity-greedy users to switch off and save?

When we are in this kind of shemozzle, it would be a perfect reminder to be cautious and reduce our consumption for the planet’s sake.