Hydro power supplies about 57% of the nation’s electricity supply and though recent inflows have helped arrest the decline, national controlled storage is sitting at just 82% of the average for this time of year, which is in the bottom 10% of historical levels for this stage in April, Transpower said in a statement yesterday.
At the same time, security of supply risk was elevated.
Gas supply was constrained, and some thermal generators were nearing the end of their life and therefore more prone to faults.
Transpower operations general manager Chantelle Bramley said it continued to emphasise the need for the market to continue to co-ordinate early to increase the energy buffer heading into winter.
"This is essential for diversifying risk away from reliance on hydro storage, and to insure against other factors such as unplanned outages to key generation assets.
"A system-wide response is under way, including continued focus on managing hydro storage levels and securing alternative fuel supplies such as coal, gas and diesel."
The Electricity Authority also released a statement this week
saying although national hydro storage was still low, it has increased slightly since last week.
Retail price increases were driven by increases to lines charges and energy costs passed through by retailers, Transpower said.
Transpower also clarified its process for triggering access to hydro lake water below normal operating levels for electricity generation ahead of winter.
Ms Bramley said it received a range of views from the electricity industry as well as major users of electricity, consent authorities and community groups about actions that could be taken for the coming winter.
It was clear from the wide range of submissions delivering a secure supply of electricity now and into the future was the priority for all stakeholders.
"Making it easier to use contingent hydro storage to reduce gas and coal burn may feel like a no-brainer, but it isn’t. It is our fuel of last resort.
"If we use our contingent hydro storage early and it doesn’t rain, we can run out of energy later in winter.
"Our decision puts New Zealand’s security of supply first, while giving hydro generators much greater clarity about the process for accessing contingent hydro for winter 2025."
New Zealand was reliant on an ageing fleet of thermal generation units to provide back-up, Ms Bramley said.
Even if alternative fuel such as gas or coal were secured to run these thermal units, if one or more fails later in winter then we will need spare water in the system so that hydro generation output can be increased while the back-up power station was fixed.
Ms Bramley also said Transpower had to take into account future years as well as the immediate situation.
"If we use the contingent hydro stored water this year, we enter the next year relying on above average levels of rain to top up the lakes for winter."
The three lakes which can be used for contingent storage are Pukaki, Tekapo and Hawea.
"In all of these circumstances the risk of electricity shortage is very real, and this drives the potential for very high wholesale electricity prices, like we saw last year."
Meridian Energy said in terms of storage, Lake Pukaki was about 76% of average at the moment, and it had lifted about a metre over the last three weeks. The Waiau catchment was about 96% of average.
Meridian Energy wholesale general manager Chris Ewers said after one of the driest starts to the year ever seen, several rain events over the last couple of weeks provided a welcome boost to the company’s hydro lakes.
"The fronts that bring rain also bring wind, so our six wind farms around the country have also been generating strongly.
"There’s further rain forecast for both the Waiau and Waitaki catchments this week, so while we’d still like a few more events before winter, the situation is a bit more positive than it was just a few weeks ago."
Meridian said less than 0.1% of its customers have direct spot market exposure.
The few power users directly exposed to spot prices were the ones who choose to be.
