A new agreement between New Zealand’s Aluminium Smelter (NZAS) and Meridian Energy could provide better security on the supply of energy for the whole country.
NZAS announced yesterday it had entered into a conditional agreement with Meridian to reduce its consumption of electricity at the Tiwai Point smelter by up to 50MW.
It would also provide demand-response flexibility during 2023 and 2024.
The agreement was conditional on receiving approval from the Electricity Authority and could take 45 days for a conclusion.
Meridian Energy chief executive Neal Barclay welcomed the agreement, as it could be valuable at times of hydro shortage or when the electricity system was otherwise under stress — for example, over winter peak periods or if transmission was not available.
"New Zealand needs to build more flexibility into its electricity market and we believe demand response has an important role to play."
NZAS chief executive Chris Blenkiron said he was proud to contribute to greater security across the national electricity system.
"NZAS has reduced consumption in eight out of the last 10 years and will continue to do so to ensure there is a reliable supply of electricity for New Zealanders when they need it most."
He said there were several separate tranches of demand-response flexibility that Meridian could call on — ranging from 15MW to 50MW.
Meridian would then pay NZAS a fixed price for each megawatt reduced by NZAS under the demand-response agreement.
If approved, this agreement would terminate on 31 December, 2024 — the same date as the current electricity agreement between both parties, which affects the potential closure of the smelter.
Both parties said the negotiations were still ongoing.
