Transpower: The power system works as intended to keep the lights on

Alison Andrew is the CEO of Transpower.

OPINION: New Zealanders have recently received several warnings through the media about the possibility of power cuts due to a lack of generation to meet peak electricity demand.

On all three occasions, media reports were triggered by messages Transpower sent to the electricity industry requesting immediate action to keep the electricity flowing. The system worked as intended and the power remained on, but New Zealanders are right when they ask how close we came to power outages and whether they should worry as we go deeper into winter.

To answer these questions, we need to look at what triggered media reports. One of the main ways that Transpower communicates with the electricity industry (power line companies, industrial customers directly connected to the grid and generators) across the country is through a system of notifications. These notices are routinely issued for a wide variety of situations as part of the running of the power system. In escalating order of importance, there are three types of notices: Customer Advice Notices (CANs), Warning Notices (WRNs), and Grid Emergency Notices (GENs).

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While these notices are public, they are intended for industry. The language is designed to encourage immediate action to ensure that the power system remains stable and avoid the risk of power outages. There is no room for ambiguity in these communications given the pace at which situations can develop and what is at stake.

On June 23, the system suddenly lost three sources of electricity generation, just as we were heading towards the morning peak. This situation has led us to issue a Grid Emergency Notice. By working with line companies to shut down controllable loads such as hot water systems for a short period of time, we were able to reduce demand for the system until the peak was over. Hot water systems are typically turned on and off by line companies throughout the day and consumers would not have noticed.

Transpower has two roles, one as owner and operator of the national grid, the backbone of our electricity infrastructure, moving electricity from where it is generated to where it is used in towns and cities around Aotearoa. The other is like the grid operator, which means we are responsible for managing the real-time electricity system and operating the wholesale electricity market.

In this role, we ensure through our control rooms that the electricity system remains stable and that supply and demand of electricity are in balance. An important part of the electricity system is a buffer known as residual generation which we like to keep at more than 200 MW at all times. The buffer ensures that we can maintain grid security even if the largest generator or the HVDC cable carrying electricity between the North and South Islands suddenly goes out.

It is essential that we keep the grid stable. If the generation in the system suddenly falls below demand, the grid can become unstable and a total grid failure becomes a risk. This could potentially lead to widespread power outages in the North or South Island that could take some time to recover. If power outages are ever necessary in this situation, New Zealanders should know that this is a last resort to reduce the risk of total mains failure.

On June 28 and July 5, we issued routine customer advisory messages (we issue about 150 a year). They advised the industry that the buffer of residual generation could fall below 200 MW during the evening peak and asked the industry to make more generation offer. These announcements were again reported in the media. The industry responded to the reports and we didn’t have to ask for hot water systems to be turned off.

The media is an important part of the system, providing an effective channel for us and the wider energy sector to communicate with electricity end users. While some media reports put the situations in a more alarming light than may have been necessary, we are very pleased with the constructive way journalists have worked with us to understand and communicate the situations.

We see increased demand for electricity in New Zealand. The 10 highest daily peak loads in the past 10 years have all occurred in the past year, and five of the top 10 have occurred since June 20 of this year. Looking ahead to the rest of the winter, we may see some more “tight days” where demand is expected to be high, and our buffer is less than we’d like to cover for the potential loss of two major sources of generation.

We will continue to work with the industry to move planned outages and let them know when additional generation should be introduced to the market to do our best to address any tight winter days. We also look forward to working constructively with the media to ensure New Zealanders are informed about the real risks to their electricity supply.

Unfortunately, I cannot guarantee that we will not face another situation where we lose generation from multiple sources at once or there is not enough generation on the market to meet demand. However, recent events should give the country the confidence that Transpower, with the support of the industry, is doing everything it can to keep the electricity grid safe and to ensure that electricity can flow from where it is generated to power the homes and businesses of Power New Zealanders.