Power outages will shake NZ homes and workplaces - Energy Voices
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Power outages will shake NZ homes and workplaces

Many New Zealand home-owners are going to be opening power bills in coming months and getting a shock as sky-high wholesale electricity prices hit home.   A combination of low hydro lake levels and a shortage of gas (only temporary this time) from a production outage at NZ’s largest gas field has spiked wholesale prices.

If you’re with one of the retailers who pass on the wholesale price, you will already have seen the price impact every week for the past month or so.

If it doesn’t happen to you in the next few months, just wait until your next price offer to arrive in the mail.   The current high wholesale prices may be temporary but lots of retailers have lost money and customers as a resultThe hydro lakes look likely to have low levels well into next year, and retailers will try to avoid being caught again between low fixed-rate retail prices and sharply increasing wholesale prices.

Genesis Energy, who owns the thermal generators at Huntly and is also a retailer, is already importing coal from Indonesia to stockpile as a part of a back-up plan.

But electricity shortages leading to a severe price spike are only one possible outcome.  If there is another network disruption – either in fuel supply or the transmission network, there might not be enough capacity in the overall system to cope.  Aucklanders will remember the power outages in October 2014 and the hurt that caused.

Kiwis rely on electricity a lot.  We rely on it to light and heat our homes.  Most of us work in places where no electricity means there’s no point being there, and we need to go home until the power is back on.  Outages are a very hard blow to our wages and salaries.

Energy security – having a very reliable supply – is essential if you want to be a First-World country and be able to pay high wages.  That was never considered by the Government when it made the decision to ban new offshore exploration and eventually end production of natural gas.

As better renewable and battery technology comes online, it could make peak gas generation less attractive over time. The pricing will send the signal.  But that is a transition that will likely take decades and in the meantime we have one decade-worth of gas reserves.

Not maintaining a reliable source of natural gas through banning new exploration is simply adding an unnecessary extra risk to New Zealand’s energy security.