08-10-02 New Zealand faces an imminent power crisis unless new electricity generation plants are developed urgently, an independent report says. The report, by engineering body Centre for Advanced Engineering and energy consultants Sinclair Knight Merz, reviewed New Zealand future electricity needs.
In it, engineering consultant Bryan Leyland says New Zealand does not have enough spare electricity generation to cope with a one-in-20 year drought. Existing and proposed stations will not be able to supply normal annual energy requirements beyond 2010, the report says.
"The country appears to be facing a crisis situation. The dry year risk is high in 2003 and 2004 and extremely high after 2005, when there will be little reserve capacity available to meet even a one-in-five dry year." However, a review of the report by commissioned by the Economic Development Ministry finds it to be too pessimistic about some assumptions.

The review also finds that modelling by Transpower, which forecasts generation shortfall between from June 30, 2005, or 2007, depending on demand growth and assuming a one-in-20 dry year, was too optimistic Energy Minister Pete Hodgson said Mr Leyland had been making forecasts every two years for nearly a decade "and they invariably predict an imminent power crisis".
"Transpower's forecasts of system security appear somewhat optimistic and Mr Leyland's rather too pessimistic," Mr Hodgson said. He has asked officials to report promptly on options for better modelling. Mr Hodgson said he was satisfied "that more than enough capacity is likely to be available for the next 10 years or so".
But National's energy spokesman Gerry Brownlee warned both Mr Leyland's report and Energy Ministry analysis of it confirmed New Zealand was headed for "very high consumer power prices and regular blackouts from 2005". Mr Brownlee said Mr Hodgson's response to the report was typically ponderous and uncertain, and there was nothing in his assurances there was sufficient additional generation capacity over for the next 10 years.

Mr Brownlee said it made sense to follow one of the report's recommendations that the Resource Management Act be amended to allow new power plants to be built. Mr Leyland's report stresses the vulnerability of the electricity supply during dry years and an urgent need to respond to the decline of the Maui gas field.
"The decline of the Maui gas resource means New Zealand is now facing an unprecedented situation where, if nothing is done, there is a high risk of electricity shortages over the next few years," the report says. In the past few years, more than 400 MW of thermal reserve stations have been taken out of service, and last year Contact postponed their proposed 400 MW Otahuhu C station.

There were only two big generating projects planned. The 400 MW combined cycle unit at Huntly, expected to be in service in 2006, and Meridian Energy's Project Aqua in the South Island, which is scheduled to add 285 MW in 2008 and another 285 MW in 2011. But these projectswill barely meet demand, the report says.
In the short-term, stations could be built or upgraded to mitigate the risk of shortages. These include converting the New Plymouth station from Maui gas to oil, or install oil-fired gas turbines at the existing Marsden.