Power prices jump, HVDC work delayed amid tight supplies

Thursday 22nd November 2018

Power prices soared and national grid operator Transpower brought some of inter-island high-voltage link back into service this morning after cold, still weather left North Island generation supplies tight.

The company shut one of the two poles of the link from 5am to start an annual, six-day work programme. But a shortage of generation on the North Island prompted the system operator – an arm of Transpower – to request the pole be brought back into service until 9am – after the morning peak demand period had passed.

The system operator had issued a formal warning to the electricity market at 5:08am that there was insufficient generation on the North Island to meet both the demand forecast in the hour from 7:30am and have sufficient back-up capacity in case any plant failed.

It asked participants to reduce demand, increase generation, or make more quick-reacting reserve available.

Transpower said the situation this morning was considered “tight but manageable” so the outage started as planned.

But demand proved higher than expected and there was little wind generation available, prompting the system operator to request the link’s return to service at short notice.

“In its role as system operator, Transpower cannot direct that asset owners change their outage plans,” the company said in an email. “However Transpower, as grid owner, will act responsibly in these situations.”

Wholesale power cost about $281 a megawatt-hour at Otahuhu at 10am, based on indicative prices. Prices at Benmore dropped to $69/MWh, reflecting the reduced ability of South Island generators to send power north.

Today’s actions reflect the reliance of the North Island – responsible for most of the country’s power demand – on gas-fired generation and South Island hydro supplies. It also shows how dramatically a cold snap, and/or a lack of wind can tighten supplies.

Cold weather across much of the country on Tuesday pushed demand to a seven-week high, according to Electricity Authority data. Average wind generation that day was also just 19 MW – down from more than 220 MW two days earlier.

Wholesale power prices across the country averaged more than $250/MWh that day, more than twice those the day before.

At 7:40am today, there was no wind generation on the South Island, according to the system operator’s website and only about 18 MW coming from the 564 MW of capacity on the North Island. All other generation, including geothermal and coal-, gas-, and diesel-fired plants, was running hard.

Transpower signalled some months ago that supplies would be tighter than usual during November due to its planned work on the HVDC link and planned maintenance at Genesis Energy’s 400 MW gas-fired power station at Huntly.

The HVDC link requires an annual shutdown for maintenance, which is held in November each year and signalled a year in advance. The work involves mobilising a large team of people, including some from overseas, to work on its complex equipment, Transpower said.

Last week the system operator specifically highlighted the increased risk of tight supplies today and tomorrow, given maintenance work Contact Energy has underway at its 400 MW gas-fired plant in Taranaki and work Meridian Energy is doing at its Ohau hydro plants on the South Island.

Transpower is planning to have both poles of the HVDC link across Cook Strait out of action from early Saturday until late Sunday. Work is scheduled to be completed on the remaining pole by late Tuesday.

(BusinessDesk)

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