The country's electricity market is the centre of a government probe after a blackout. (Image: Tina Tiller)

Government takes aim at ‘commercial decision’ by Genesis Energy for blackout

It wasn’t errant seaweed (this was a serious theory) or a lack of natural gas that caused a massive blackout yesterday, but ‘commercial decisions’ by Genesis Energy. The government is demanding answers. Justin Giovannetti reports.

A blackout that plunged parts of New Zealand into darkness during a cold winter night yesterday wasn’t caused by a failure of the country’s electrical system, but a power company’s decision to disregard an emergency order to produce more.

While the country’s electrical system was pushed to its limits by all-time high demand, energy minister Megan Woods said the blackout was preventable and the result of “commercial decisions” by Genesis Energy not to fire up a third boiler at the Huntly power station, the country’s largest.

The government is now demanding answers from Genesis and blaming the company for causing the country’s electricity market to fail.

“All New Zealanders would have an expectation that when we’re putting out emergency notices, that we’re in a situation where we are in the middle of a storm and cold snap, I think New Zealanders rightly have an expectation that all that can be generated will,” she said.

Not only was their a boiler staying unused at Huntly at the same time as thousands of New Zealanders were in the dark, but the electrical cable linking the North Island with the massive generating capacity across the South Island was only running at half capacity.

On Monday morning, Transpower, the agency responsible for running the national grid, had forecast massive demand and warned the private companies that provide New Zealand’s electricity to be prepared for an emergency. In a statement, Genesis said it looked at the situation and chose not to turn on the boiler because it expected generation would meet demand.

“There was sufficient generation capacity available to the market prior to the loss of generation at Tokaanu and sudden decline in wind generation that coincided with peak demand,” the company said in a statement.

The Tokaanu power station saw a sudden fall in generation when seaweed entered the dam’s water intake, while powerful winds stilled, stopping turbine blades across the country. Huntly uses coal and gas, the type of power station usually used when demand is at its peak and all generation is turned on. However, the company said because it chose not to activate the third boiler when it got a warning earlier in the day from Transpower, it would have taken several hours to get it ready, so it wouldn’t have helped with the blackouts.

The company’s explanation doesn’t wash with Woods. For starters, while Genesis might be a large power company, only Transpower actually has a firm sense of what’s happening across the power system. Power companies aren’t supposed to second-guess an emergency order from the grid operator and then ignore it.

“They only have line of sight into what they are doing,” Woods said of Genesis.

Once Transpower saw that demand was exceeding generation, it asked local utilities to start shutting off water cylinders and other big users of power. Once that wasn’t enough, entire neighbourhoods were cut off. In the end, it looks like the operator turned off about twice as many connections as needed.

That decision is one of a “very long list of questions” the minister has over what happened yesterday. She’s also looking into why the public was given no notice of the situation when power companies had all day to prepare.

Woods is also asking Genesis if they chose not to fire up the boiler to increase power prices on purpose. The company did not make a spokesperson available for comment. If an investigation by the grid operator finds out that Genesis reduced power to make a buck, Woods said things would not end well for the company.

“I don’t think that’s a tolerable situation. If there was a situation where there was such a constraint so that New Zealanders couldn’t be sure of their ability to keep the lights on and heaters on, then we have serious questions,” she said.

The entire electrical system is currently under review and the minister wouldn’t say whether she thought it was a functioning market that’s serving New Zealanders well.

As the country continues to add more electric vehicles and larger appliances to the grid it will face additional pressure in the coming years. There are currently no realistic proposals to build large-scale power stations that don’t rely on the wind or sun, neither of which would have been useful in the middle of a still, cold night. To ensure the power market stays stable, experts say the country will need to look at ways to reduce demand for electricity in the future, including much more insulation for homes.

A proposal to strengthen the power system is the government’s Lake Onslow project, which centres around the idea of turning an artificial lake into a big battery for the country. The $4 billion project would see water pumped into an enlarged reservoir when power prices are low and let to drain out, spinning a turbine, when prices surge. While it could be tapped in times of emergency, the proposed volume of water is large enough to back up the energy supply over an entire dry season when dam levels are low.




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