28 Apr 2021

Tiwai Point aluminium smelter to lower its electricity consumption

5:06 pm on 28 April 2021

Tiwai Point aluminium smelter has agreed to lower its consumption of electricity, as a lack of rain has placed pressure on hydro generation.

Tiwai Point

Photo: RNZ / Nate McKinnon

The smelter, which consumes about 13 percent of the country's power, has reached an agreement with Meridian Energy to reduce its usage by up to 30.5MW until the end of May.

The smelter has a supply contract with Meridian to provide it with cheap power until 2024.

The decision came as hydro storage levels had fallen by a third on last year, and were sitting around their lowest point in 25 years at 1840GW, according to data from the energy consultancy firm Energy Link.

The dry weather combined with a shortage of natural gas had contributed to wholesale power prices rising nearly eight-fold.

The decision comes as a lack of rain, falling hydro lake storage and a shortage of natural gas has seen wholesale power prices spike in recent weeks.

The high prices have driven up the costs for big manufacturing companies and even forced the temporary closure of the Norske Skog paper mill in Kawerau, leading some to question if the smelter would have to reduce to its load.

Today's deal would see the smelter compensated for any load it decided to reduce.

However, Meridian still maintained the ability to call a "Smelter Demand Response" allowing it to recall power if the dry year trigger level was reached.

The smelter's owner, global mining giant Rio Tinto, said it had already cut usage modestly and was saving 50MW by not restarting some of its operations that were shut down during last year's lockdowns.

The changes meant the company was using about 566MW, which was about 9 percent less than usual.

"We are pleased to now be in position to be able to do more to assist New Zealand's security of supply for all customers should the lake levels not be replenished in the short term," it said.

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