Photo: Lynn Grieveson
- Genesis, Mercury, Meridian and Contact will set up a strategic energy reserve at Huntly Power Station
- Large coal stockpile will cover "dry winter" hydro risk and gas shortage
- Agreement prompted by 2024 electricity supply crunch
- Companies will seek Commerce Commission approval for scheme
The country's big four power companies have signed an agreement to set up a coal stockpile at Huntly Power Station to support security of electricity supplies.
Genesis has struck a deal with Contact, Meridian and Mercury to amass up to 600,000 tonnes of coal reserves, which when added to the current stocks will total potentially 1.1 million tonnes.
Most of the coal is imported from Indonesia, and the Huntly units can burn as much as 10,000 tonnes a day.
The resource, which in due course might also include biomass wood pellets, will keep Huntly's coal and gas fired Rankine units in operation and available to provide quick starting generation when renewable electricity supplies are pressured, as well as reduced gas supplies.
Genesis chief executive Malcolm Johns said without the deal one of the units would have been shut down early next year.
"To keep this unit in service out to 2035 requires significant investment. The agreements announced on Monday are essential to making that investment and ensuring a fuel reserve is in place for energy security."
Preventing a repeat of 2024 winter
The agreement has been prompted by market conditions in winter 2024. A combination of low hydro-lake inflows, low wind conditions and fluctuating natural gas supplies sent wholesale electricity prices soaring and forced emergency measures to avoid shortages.
"The country was hit hard last year by an unexpected and significant shortage of gas, and that problem is not going away any time soon," Meridian chief executive Mike Roan chief executive said.
Minister of Energy Simon Watts said the energy reserve would help to uphold the country's energy security.
"This agreement will provide a crucial buffer against future dry winters, helping maintain power supply and keeping energy costs stable for New Zealanders."
Johns said the power companies would approach the Commerce Commission to ensure the agreement did not break competition rules, and the power offer was not exclusive to the big four.
"[This] is open to all participants in the electricity market from gentailers to independent generators and retailers, and large industrial users."
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