Power supply at risk

A newspaper ?reports:?quote:

Our electricity supply is at risk. The average spot price over a normal year is about 7c/kWh. Since the beginning of October wholesale electricity prices have averaged about 40c/kWh. On November 1 they peaked at about $1 but recent rain in the hydro catchments has dropped the prices somewhat.

Prices have been much higher than they should have been because of shortages of generating plant, water (the hydro lakes were quite low), gas and coal. The generators controlled the prices and seemed to be making hay while the sun shines.

If this was so, they were playing games with the economy and making a nonsense of the market. The high prices should not have happened. They prove that the market is not fit for purpose.

We still face a serious risk that it won’t rain enough in the next few months to refill the lakes and/or we won’t have enough gas and coal to relieve the hydro stations and build up hydro storage. The lakes need to be close to full by mid April to ensure we have sufficient reserve energy for the winter. end quote.

That is a likely scenario. It rains less in the south over the summer. The heavy rains mostly happen before October. Drier winters happen on a regular basis, but it signals potential problems with energy supply for the next autumn and winter. quote.

If we fail to refill the lakes there is a risk of high prices, an electricity shortage and the possibility of blackouts around June. But no one can do much about it because there is no way to induce thermal generators to generate extra electricity in the meantime to fill the lakes even though it would be in the national interest to do so.

The electricity market has failed to provide incentives to persuade the generators to conserve storage and make sure that sufficient coal exists on the stockpile at Huntly. If Genesis was rewarded for acting in the national interest it would be aiming to have a stockpile of about 1 million tons by autumn to reduce the risk of massive economic damage from major power cuts in the winter. end quote.

Another winter of discontent coming up. The thing is that the lakes fail to fill up sufficiently every few years, but no one has ever thought to do anything to secure our energy supply.

With this government’s cavalier attitude to energy, it certainly will not be them that does it. quote:

In the short term we need to continue importing coal from Indonesia and hope the Pohokura offshore gas supply is restored quickly. end quote.

What if it isn’t? The security of energy supply should not be dependent on hope. We need better than that. We need certainty, and we do not have it.

I’m not blaming the government entirely for this, although their blindsiding of the oil and gas industry has not helped this situation. With the prospect of rising energy prices next winter on top of everything else, this will be another blow to the economy. This does not merely mean that you won’t be able to take a hot shower when you want to. It will be a huge blow to industry and manufacturing and it will slow down the economy even further. By this time next year, we will be in recession.

But hey. This is the government that is bringing kindness back. Kindness with cold water to wash the dishes.