Review of forecasting provisions for intermittent generators

Today the Electricity Authority published an Issues and options paper on the issue of uncertainty in intermittent generation forecasts in the electricity spot market. We are seeking feedback on proposed solutions to improve the accuracy of intermittent generation forecasts.

We have observed that intermittent generation forecasts are often inaccurate and unreliable until close to real time. Inaccurate forecasting is prevalent because there are minimal obligations around the accuracy of intermittent generation forecasts. Intermittent generators have few incentives to forecast accurately as there is little correlation between forecasting accuracy and revenue earnt in the spot market.

Inaccurate intermittent generation forecasts create uncertainty for other participants, who need to make generation or consumption decisions ahead of real time. Inaccuracy may particularly affect participants who need advance notice to make generation or consumption decisions (for example, thermal generators and industrial demand-side participants).

Incorrect forecasting by wind generators was a contributing factor in the 9 August 2021 grid emergency, which resulted in the disconnection of approximately 34,000 customers without warning.

It is estimated that the share of supply from intermittent generation will increase from around 6% of total generation today to 47% by 2050. In the short term, solar projects account for 78 percent of actively pursued projects that could be completed by 2025, with wind projects accounting for most of the remaining generation potential. Therefore, it is an appropriate time to review the forecasting arrangements for intermittent generators.

The Issues and options paper discusses forecasting arrangements that are used in other jurisdictions, including the relative advantages and disadvantages of each. It also outlines the principles we think should underpin any policy solution, as well as certain design considerations to help determine how each forecasting arrangement would be implemented.

We welcome views from all interested parties. A full list of questions we would like you to answer in your submission can be found in Appendix C of the Issues and options paper. Please email submissions to forecasting@ea.govt.nz by 5pm on Wednesday 26 July 2023.

We will then consider all submissions before deciding which option to progress by Winter 2024.