Electricity Authority announces electricity emergency reserve scheme

The Electricity Authority Te Mana Hiko (Authority) announced today that an emergency reserve scheme (ERS) will be established as an extra layer of protection against unplanned disconnections for New Zealand households and businesses. These happen in rare circumstances where not enough electricity is being generated to meet demand.

The ERS will be implemented as a new ancillary service to support the electricity market and will be operated by the System Operator (Transpower). It will enable industrial organisations to opt-in and be paid to reduce their electricity demand briefly, or provide additional generation, when supply is especially tight. These organisations would do this for short periods where it makes commercial sense for them to do so.

The Authority’s General Manager, Wholesale and Supply, Hayden Glass, said the scheme has been developed in consultation with the electricity sector and is well supported by industry participants.

“The consultation process has confirmed that the scheme has clear benefits for industry and for everyday consumers."

“Our research estimates net economic benefits of $33 million from establishing an ERS. It would be significantly cheaper than investing in additional emergency generation.”

Glass said the ERS supports the Authority’s key strategic outcome of ensuring that New Zealand’s electricity supply is reliable, secure and recovers quickly from shocks.

“Emergency events that cause unplanned disconnections are very rare, but they can be quite impactful. The most recent example occurred on 9 August 2021 when around 34,000 consumers were disconnected for up to two hours."

“This is the sort of costly and damaging outage an ERS will help prevent.”

Transpower, as System Operator, will work with providers to develop and implement the scheme which should be in place by the last quarter of this year.

New Zealand is not unique in implementing an ERS. Similar mechanisms have operated for some time in overseas jurisdictions such as Texas, Great Britain and Australia.

Find out more about the emergency reserve scheme as part of the Authority’s broader work programme to support a secure supply of electricity for all New Zealand consumers.