Keeping the lights on

New Zealand has two key challenges to supplying electricity around the clock. One is having enough ‘generation capacity’ during periods of peak power demand, and another is having enough fuel to generate electricity during a ‘dry year’.

Generation capacity

The highest demand for electricity is in winter during those cold evenings or frosty mornings when people turn up their heating. But there can also be cold spells in autumn and spring.

If there is no wind or sun, then wind farms and solar panels can't make as much electricity. This means hydro, geothermal and thermal generation must provide more electricity when demand is high.

Geothermal generation already runs at near full capacity, so only thermal and hydro can be dialled up and down to make up the difference and keep the lights on.

Hydro power (using water from lakes to make electricity) can start operating quickly, but some large thermal generation units (those that use gas, diesel or coal to make electricity) can take much longer.

The challenge is to make sure there are enough hydro and thermal units running to meet everyone's needs when electricity demand is highest.

Dry year risk

New Zealand relies a lot on hydro power. When we have a long period of time with less rain than usual, the lakes will be low – we call this a 'dry year'. This can happen during any season but is worse in winter when we use more power.

When the lakes are low, hydro power is offered at a higher price because water is becoming scarcer. Thermal power plants need to generate electricity and make up the difference. Because thermal fuels (gas, coal) are more expensive than renewable sources (water, wind, solar) this can cause the wholesale price of electricity to go up.

We publish a weekly snapshot that explains how well the electricity system is functioning to keep the lights on. These snapshots show how secure our system is overall, with supporting information about rainfall, hydro storage, geothermal generation and wholesale electricity prices. You can access these snapshots in the links at the top of this page.

We do a lot of monitoring and tracking behind the scenes to understand if the power system can make and move enough electricity to keep the lights on. We pay close attention to:

• Hydro storage and inflows - New Zealand has a highly renewable power system, with hydro generation making up around 60% of our electricity supply. The lakes are relatively shallow – they could go from full to zero water in six weeks if there's no rain. So, we constantly monitor hydro storage and inflows to identify any risks.

• Wind and solar generation - Wind and solar farms don't produce power consistently – only when there's no wind or sun. We forecast how much power these sources will produce to help keep the system running smoothly.

• Thermal fuel availability - We monitor the amount of gas, coal and diesel that can be used to generate electricity. These fuels are like backup electricity sources. They are used when usual sources, like water, wind or sun, aren't creating enough power.

• New electricity generation - We monitor how many new power plants (wind and solar farms), solar panels and batteries are planned, to understand if there will be enough electricity in the future.

• Power plant and equipment outages - Power plants and Transpower need to take equipment out of service to complete necessary maintenance work. This needs to be carefully coordinated to ensure the power system can keep our power supply reliable at all times.

Making sure you have power when you need it is our top priority, and we are constantly working to improve New Zealand's power system. We're currently working on:

• Establishing an Emergency Reserve Scheme - enabling businesses to opt-in to a scheme to reduce their electricity use on request, so the System Operator can access this power when the grid is under pressure.

• Improving the System Operator’s information gathering powers - so that the System Operator has access to the right information to effectively manage the electricity supply for electricity customers.

• Outage coordination enhancements - enabling asset owners and Transpower to more effectively coordinate planned outage schedules, to reduce the risk of too many assets being on outage at the same time.

• Improving the accuracy of intermittent generation forecasts (wind and solar) - to have a positive impact on electricity system costs and improve the risk to overall security during periods of tight supply. For example, if there is over-forecasting of wind capacity, this increases the risk of slow start thermal generation not coming online to meet peak demand because sufficient generation is forecast.

• Updates to the stress test regime - to enable retailers to assess how they would fare when longer-term price risk events occur.

• Enhancements to improve the collection and publication of thermal fuel in formation - to help ensure that industry participants can make informed decisions about risk management.

Electricity demand is expected to grow significantly in the future, and our system is evolving quickly to enable this. Most of this predicted increase in demand is expected to be from processes that currently use other fuels (such as transport and industrial boilers) switching to electricity. This could help us reach net zero carbon emissions by 2050.

To meet this additional demand, more electricity generation is being built, such as geothermal power plants, wind and solar farms. And new technology is being introduced, for example smart grid technologies and smart energy systems.

In future, more homes, businesses and communities will also be producing and managing their own electricity. This will make communities more resilient in the face of significant weather events and natural disasters and enable people to benefit from supplying power into their local network.