Power supply challenges lead to back-to-back production cuts at Tiwai aluminium smelter

The New Zealand Aluminium Smelter (NZAS) has agreed to further reduce its electricity consumption by an additional 20 megawatts to alleviate pressure on the national grid amid the current energy squeeze. This reduction comes on top of the 185MW demand cut the smelter recently implemented. Tiwai, the country's largest power consumer, typically accounts for around 13 per cent of New Zealand's total electricity usage under normal conditions.

NZAS agreement with Meridian Energy

NZAS has signed an agreement with Meridian Energy to release 20MW of electricity to the national grid over an estimated five-week period, including the ramp-down and ramp-up phases. This agreement is independent of the existing demand response arrangements with Meridian Energy and Contact Energy. It underscores the seriousness of the current energy situation in New Zealand, according to NZAS.

"While the smelter has had to make a difficult decision to reduce aluminium production, we are pleased to be able to offer this additional support for New Zealand's power grid at this time of energy constraint. As a large electricity user, we recognise the responsibility we have in contributing towards keeping the lights on across New Zealand when needed. We have taken off 185MW already, which we achieved nine days earlier than planned," said the company.

Simon King noted that 20MW is roughly equivalent to the electricity required to power all the homes in Napier. Meridian's chief executive, Neal Barclay, expressed gratitude for the additional support from NZAS.

"That is having a positive impact, and this additional 20MW will further assist the country's national grid. "New Zealand is currently in a period of high spot prices and tight electricity supply," added NZAS external affairs director Simon King.

Power prices dropped

Wholesale power prices have dropped significantly after reaching a peak of over $800 per megawatt-hour earlier this month, though they remain high at around $450/MWh. Last week, Methanex, the country's largest natural gas consumer, temporarily shut down its remaining operations at Motunui due to a severe gas supply shortage.

The Vancouver-based company, which produces methanol from natural gas at its Taranaki plants, has agreed to sell its contracted gas supply to electricity providers Contact Energy and Genesis Energy. This decision will lead to the closure of Methanex's plants, where production had already been substantially reduced.

“Being able to call on our groundbreaking demand response agreement has already provided important relief, and NZAS has once again stepped up to sign an agreement that will provide further security of supply,” Barclay said.