Rio Tinto’s Tiwai aluminium smelter to curtail its electricity consumption, shortfall of rain mounts pressure on hydro generation

Rio Tinto owned Tiwai Point Aluminium smelter consumes around 13% of New Zealand’s electricity produced, however, it has now outreached an agreement with Meridian Energy to curtail its usage by up to 30.5 megawatts per hour (MWh) until the end of May 2021.

Tiwai aluminium smelter has a supply contract with 100% renewable energy supplier, Meridian Energy New Zealand to deliver with cheap power until 2024.

According to data from the energy consultancy firm Energy Link, this decision has come into force, as hydro storage levels had dropped by a third last year, and are sitting around their lowest point in 25 years at 1840 gigawatts per hour.

The wholesale power prices have surged nearly eight-fold in the recent weeks, as the dry weather crops up with lack of rain causing the plunge in hydro lake storage combined with a shortage of natural gas.

The rise in prices has steered up the costs for big manufacturing units and even compelled for the temporary shutdown, like the Norske Skog paper mill in Kawerau, which led some to question if the Tiwai smelter would have to curtail its load.

The global mining giant Rio Tinto said: “We had already curtailed usage modestly and saving 50MWh by not restarting some of our operations that were shut down during last year's lockdowns.”

“The changes meant the company was using about 566MWh, which was about 9% less than usual.”

"We are pleased to now be in a position to be able to do more to assist New Zealand's security of supply for all customers should the lake levels not be replenished in the short term," it said.