✨ Electricity Security Policy
4 JUNE 2008 NEW ZEALAND GAZETTE, No. 92 2479
Security of supply
Background
- A key priority of the Government is to maintain security of electricity supply. Shortage risks and periods of high spot prices need to be well managed to ensure that businesses and the wider community have confidence in ongoing security of supply. In the Government’s view, security of supply is vital to achieving its objective of sustainable economic development.
Key requirements of security of supply
- Key requirements for security of supply, and confidence in security of supply, are that:
• sufficient generation capacity is built or energy efficiency improvements made to meet ongoing demand growth
• hydro and thermal generating capacity and fuels are appropriately managed, to deal with the risk of shortages, including extended dry hydro periods
• the system has sufficient capacity (plant and fuel and/or demand response) to cope with extreme dry sequences, periods of low wind speed and other unexpected supply disruptions
• quality information and forecasts of thermal fuel availability, the hydro system (including lake levels and spill), wind flows and generation capacity are available
• the national grid and distribution lines meet specified reliability objectives. (Transmission and distribution issues are covered in separate sections)
• opportunity exists for electricity consumers to manage exposure to high spot prices. (Hedge market transparency and liquidity are covered in separate sections.)
Security of supply objective for the Electricity Commission
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A function of the Commission under the Electricity Act 1992 (s172O) is to use reasonable endeavours to ensure security of supply, without assuming any demand reduction from emergency conservation campaigns, while minimising distortions to the normal operation of the electricity market.
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To provide a measure of security of supply, to date government policy has been to assess security of energy supply against a "1 in 60 dry year" standard. Following a substantive review of the reserve energy policy in 2007, the "1 in 60 dry year" is replaced by a standard expressed in terms of "winter energy margin" (the margin between forecast capacity to supply in a mean hydro year and forecast demand).
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Accordingly, to meet the security of supply objective, the Commission should use reasonable endeavours to ensure that the generation and transmission system is capable of maintaining a mean winter energy margin of 17 percent for New Zealand overall, and 30 percent for the South Island. This new standard will provide a level of security similar to the 1 in 60 standard, but provides a measure that is clearer, and easier to calculate and understand.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2008, No 92
Gazette.govt.nz —
NZ Gazette 2008, No 92
✨ LLM interpretation of page content
🏭 Security of electricity supply policy
🏭 Trade, Customs & IndustryElectricity, security of supply, generation capacity, energy efficiency, hydro generation, thermal generation, fuel management, demand response, reliability objectives, price management