The Tiwai Point aluminium smelter (NZAS) and Meridian Energy have been given a green light on a deal to allow for greater demand flexibility from the smelter during peak periods. Under the deal, approved by the Electricity Authority, Meridian could require the smelter to cut demand by up to 50 megawatts when the electricity system was under stress, such as winter peak periods or during power generation or transmission issues.
NZAS chief executive Chris Blenkiron said the approval formalised an agreement struck earlier this year. “Simply put, this agreement means Aotearoa will likely need to burn less coal when a dry spell causes the hydro lakes to drop to low levels.” Barclay said the additional peak energy available was roughly equivalent to the power consumed by 50,000 average homes.
“The net result is likely to be a reduction in carbon emissions from burning less coal and, just as importantly, a reduction in the overall cost of the electricity system, which ultimately reduces costs to customers.”
The deal – first announced in April – will cover the remaining term of the supply contract between Meridian and the smelter, which runs until December next year. “As New Zealand works towards a more renewable electricity system, we need to think creatively about how we can manage winter demand and dry period energy needs,” Barclay said.
The Electricity Authority also agreed the smelter could on-sell any unused electricity to a third party.