Keeping an eagle eye on security of supply

The latest quarterly Security of Supply outlook from system operator Transpower highlights some of the challenges the system faces as we head into winter. 

The assessment of the security of supply outlook reflects a decline in hydro storage, the need for industry to focus on fuel storage and plant availability, new generation of about 250MW coming online and the need for investment in flexible resources.

The system operator has a role to provide information and short- to medium-term forecasting on security of supply while we take a longer-term view. Improving security of supply is a critical priority and we have been progressing policy initiatives in support of this.

We want to ensure market settings strike a balance between providing the system operator with sufficient flexibility to manage power system security, and promoting appropriate market signals in a way that incentivises reliable supply for consumers.

We’ve used our information gathering powers to request detail from generators on their contingency arrangements for the coming winter to better understand the risk mitigation measures that are in place.

We’ve also enhanced risk management for wholesale electricity buyers through development and trading of a standardised super-peak hedge contract to help smooth exposure to price volatility.

Late last year we fast-tracked amendments to the Code to strengthen security of supply by improving the outage coordination rules.

We are currently consulting on proposals to improve the information on thermal fuels to better inform us and market participants about their availability, update the stress test regime to reduce risk to consumers and security of supply and extend trader default provisions to all retailers to protect customers.

We are also supporting and encouraging more investment in new generation and will soon be publishing a visual tool to provide detailed and up-to-date information about new generation projects that are on the cards.

As our electricity system becomes more reliant on intermittent, renewable sources of electricity and demand increases, the industry must pull together to respond to the challenge of ensuring that security of supply continues to improve.