THE PRESS THURSDAY, APRIL 30, 1981. Possible power shortages

Press, 30 April 1981, Page 16

THE PRESS THURSDAY, APRIL 30, 1981. Possible power shortages

As New Zealand enters winter the South Island’s hydro storage lakes are comfortably full and talk of power' cuts might seem out of place. In a recent issue of the Electricity Supply Authorities Association’s magazine the opinion was expressed that power shortages are probable, almost certain, not this winter but in five or six years time. This warning was prompted by the concern of some supply authorities about the Government’s decision to postpone local hydro schemes until the environmental and recreational losses which may result from such schemes have been properly assessed. If there are power shortages in the late 1980 s, it will hot be because the construction of small hydro stations has been delayed or even cancelled. Small power schemes were expected to provide about 300 GWh a year by 1985. The capacity of the country’s existing hydro plant is about 19,000 GWh a year. The small power schemes would make some, but very little, difference if shortages occur.

Nevertheless, the possibilities suggested in the magazine, that power cuts might be necessary in the second half of this decade, cannot be entirely ruled out. This is a marked change from the expectation two years ago when a large surplus of electricity in the later 1980 s was forecast — the result, largely, of a dramatic downturn in domestic demand for power and of the slowing down of the economy. What has turned this expected surplus into a possible deficit has been the Government’s decision to allocate surplus power to large, electricity-intensive industries.

Once the Government had allocated all, and possibly more than, the expected surplus of power, the 1980 Energy Plan provided for more generating capacity to be installed sooner than was being planned the year before, but it allowed that, even so, shortages of electricity might arise any time between 1985 and 1993 but particularly between 1986 and 1989. Power will be in short supply only if certain circumstances coincide: dry years, greater economic growth than is anticipated by the power planners, and larger-than-expected demands from new, electricity-intensive industries.

Margins have long been written into the country’s power plans to ensure that there is sufficient power, even if there are such unfavourable circumstances as a run jf dry years, unexpectedly high demand, oreakdowns in generating plant or delays in commissioning new plant. What is inclear at the moment is how thin these margins are for the second half of the 1980 s. The response of the Minister of Energy, Mr Birch, to the forecast that lower cuts would probably be necessary in :ive or six years time was that the jovernment has already acted to ensure ;hat the margins will be adequate should ;he country be better off, should the weather be dry, or should the new ndustries consume more power than ?xpected. Thus the Government is ;onsidering refurbishing rather than shutting down the Meremere station, stockpiling coal against a dry year and :ommissioning the Marsden B station. These steps, and others, may be enough o ward off any possible shortages; but stepping up production of coal to fuel

thermal power stations cannot be done overnight and using greater quantities of either gas or oil to meet any deficiency in the power generated in hydro stations or coal-fired stations could cause severe economic difficulties or disruptions. The measures that Mr Birch has indicated the Government is considering to avoid any shortages of electricity certainly do not remove all risks.

The Government’s decision to use the expected surplus of power for new industries was sound in principle, and is one way of applying New Zealand’s abundant energy resources to exporting — in effect by exporting energy as others do. Continuing uncertainties about the adequacy of power supplies in the later 1980 s must raise questions about whether decisions about particular electricityintensive industries may not have been made too hastily. It is still not clear that the power-planning implications of new demands arising from electricity-intensive industries were properly considered before large blocks of power were allocated to them. Will the new industrial loads impose such a burden on the country’s power system that the margins written into the energy plan, even when widened by such steps as the Minister has noted, are no longer adequate?

An answer to this question is desirable, even if one concedes that some risks and uncertainties are inevitable in any planning on this scale and over such a long period in which events can take unpredictable turns. When power planners overestimated, by what was really a fairly narrow margin, the demand for electricity, they faced much criticism. The planners, who are in effect all the supply authorities in the country amking a guess about the future, were given little quarter by some people who were wise after the event. The same will undoubtedly apply if the planners under estimate demand or provide for insufficient latitude in supply when events conspire against them. Although the degree of error may be but a small percentage of the total demand or supply, it may represent many millions of dollars, spent or temporarily saved, in generating plant. This, in turn, affects Government expenditure and the disposition of resources for investment generally.

Waiting for the perfect answer, of course, means waiting forever, making no firm decisions on energy or industries, and permitting the final cost to be higher and permanently built into power charges and the overheads of production. Some compromise between taking risks and certainty of supply is inevitable unless the country expects a programme of development to be very cautious or to stand still.

For all that, last year’s Energy Plan spelled out clearly that this year’s forecasts of demand for electricity may have to be revised upwards when the full extent of the requirements of planned industrial developments are known. If there are to be shortages of power, or even a risk of them, because of the demand from the proposed electricity-intensive industries, the public is entitled to be properly forewarned and to have all the information it needs to judge whether the reasons for shortages of power, should they occur, are good ones.