Investigation into electricity supply interruptions of 9 August 2021

The investigation was headed by former Cabinet Minister Pete Hodgson and assisted by specialist technical advisor Erik Westergaard with secretariat support from the Ministry of Business, Innovation and Employment.

The investigation was tasked with understanding the causes of power supply interruptions on the evening of 9 August 2021, and recommending improvements to ensure similar circumstances are better managed in future.

The investigation team carried out more than 25 interviews with a range of market participants and key stakeholders including generator retailers, major users, and electricity distribution businesses.

Its key findings are:

• Turning off any householder’s electricity, apart from their hot water cylinder, simply need not have happened. The demand side had enough discretionary load to maintain the system, but the electricity system operator had inadequate visibility or up to date awareness of that resource.
• The system operator staff acted capably and professionally during a challenging evening.
• Forecast wholesale electricity prices seemed to provide insufficient incentive to restart Genesis’ third Rankine at Huntly or Contact’s Taranaki Combined Cycle plant.
• Electricity distribution businesses were for the most part very responsive and engaged throughout the evening. Generators maximised their output where practicable – there was nothing exceptional about the planned or unplanned outages.
• The electricity system’s arrangements for generation shortfalls that may last for part of a day (or multi-hour) are very much less mature than arrangements for instantaneous and short outages.
• The market requires much greater demand side participation. This will be essential if goals of greater electrification and decarbonisation are to be achieved.
• Ripple (hot water) control and replacement technologies are envisaged as being at the heart of a transition to a richer demand side participation in the market over the next decade
• Transpower has room for improvement in the nature and standard of its communications.
• The likely length of the outage, which is the most useful piece of information for customers, especially if they are medically dependent on electricity, was mostly unavailable on the night of 9 August.
• The Electricity Authority must review and strengthen its oversight of the system operator.

It makes 18 recommendations covering 5 key themes:

• Performance of the system and system operator - two recommendations relating to ensuring discretionary load that is available (e.g. hot water demand that can be interrupted through ripple control without affecting the quality of service) is exhausted before households are disconnected, and the Electricity Authority scrutinising its relationship with Transpower.
• Wholesale market and supply side - two recommendations relating to improving wind generation forecasting and exploring afresh a market for cap products (a financial product to manage wholesale price risk, particularly at peak times, and assist parties to make efficient investment decisions).
• Demand response and demand side participation - four recommendations relating to demand side response by major users, visibility of discretionary load availability, and the development of a new product for managing multi-hour generation shortfalls.
• Information and communications - nine recommendations relating to improving information provision and communications in a grid emergency, including establishing best practice arrangements for medically dependent consumers, and undertaking pan-industry contingency exercises.
• Looking ahead - one recommendation relating to demonstrating leadership in standard setting where it is in the public interest to harness emerging demand side opportunities.

Minister’s press release announcing investigation(external link) — Beehive.govt.nz