John Carnegie: Energy Resources Aotearoa CEO on Tiwai Point scaling back its electricity usage to meet demands

The confirmation Tiwai Point is going to reduce its electricity usage next month isn't proving to be great news for everyone.  

The aluminium smelter's usage agreements means Meridian Energy can request it scale back production to meet electricity demands.  

But Energy Resources Aotearoa Chief Executive John Carnegie told Ryan Bridge production shouldn't have to be reduced, and it's a sign the gas market needs to be revitalised. 

He says the country isn't in great shape, adding with declining gas reserves comes the threat of black outs. 

LISTEN ABOVE 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Of New Zealand Aluminium Smelters is going to have to
reduce its electricity usage at Ty Point by a total
of one hundred megawatts from early August. If you want
to know what one hundred megawatts means, it's about half
of the energy that's needed to Powerhawks Bay at this
time of year. The generative Meridian can request that they
ramp down their energy use to meet generation demands following

(00:23):
a new supply agreement that they started this month. Meridian
says the production, sorry, the reduction and power use will
help them manage hydro levels in the South Island energy
resources altered. Our chief executive John Carnegie's with me this morning, John,
Good morning to you. They seem to you, good morning,
good morning. Ty seems to be sort of okay with this.

(00:43):
Is there a problem?

Speaker 2 (00:46):
There's this, ye, a wide problem with the both the
gas and the electricity markets. And unfortunately none of this
is some is a great surprise that's been in the
baking for half ausand odd years.

Speaker 1 (01:01):
Because obviously in winter there's a there's greater demand and
there's also a dip in the in the hydro lake levels,
particularly in the South Island. Most of it is what
is what is your solution to this problem?

Speaker 2 (01:14):
Oh well, look, I think predominantly actually we need to
revitalize the New Zealand gas markets because as as you said,
we've we've got a major electricity user having to turn
down production. So that's that's a loss of economic output

(01:36):
and that's and that's not a good thing. That's not
a good way to run your energy system. But we're
also experiencing the same with major guess users methanol producer
and others fertilizer and steelmakers are also burning down their production.
Make sure that the declining as they've got declining gas reserves,

(01:59):
declining guests reserves can be used in the electricity actually
prop up the electricity system. So you know, we're not
we're not we're not in a great we're not in
a great shape. And of course with the decline gases
now we have a threat of blackouts. We're struggling to

(02:20):
get the lights on and we're getting constant threat of blackouts.
We're actually because of gas again, we're not building the
gas fired peekers that the electricity system needs. And a
lot of that, of course comes back to previous government's
policy settings.

Speaker 1 (02:36):
So that's the future exploration of oil and gas. I mean,
so thats been reversed. Is that basically going to fix
the problem, or is there actually more that you need
to be done in terms of legislation.

Speaker 2 (02:49):
Oh well, look, I wish it was as easy as that,
because of course new gas exploration and appraisal is a
long term while a long term misue. And I mean,
of course, we do have our incumbent producers, you know,
who are in situ, and once the oil and gas
band has been removed from the legislation, because it's still

(03:11):
in place, they are more likely to be the most
likely to be the ones who can look at neighboring
fields to try and quickly ramp up production. But I
guess the point is Ryan, you know, if you can't
get extra gas elthily to continue to lose industrial production,
and we have the constant that are blackouts, and the

(03:33):
solutions are, unfortunately that we continue to import coal be
used in our electricity system because it's such a vital
balancing fuel at the moment in our electricity system, or
we import gas when new renewables are fantastic, we need
more of them, but we're always going to need gas

(03:54):
to back them up and make sure that the electricity
market functions properly. I mean the fact that Rio, the
aluminium smelter and Meridian have struck it there as fantastic.
But again it comes back to it's not a great way.
Bending down industrial production is not a great way to

(04:16):
run an your energy system now, and.

Speaker 1 (04:18):
As you say, it happens every winter, doesn't it that
they're having to do this, John, Thank you very much
for your time. John Carnegie with us this morning, chief
executive at Energy Resources ALTEDOA. For more from News Talks
b listen live on air or online, and keep our
shows with you wherever you go with our podcasts on
iHeartRadio