NZ energy companies strike agreement for Huntly Power Station
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The news: New Zealand's four largest electricity generators have signed an agreement to establish a strategic energy reserve at Huntly Power Station.
The numbers: Dual-listed Genesis Energy, Mercury NZ, Meridian Energy and Contact Energy expect the agreement to come into effect from 1 January, subject to a review by the Commerce Commission.
The power station, located at Raahui Pookeka Huntly, is New Zealand's largest power generation site. It features three Rankine units, each with a capacity of 240 megawatts (MW), able to run on gas and coal.
The agreement includes new 10-year "Huntly Firming Options", or HFOs, covering 50MW for Mercury, Meridian and Contact. It will also support Genesis' establishment of a solid fuel reserve of up to 600,000 tonnes for dry winters with low hydro inflows. This will initially be made up of coal, with Genesis "actively progressing" its investigation of biomass as a replacement fuel.
The context: The agreement comes after the four companies said in February they were exploring options to keep thermal units at Huntly Power Station operational for longer than planned, to support national energy security after the market experienced a "pinch point" on energy supply last winter.
What they said: "The country was hit hard last year by an unexpected and significant shortage of gas, and that problem is not going away any time soon," said Meridian CEO Mike Roan.
"The strategic energy reserve gives us a further option and shows the value of having large players who are able to work together in the national interest."
