Tiwai Point Aluminium Smelter Reduces Power Usage Amid New Zealand Energy Crunch
The Tiwai Point aluminium smelter has agreed to further cut its electricity consumption by an additional 20 megawatts (MW) as New Zealand grapples with an ongoing energy shortage. This reduction is on top of the 185MW demand cut the smelter recently implemented at the request of Meridian Energy, highlighting the severity of the current energy situation in the country.
The new 20MW reduction will be phased over an estimated five-week period, including ramping down and then back up. This agreement is separate from the existing demand response agreements with Meridian Energy and Contact Energy, and it underscores the urgent need to ensure security of electricity supply in New Zealand. The smelter will be compensated for the power it does not use under this agreement.
New Zealand's energy sector has been under pressure due to low hydro lake levels combined with a depleted gas supply, leading to unprecedentedly high wholesale electricity prices. While prices have slightly eased following Methanex's decision to shutter operations and sell its gas to Contact and Genesis for thermal generation, the energy crunch continues to impact businesses.
Simon King, New Zealand Aluminium Smelters’ (NZAS) external affairs director, acknowledged the difficult decision to reduce aluminium production but emphasized the importance of supporting the national grid. King noted that the initial 185MW reduction, achieved nine days ahead of schedule, has already had a positive impact, and the additional 20MW reduction will further assist in stabilizing the power grid.
This reduction equates to the electricity needed to power all the homes in Napier, and while it will slightly impact aluminium production, it is seen as a necessary measure in the current energy climate. The smelter is currently operating with two potlines fully operational and one out of circuit, reducing production by approximately one-third.
Meridian Energy’s chief executive Neal Barclay expressed gratitude for the smelter’s support, highlighting the importance of the demand response agreement in providing relief during this period of high spot prices and tight electricity supply.
NZAS, which owns and operates the Tiwai smelter, is currently 79.56% owned by Rio Tinto and 20.64% by Sumitomo Chemical Company. Rio Tinto is set to fully acquire the smelter after completing an agreement to purchase Sumitomo’s stake.
