Electricity’s iron law

Matt Burgess
Insights Newsletter
20 August, 2021

Events have rather overtaken last week’s blackout. The outage on the evening of 9 August left 35,000 households in the dark for up to two hours on the coldest night of the year. 

This week we published a paper on the blackout by Carl Hansen, the former Chief Executive of the Electricity Authority from 2010 to 2018. 

Hansen’s paper is full of insights. He steps through the blackout to identify the crucial moment which led to the outage. He explains how the electricity system deals with shortages. And he shows who is responsible for what, when outages occur. 

Hansen’s main message is that officials at the Electricity Authority must be allowed to do their job and investigate the outage. The facts must be established before any response from the government. 

The blackout was a stern reminder of electricity’s iron law: the lights must stay on. 

This law is one reason why most government interventions in electricity end up doing the opposite of what was intended. 

Take the offshore oil and gas exploration ban, for example. That might seem like a good way to reduce emissions, including from electricity generation. Until the next dry year, that is, when we find ourselves importing coal with twice the emissions per kilowatt of gas to keep the lights on. 

Last week’s blackout was probably not the direct result of any government policy. But policies like 100% renewable electricity and the gas exploration ban will eventually lead to more blackouts. 

In 2019, the government’s Interim Climate Change Committee estimated 100% renewables could produce 100 times more blackouts than business as usual. The policy will also raise power prices and effectively increase emissions. 

The government responded to this devastating critique from its own experts the only way it could. It brought forward the start date for 100% renewables from 2035 to 2030. 

Despite the blackout, New Zealand has a world-class electricity system. It is more green and more affordable than most other systems, and about as reliable. 

Blackouts are shocking because they have become so rare, a remarkable feat for a system which requires supply and demand to balance every second of every day. In an isolated country which cannot import electricity from across the border to secure supply. In a system which is more than 80% renewable. 

Our electricity system almost defies gravity, it is so good. Which makes last week’s blackout a momentary wobble on a magic carpet. Tread carefully, Minister. 

Read Carl Hansen's report "What happened on Black Monday ? here.

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