The Tiwai Point aluminium smelter in Southland. Photo: ekays/123RF
The Tiwai Point aluminium smelter has agreed to further reduce its energy use to help ease the country's supply constraints.
The agreement with Meridian Energy would see the smelter reduce electricity consumption by another 20 megawatts (MW), with the energy made available to the national grid over a five-week period.
The deal was separate to earlier demand response agreements signed with Meridian and Contact Energy.
New Zealand Aluminium Smelter (NZAS), said it had taken off 185 MW of usage already and the additional 20 MW would help reduce pressure on the grid.
Twenty MW would be enough to power all the homes in the city of Napier, NZAS said.
New Zealand's electricity supply has come under immense strain in recent months as hydro lake levels drop because of low rainfall, and due to lean gas reserves.
It has caused wholesale power prices to surge, leading to some large energy users shutting operations and has also caused an electricity retailer to default on its payments to a generation company.
Earlier this month, New Zealand's biggest gas user, Methanex, announced a temporary shutdown of operations in a deal with Contact and Genesis Energy, to add extra gas supply to the system.
NZAS said its latest agreement with Meridian highlighted the "severity" of New Zealand's energy situation.
"While the smelter has had to make a difficult decision to reduce aluminium production, we are pleased to be able to offer this additional support for New Zealand's power grid at this time of energy constraint," NZAS spokesperson Simon King said.
"As a large electricity user, we recognise the responsibility we have in contributing towards keeping the lights on across New Zealand when needed," he said.