Genesis Energy has reached an agreement with Contact, Meridian, and Mercury to create a coal reserve at Huntly Power Station.
The joint effort will secure up to 1.1 million tonnes of fuel to support electricity supply during peak strain. Last year’s dry winter and gas shortages led to power price spikes and supply concerns. The reserve is intended to avoid similar disruptions in future.
Fuel Stockpile to Support Grid Reliability and Peak Demand
Genesis and its partners plan to build a coal reserve of up to 600,000 tonnes, bringing Huntly’s total potential reserves to 1.1 million tonnes. The fuel source, largely from Indonesia, will supply the site’s coal and gas-fired Rankine units, the units can burn as much as 10,000 tonnes per day.
2024 Energy Supply Pressures Highlight System Vulnerabilities
The agreement follows a difficult winter in 2024, where energy supply faltered under a combination of weak renewable performance and inconsistent natural gas flow.
“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 Energy chief executive Mike Roan.
Dwindling hydro inflows and low wind generation compounded the situation, forcing emergency measures and driving wholesale prices to extreme levels.
Fuel Reserve Designed to Enhance Energy Security
The coal and potential biomass stockpile will serve as a backup to cover shortfalls in renewable generation. Genesis CEO Malcolm Johns said that without the deal, one of the Rankine units would have been shut down in early 2025.
“The agreements announced on Monday are essential to making that investment and ensuring a fuel reserve is in place for energy security, to keep this unit in service out to 2035 requires significant investment. ” Johns stated.
The Rankine units provide quick-start capability, making them a crucial failsafe during demand spikes or sudden dips in renewable output.
Energy Reserve Framework Includes Market Access and Compliance
The agreement, though brokered by the major generators, is not exclusive. Johns emphasised that participation was open across the electricity sector:
“[This] is open to all participants in the electricity market from gentailers to independent generators and retailers, and large industrial users.”
The group will seek Commerce Commission guidance to ensure the arrangement complies with competition law.
Government Backs Industry-Led Energy Resilience Measures
Minister of Energy Simon Watts backed the plan, framing it as a responsible response to energy volatility. “This agreement will provide a crucial buffer against future dry winters, helping maintain power supply and keeping energy costs stable for New Zealanders,” Watts said.