Government welcomes smelter agreement

The signing of individual 20-year bilateral long-term contracts between the New Zealand Aluminium Smelter (NZAS), Meridian Energy, Contact Energy, and Mercury NZ will provide certainty for the electricity market and will be a welcome relief for the Southland economy, Energy Minister Simeon Brown says.

“The Tiwai Smelter is New Zealand’s largest electricity user. Their signing of these long-term contracts with Meridian Energy, Contact Energy, and Mercury NZ will provide much needed certainty for electricity generators. Demand for electricity is going to remain high, and we expect that this news will lead to more electricity generation being brought online,” Mr Brown says.

“One of the conditions of the agreement between the electricity generators and NZAS is to provide up to 185MW of demand response. This will help ensure there is electricity available for households when we have a dry year and electricity generation is tight.

“As our electricity system becomes more based upon renewables, intermittency of generation becomes a larger problem. This commitment from NZAS will help ensure the grid can continue to deliver electricity to Kiwis during times of peak demand.

“I am pleased that a deal has been reached between NZAS, Meridian Energy, Contact Energy, and Mercury NZ. This provides much needed certainty not only for the smelter’s workers and their families, but also for all of the businesses and jobs indirectly supported by the smelter and its operations. It will be welcome news for the people of Southland and provide confidence for their regional economy,” Mr Brown says.