Tiwai Point aluminium smelter will reduce its usage by a total of 185 megawatts, representing about four percent of the country's energy use. Photo: Getty Images
The decision comes as Meridian Energy grapples with historically low hydro lake levels.
Meridian Energy has invoked a provision of its supply contract requiring the smelter to cut power usage and with it production, after requesting a 100 megawatt reduction last week.
New Zealand aluminium smelter chief executive Chris Blenkiron said it would reduce its usage by a total of 185 megawatts, representing about four percent of the country's energy use.
"I want to recognise the significant work ahead for the team at Tiwai who will now be asked to commence stopping and restarting one third of our operation, until April next year," Blenkiron said.
"While winding back our operations is complex, the team at Tiwai understand the importance of playing our part as part of the wider electricity system to ease the stress the system is now under, from tight hydro and gas supplies."
Meridian Energy provides about three quarters of the smelter's energy.
Wholesale general manager Chris Ewers said it issued the notice to help manage South Island hydro storage levels after recent low rainfall levels led to below average in-flows into the hydro lakes.
Meridian Energy can ask the smelter to ramp down its usage as part of a 20-year deal with the smelter that was signed in May.
"We said as part of that discussion all the way through the last two years that in order for them to have a long-term future in New Zealand, they need to be a bit more sympathetic to the needs of the electricity system," Ewers said.
"So as the electricity system has a bit of a challenge, they come and support it through demand response and that's exactly what we're seeing."
The demand response was one of the options Meridian Energy had to tide itself over until in-flows picked up in spring, and they were also investing in other renenwables, he said.
"We're a long way through winter, and hydro lake inflows tend to pick up from September through changing weather patterns and increased rainfall, which provide a good dose of hydro lake inflows."
Blenkiron said initiating the demand response validated the hard work that went into negotiating the agreement.
"It has given the system some of the long called for flexibility New Zealand needs to respond to the energy challenges we face," he said.
