Getting power to the people: how electricity works in NZ
Flick the switch, and the lights turn on.
It takes less than half a second, but behind the scenes there’s a lot going on. So let’s dive into how electricity gets from A (the generation source) to B (your place).
- Generation: creating power.
- Transmission: also known as “the grid" - a pool of power.
- Distribution: delivering power to your place.
- Retail: selling power to the people.
Five power companies in New Zealand generate most of the country’s electricity (us included) alongside a few other small generators. The good news is, renewable generation sources (those that can naturally be replenished, like wind, water, sun and geothermal) have the biggest slice of the country’s generation pie: about 85%. But that still leaves around 15% generated by non-renewable sources like coal, oil and gas. Those can’t be naturally replenished, so when the earth’s supply is all used up, there’s no more where that came from. Plus, they harm the environment by emitting carbon.
Where does Meridian come into it? We’re New Zealand’s largest generator of energy from 100% renewable sources – wind, water and sun (through our wind farms, hydro stations and solar arrays). How that generation works is a story in itself. We'll save that for another day. But for now, what you need to know is that every Meridian customer is supporting renewable generation in New Zealand. We think that’s pretty awesome. Because there’s no place for oil, gas and coal in our future. It’s doing too much damage to our country and our planet.
All that power is then poured into the grid. We like to think of it as a pool full of electrons. But actually, it’s made up of the huge pylons and systems of lines you see running up and down the country. Plus, a couple of massive under water cables across the Cook Strait connecting the North and South islands. All these take the power from the generation sites (like hydro stations and wind farms) to substations, and then on to the distribution networks around the country. The grid system is run by Transpower.
Here’s the important part about those electrons in the grid: they're all created equal. That means that even though Meridian generates energy from 100% renewable sources, the energy you get to your home isn’t directly from us. It’s from the grid - a mix of energy generated from all the sources in New Zealand. That’s both renewable (the good stuff) and non-renewable (the dirty stuff). The same goes for every other power company and customer. But once again – by being a Meridian customer, you’re choosing to support renewable generation. Nice one.
That’s where the power lines and power poles running down your street come to the party. It takes the power from the grid (the pool of electrons) and shoots it through the power lines to your place. Local network companies look after those lines, making sure they’re safe and in working order.
So that’s the physical movement of energy from us to you. But what about selling power?
In New Zealand, there are five companies that are known as gentailers – because we both generate electricity and retail (sell) it to customers. That’s Meridian, Genesis, Mercury, Contact and Trustpower. There are also more than 40 other companies who sell power, but don’t generate it themselves.
How does that work? Electricity is traded through a wholesale spot market, which is managed by Transpower. Power companies like us then buy electricity from the market, and on-sell it to customers. Then, we’re back to where this story started: you turning on the light.
A fifty(ish) word summary:
- 85% of NZ's electricity is generated by renewable sources.
- Five main companies (including us) generate power. Forty plus companies sell it to customers.
- The grid is an invisible pool of electrons. What we see are the pylons and lines.
- We can’t ‘plug in’ to renewable energy, but...
- ...Meridian customers are supporting renewable energy generation in New Zealand. Nice one.