Category: Market Update

Market Update November 2024

December 10, 2024 by Briar

The Wholesale Electricity Market

Spot prices in the wholesale electricity market for November fell even further from the low levels seen the last two months. Average spot prices for the month ranged from $24 in the lower South Island (down from $50 in October), up to $35 in the upper North Island (down from $60).

The following chart shows average weekly spot prices over the last 2 years. The extreme highs and lows over the last few months can be clearly seen.

Electricity Demand

Electricity demand in November continued the recent low trend at the start of the month but increased later to be close to average in recent years later in the month.

Electricity Generation Mix

Through November, increased hydro generation for much of the month meant that thermal generation backed off even further to be close to minimal levels for most of the month.

HVDC Transfer

Power transfers on the HVDC link connecting the North and South Islands are important both in showing relative hydro positions and the reliance on thermal power to meet demand. High northward flow tends to indicate a good SI hydro position, whereas the reverse indicates a heavy reliance on thermal power to make up for hydro shortages.

With high South Island hydro storage levels, November saw continued strong northward transfers and very little southward transfer.

The Electricity Futures Market

The Futures Market provides an indication of where market participants see the spot market moving in the future. They are based on actual trades between participants looking to hedge their positions (as both buyers and sellers) into the future against potential spot market volatility. They are also a useful proxy for the direction of retail contracts.

The following graph shows Futures pricing for CY 2025, 2026, 2027 and 2028 at Otahuhu (Auckland) for the last 2 years.

Note that $100/MWh equates to 10c/kWh.

Forward prices fell again for 2025 but increased in all other years. CAL 2025 ended the month at $167.5 – down a further 9% from last month. CY 2026 price was up 2% at $181.5 while CY 2027 also closed up 2% at $174/MWh. CY 2028 finished the month up 3% at $173/MWh.

Known new generation projects are shown below (additions / removals / changes highlighted in bold).

Hydro Storage

Inflows in the South Island were again well above average in November. The North Island had a lower than average inflows for the month.

These continuing high inflows resulted in energy storage levels climbing throughout November reaching 3,891GWh (88% full) at the end of the month – an increase of 480GWh over the month. Storage is now well above the average level seen at this time of year. The following chart shows the latest breakdown of storage across the main hydro catchments.

Security of supply risks decreased further through November with storage levels increasing as shown below.

Snowpack

Snowpack is an important way that hydro energy is stored over the winter months and released as hydro inflows in the spring. The following graph shows that the snowpack in the important Waitaki catchment decreased through November, however remains close to the mean levels seen in the last 30 years for this time of year.

Climate outlook overview (from the MetService)

Climate drivers — An active Southern Ocean brought strongly negative (active) Southern Annular Mode (SAM) last month, driving frequent frontal passages across West Coast, Fiordland and Southland, and this uptick is likely to persist into the first week of December.

A passage of Madden-Julian Oscillation (MJO) is possible across the Southwest Pacific around mid-December, with an increased risk for tropical or subtropical cyclones north of the country. These bring the potential for significant rainfall events across the North Island if they spread southwards towards New Zealand, and with the tropical cyclone season now in effect, this will be an event to watch.

El Nino Southern Oscillation (ENSO) remains neutral, and while there is about a 1-in-3 chance for a short-lived and weak event to develop later this month into early 2025, this risk has been steadily decreasing. However, a negative Indian Ocean Dipole (IOD) event persists through much of December, which in itself can mimic La Nina conditions and heighten the risk for any northerly low to affect northern New Zealand. While the signals are not fully in alignment for development north of the country, the risk is picked to increase from about mid-month

December 2024 Outlook — Summer begins on a warm note for eastern regions across the country, with cities from Gisborne down to Oamaru expected to reach into the upper 20s to low 30s over the next few days as gusty northwesterly winds spread northwards. A few rainy days from Westland to Southland, tipping rainfall above average there, while the rest of New Zealand trends much drier under prevailing high pressure. Another weather system brings a short burst of rain across southern parts of the country to end the week.

Next week sees an unsettled start with cooler temperatures over parts of the South Island, but conditions improve markedly by mid-week as another ridge slides across New Zealand. An overall dry week again for central and northern parts of the country, trending wetter about the West Coast. A windy westerly flow is likely to accompany these weather systems which could again push temperatures near or above 30C in downwind regions. It will become important to watch for any low development north of the country later in the week with the MJO passage, and any system that develops and approaches the country could bring a risk of boom-or-bust rain event into week three, along with warmer and more humid weather.

The third week of December sees the trend for a wetter west coast of the South Island persist, while high pressure moves east of the country. This may allow a progression of fronts to cross over the country with near-average rainfall elsewhere. Temperatures are likely to trend slightly warmer than average, but a northerly low could tip the scale much warmer.

The final week of the year brings little change to the weather pattern, with hints of more settled weather possible as we head into the new year. While weather models continue picking overall dry conditions across eastern South Island and most of the North Island, the start of the tropical cyclone season means conditions north of New Zealand will become increasingly favourable for low development, and it takes only one northerly low to bring a notable rain event and push totals towards the wetter end of the scale.

The Wholesale Gas Market

Spot gas prices in November continued at the very low levels seen over the last couple of months. Prices for the month averaged $8.65/GJ – a 5% increase compared to October. Average prices are now 36% lower than they were at the same time last year.

On the supply side Maui production fell through the month from 65TJ/day at the start of the month down to 55TJ/day by the end of the month. Pohokura maintained output, averaging around 30TJ/day. Kupe also held its output at around 42TJ/day. McKee / Mangahewa decreased its production slightly averaging 64TJ/day.

The following graph shows production levels from major fields over the last 6 years.

After nearly 2.5 months shutdown Methanex Motunui came back, as planned, at the very end of October. Through much of November Methanex used close to 100TJ/day. Huntly usage fell away through the month averaging 13TJ/day, while TCC remained idle for the month. There is talk that Genesis has swopped some contracted gas with Methanex, “banking” some gas for next winter.

The following graph shows trends in the major gas users over the last 6 years.

Gas storage is becoming increasingly important as falling production coincides with more variable demand particularly from gas fired electricity generation. The following chart shows how storage at Ahuroa has increased over the last few months. It is now at the highest level it has been at this time of year over the last few years.

Internationally, LNG netback prices ended the month at $17.86/GJ – up 8% from last month. Forecast average price for 2024 was flat at $15.09. Forecast prices for 2025 were up 11% at $19.35/GJ. (Note that netback prices are indicative of international prices – they are produced by the ACCC and quoted in Australian dollars. They are net of the estimated costs to convert from pipeline gas in Australia to LNG, hence the term “netback”)

New Zealand does not (yet) have an LNG export/import market, so our domestic prices are not directly linked to global prices. With recent gas supply issues, the Government is now talking about the possibility of facilitating the building of an LNG import facility.

LPG is an important fuel for many large energy users, particularly in areas where reticulated natural gas is not available. The contract price of LPG is typically set by international benchmarks such as the Saudi Aramco LPG – normally quoted in US$ per metric tonne.

The following graph shows the Saudi Aramco LPG pricing for the last 3.5 years as well as forecast pricing for the year ahead. Futures pricing was flat over the last month.

The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. The exchange rate fell through the month ending at 0.58. This would tend to push up LPG prices when quoted in NZD.

The Coal Market

The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. Prices in November fell, ending the month at US$138/T – a 3% decrease on the October close. These prices are finally returning to levels close to what we expect to see as shown in the following graph of prices over the last 10 years.

Like gas, the price of coal can flow through and have an impact on the electricity market. In October Genesis reported that it planned to import at least 270,000 tonnes of coal by March to help secure electricity supplies going into next winter. It had previously aimed to stockpile 350,000 tonnes, but now says it wants to hold about 500,000 tonnes to cover peak autumn and winter electricity demand in 2025. Genesis says that 500,000 tonnes is the equivalent of about 1,000GWh of electricity storage or 22% of maximum hydro storage in NZ.

Carbon Pricing

NZ has had an Emissions Trading Scheme (ETS) in place since 2008. It has been subsequently reviewed by several governments and is now an “uncapped” price scheme closely linked to international schemes. However, there are “upper and lower guard-rails” set up to prevent wild swings in carbon price that act as minimum and maximum prices. These increased in December 2023 to $173 and $64 respectively. Carbon prices increased 1% in November to $64.

As the carbon price rises, the cost of coal, gas or other fossil fuels used in process heat applications will naturally also rise. Electricity prices are also affected by a rising carbon price. Electricity prices are set by the marginal producing unit – in NZ this is currently typically coal or gas or hydro generators, with the latter valuing the cost of its water against the former. An increase in carbon price can lead to an increase in electricity prices in the short to medium term (as the marginal units set the price). A carbon price of $50/t is estimated to currently add about $25/MWh (or ~2.5c/kWh) to electricity prices. In the long term the impact should reduce as money is invested in more low-cost renewables and there is less reliance on gas and coal fired generation.

EU Carbon Permits increased in November to 68.4 Euro/tonne – up 2%.

About this Report:

This energy market summary report provides information on wholesale price trends within the NZ Electricity Market.
Please note that all electricity prices are presented as a $ per MWh price and all carbon prices as a $ per unit price.
All spot prices are published by the Electricity Authority. Futures contract prices are sourced from ASX.

Further information can be found at the locations noted below.

Transpower publishes a range of detailed information which can be found here: https://www.transpower.co.nz/power-system-live-data

The Electricity Authority publishes a range of detailed information which can be found here: https://www.emi.ea.govt.nz/

Weather and Climate data – The MetService publishes a range of weather-related information which can be found here: https://www.metservice.com/

Disclaimer: This document has been prepared for information and explanatory purposes only and is not intended to be relied upon by any person. This document does not form part of any existing or future contract or agreement between us. We make no representation, assurance, or guarantee as to the accuracy of the information provided. To the maximum extent permitted by law, none of Smart Power Ltd, its related companies, directors, employees or agents accepts any liability for any loss arising from the use of this document or its contents or otherwise arising out or, or in connection with it. You must not provide this document or any information contained in it to any third party without our prior consent.

About Smart Power:

Smart Power is a full-service Energy Management consultancy. Apart from Energy Procurement, Smart Power can also provide:

Technical advice on how to reduce your energy use & emissions

Sustainability Reporting

Invoice Management Services

We also offer boutique energy and water billing services for landlords/property developers.

Contact us here or call one of our offices to talk to our experienced staff about how we can assist you with achieving your energy goals.

Market Update October 2024

November 6, 2024 by Briar

The Wholesale Electricity Market

Spot prices in the wholesale electricity market for October continued at the much lower levels seen last month. Average spot prices for the month ranged from $50 in the lower South Island (down from $69 in September), up to $60 in the upper North Island (down from $80).

The following chart shows average weekly spot prices over the last 2 years. The extreme highs and lows over the last few months can be clearly seen.

Electricity Demand

Electricity demand through October was low compared to the last few years with mild spring weather in most parts of the country.

Electricity Generation Mix

Through October, increased hydro generation meant that thermal generation could largely remain backed off.

HVDC Transfer

With plenty of uncontrolled inflows and increasing hydro storage levels, October saw continued strong northward transfers and very little southward transfer.

The Electricity Futures Market

The following graph shows Futures pricing for CY 2025, 2026, 2027 and 2028 at Otahuhu (Auckland) for the last 2 years.

Note that $100/MWh equates to 10c/kWh.

Forward prices fell steeply for 2025 but increased in all other years. CAL 2025 ended the month at $184.5 – down 16%. CY 2026 price was up 6% at $178 while CY 2027 closed up 4% at $170/MWh. CY 2028 recently started being traded and is currently at $167.5/MWh.

In late October Contact hinted that TCC may remain operating through next year to support NZ’s security of supply, though it is reliant on “materially more gas being available than is currently contracted”. TCC was due to be decommissioned at the end of this year.

Known new generation projects are shown below (additions / removals / changes highlighted in bold).

Hydro Storage

Inflows in the South Island were again well above average in October. The North Island had a little more than average inflows for the month.

These continuing high inflows resulted in energy storage levels climbing throughout October reaching 3,411GWh (77% full) at the end of the month – an increase of 529GWh over the month. Storage is now well above the average level seen at this time of year. The following chart shows the latest breakdown of storage across the main hydro catchments.

Security of supply risks decreased throughout October with storage levels increasing and Transpower making a downward adjustment in the risk curves for 2025 as shown below. This was potentially due, at least in part, to the news about TCC being available for longer.

Snowpack

Snowpack is an important way that hydro energy is stored over the winter months and released as hydro inflows in the spring. The following graph shows that the snowpack in the important Waitaki catchment decreased through most of October, however remains close to the 75th percentile levels seen in the last 30 years for this time of year.

Climate outlook overview (from the MetService)

Climate drivers — New Zealand weather during most of November will be dictated by the usual short-term climate drivers, with the Southern Annular Mode (SAM) coming out of a prolonged negative (active) phase while the Tasman Sea Index (TSI) remains largely positive. This suggests that most fronts originating from the Southern Ocean should weaken as they spread further north, and more frequent high pressure systems are likely.

El Niño Southern Oscillation (ENSO) remains neutral, and while a weak La Niña may still develop over the summer, this risk has decreased slightly. However, there is now higher confidence that a negative Indian Ocean Dipole (IOD) event develops this month, which favours a more active north Tasman Sea and in turn more frequent northerly rain events for New Zealand. This is more likely towards the end of November into the start of summer, when another pulse of Madden-Julian Oscillation (MJO) moves into the Southwest Pacific.

Both the negative IOD event and MJO passage later in the month could enhance the risk for moisture-laden air masses to spread northerly rain across the top half of New Zealand. In addition, the tropical cyclone season has now begun, so any system developing north of the country may have the conditions necessary for tropical or subtropical weather systems to develop. Any northerly low in this weather setup has the potential for bringing a ‘boom-or-bust’ rain event to the country, particularly the North Island, so keep an eye to the north.

November 2024 Outlook — The start of November sees a few fronts moving onto the lower South Island while high pressure nestles over the North Island, and a short cold snap with morning frosts is possible across southern regions after frontal passages over the weekend. A warmer northerly flow then brings above normal temperatures to most of the country for the remainder of the week, with a drier weather pattern across central and northern New Zealand, while southern regions experience a slightly wetter week.

The second week of the month trends closer to average for rainfall across the board, with passing fronts followed by mobile ridges of high pressure. Temperatures become more volatile during this period, with short bouts of morning frosts intermixed with warming ridges, and the weekends cooler than average.

A solid high-pressure anomaly moves over the country from about mid-month, with many regions experiencing extended spells of fine weather. The strongest dry signal lies across the southern South Island, which also coincides with the warmest temperature pattern.

High pressure weakens and spreads eastwards towards the end of November and corresponds with a potentially more active Southwest Pacific and North Tasman Sea. While weather models are picking generally dry conditions to persist, it will become important to keep your eyes to any system approaching from the north, which have the potential to bring a ‘boom or bust’ event. It only takes one northerly rainmaker to skew rainfall totals wetter, and we can’t forget that tropical cyclone season has just begun.

The Wholesale Gas Market

Spot gas prices in October continued at the very low levels seen in September. Prices for the month averaged $8.26/GJ – a 7% decrease compared to September. Average prices are now 22% lower than they were at the same time last year.

On the supply side Maui production fell through the month from 70TJ/day down to close to 60TJ/day at the end of the month. Pohokura also dropped output, averaging around 29TJ/day. Kupe decreased output from around 45TJ/day down to 40TJ/day at the end of the month. Bucking the trend, McKee / Mangahewa increased its production slightly at 66TJ/day.

The following graph shows production levels from major fields over the last 6 years.

After nearly 2.5 months shutdown Methanex Motunui came back, as planned, at the very end of October. On the 31^st October it used 51TJ of gas – the same level it was using just before being shut down. Huntly usage was down over the month at close to 55TJ/day, while TCC remained idle for the month.

The following graph shows trends in the major gas users over the last 6 years.

Gas storage is becoming increasingly important as falling production coincides with more variable demand, particularly from gas fired electricity generation. The following chart shows how storage at Ahuroa fell over the last 18 months, but more recently increased with Methanex shut down and increased hydro inflows limiting the need for thermal generation.

Internationally, LNG netback prices ended the month at $16.49/GJ – down 5% from last month. Forecast prices for 2024 were flat at $15.08. Forecast prices for 2025 were up 4% at $17.42/GJ. (Note that netback prices are indicative of international prices – they are produced by the ACCC and quoted in Australian dollars. They are net of the estimated costs to convert from pipeline gas in Australia to LNG, hence the term “netback”)

The following graph shows the Saudi Aramco LPG pricing for the last 3.5 years as well as forecast pricing for the year ahead. There has been a decrease in futures pricing over the last month.

The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. The exchange rate fell through the month ending just below 0.6. This would tend to push up LPG prices when quoted in NZD.

The Coal Market

The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. Prices in October were largely flat, ending the month at US$142/T – a 2% decrease on the September close. These prices are finally returning to levels close to what we expect to see as shown in the following graph of prices over the last 10 years.

Carbon Pricing

EU Carbon Permits increased in October to 67 Euro/tonne – up 2%.

About this Report:

Further information can be found at the locations noted below.

Transpower publishes a range of detailed information which can be found here: https://www.transpower.co.nz/power-system-live-data

The Electricity Authority publishes a range of detailed information which can be found here: https://www.emi.ea.govt.nz/

Weather and Climate data – The MetService publishes a range of weather-related information which can be found here: https://www.metservice.com/

About Smart Power:

Smart Power is a full-service Energy Management consultancy. Apart from Energy Procurement, Smart Power can also provide:

Technical advice on how to reduce your energy use & emissions

Sustainability Reporting

Invoice Management Services

We also offer boutique energy and water billing services for landlords/property developers.

Contact us here or call one of our offices to talk to our experienced staff about how we can assist you with achieving your energy goals.

Market Update September 2024

October 8, 2024 by Briar

The Wholesale Electricity Market

After record highs through August, spot prices in the wholesale electricity market for September continued at the much lower levels seen at the end of last month. Average spot prices for the month ranged from $69 in the lower South Island (down from $488 in August), up to $80 in the upper North Island (down from $457).

The following chart shows average weekly spot prices over the last 2 years. The extreme highs and lows over the last two months can be clearly seen.

Electricity Demand

Electricity demand through September was low compared to the last few years with mild early spring weather in most parts of the country.

Electricity Generation Mix

Through September, reduced demand and increased wind generation, along with increased hydro generation meant that thermal generation could back off.

HVDC Transfer

With plenty of uncontrolled inflows and increasing hydro storage levels, September saw more “normal” northward transfers return and very little southward transfer for the month.

The Electricity Futures Market

The following graph shows Futures pricing for CY 2024, 2025, 2026 and 2027 at Otahuhu (Auckland) for the last 2 years.

Note that $100/MWh equates to 10c/kWh.

Forward prices climbed at the start of September particularly for CAL 2025, which peaked at $250/MWh before falling. CAL 2025 ended the month at $219 – down 6%. CY 2026 price was down 2% at $168 while CY 2027 closed up 1% at $164/MWh.

Known new generation projects are shown below (additions / removals / changes highlighted in bold).

Hydro Storage

Inflows in the South Island approached record levels in many hydro catchments. Te Anau / Manapouri went from minimum levels to close to the highest levels seen, at this time of year, in a matter of days. The lower Waiau river which takes over-flow or spill from Manapouri was consistently flowing more than 600cumecs (and as high as 800cumecs) for much of September. Putting this in perspective the Waikato river at the Huka Falls typically flows between 50 – 250cumecs.

The North Island was comparatively tame with a little more than average inflows for the month.

These very high inflows resulted in energy storage levels climbing throughout September reaching 2,882 (65% full) at the end of the month – an increase of 968GWh over the month. Storage is now back above the average level seen at this time of year. The following chart shows the latest breakdown of storage across the main hydro catchments.

Security of supply risks decreased throughout September with storage levels increasing. This is shown in the following risk curves.

Snowpack

Snowpack is an important way that hydro energy is stored over the winter months and released as hydro inflows in the spring. The following graph shows that the snowpack in the important Waitaki catchment increased through September with some good dumps of snow and is now above the 75th percentile levels seen in the last 30 years for this time of year.

Climate outlook overview (from the MetService)

Climate drivers — El Niño Southern Oscillation (ENSO) remains in neutral territory. Longer-range climate models continue to pick a near-even chance of either remaining neutral, or a weak La Niña developing over the next few months. In either case, any weather impacts from ENSO are not expected before summer.

The Southern Annular Mode (SAM) was strongly negative last month, resulting in frequent fronts and lows passing over the South Island. This should remain negative over the next week with further weather systems in the south, but is likely to trend neutral or even positive from the middle of October as high pressure builds across the Far South and Southern Ocean, with less frequent rain-makers for the South Island. A pulse of Madden-Julian Oscillation (MJO) is picked to move into the Southwest Pacific mid-late month, and this could enhance the risk for moisture-laden air masses to spread northerly rain across the top half of New Zealand.

October 2024 Outlook — A slow-moving low affects New Zealand through the first week of October, bringing heavy rain and thunderstorms across much of the country, and a risk for late season snow about the Otago high country farms. Another low brings a second burst of rainfall and strong westerly winds to much of the country over the weekend and into early next week. This brings warming temperatures across the North Island, but a possible cold snap in the south with frosts becoming likely from the middle of next week.

This pattern shifts around mid-October. While models famously struggle during the Southern Hemisphere spring (called the springtime predictability barrier), all indications are for more frequent and stronger high pressure systems spreading across the Southern Ocean and over the South Island. This will help push any low pressure systems further north over the Tasman Sea and North Island, and the South Island is likely to see the majority of its October rainfall during the first 1-2 weeks of the month as activity moves northwards, with a temporary reprieve from wetter conditions. However, the risk for morning frosts increases during the final two weeks of October across the South Island, with temperatures falling near or slightly below normal.

It’s a different story for the North Island, where the risk for heavy northerly rainfall events increases during the back half of the month. Passing high pressure systems are still expected, but Tasman lows become more likely during this time, and the MJO passage may enhance the moisture content of any approaching lows. Northern regions from Northland and Auckland, to Bay of Plenty and Gisborne have a greater chance of seeing these heavy rainfall events, but it’s important to remember these may be boom-or-bust events.

Springtime is a period of highly changeable weather across New Zealand, so we can expect this volatile weather pattern to continue into next month.

The Wholesale Gas Market

Spot gas prices in September continued at the very low levels seen at the very end of August. Prices for the month averaged $8.8/GJ – a 77% decrease compared to August. Average prices are now 17% lower than they were at the same time last year.

On the supply side Maui produced 70TJ/day – down 11%. Pohokura dropped output significantly at around 33TJ/day – down 35%. McKee / Mangahewa increased its production, up 25% at 64TJ/day. Kupe maintained around 45TJ/day apart from a short outage in the middle of the month.

The following graph shows production levels from major fields over the last 6 years.

As noted last month Methanex did a deal with the large electricity generators to shut down its Motunui site in the middle of August through to the end of October. Gas usage was zero for the whole of September. Huntly usage was constant at close to the 60TJ/day observed at the end of last month, while TCC was shut down for all the month.

The following graph shows trends in the major gas users over the last 6 years.

Internationally, LNG netback prices ended the month up at $17.34/GJ – up 6.5% from last month. Forecast prices for 2024 increased to $15.04 – down 2% compared to July. Forecast prices for 2025 were down 6.5% at $16.81/GJ. (Note that netback prices are indicative of international prices – they are produced by the ACCC and quoted in Australian dollars. They are net of the estimated costs to convert from pipeline gas in Australia to LNG, hence the term “netback”)

The following graph shows the Saudi Aramco LPG pricing for the last 3 years as well as forecast pricing for the year ahead. There has been an increase in futures pricing over the last month.

The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. While volatile during the month the exchange rate ended the month at about the same level that it started it.

The Coal Market

The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. Prices in September were largely flat, ending the month at US$145/T – a 1% increase on the August close. These prices are finally returning to levels close to what we expect to see as shown in the following graph of prices over the last 10 years.

Like gas, the price of coal can flow through and have an impact on the electricity market. In August Genesis reported that it had imported additional coal. Stockpiles had reduced to 231,000 tonnes at the end of June – down from 624,000 tonnes at the end of March. Genesis says that it usually aims to hold about 350,000 tonnes of coal.

Carbon Pricing

NZ has had an Emissions Trading Scheme (ETS) in place since 2008. It has been subsequently reviewed by several governments and is now an “uncapped” price scheme closely linked to international schemes. However, there are “upper and lower guard rails” set up to prevent wild swings in carbon price that act as minimum and maximum prices. These increased in December 2023 to $173 and $64 respectively. Carbon prices increased 1% in September to $62.2.

EU Carbon Permits decreased in September to 65.5 Euro/tonne – down 7%.

About this Report:

Further information can be found at the locations noted below.

Transpower publishes a range of detailed information which can be found here: https://www.transpower.co.nz/power-system-live-data

The Electricity Authority publishes a range of detailed information which can be found here: https://www.emi.ea.govt.nz/

Weather and Climate data – The MetService publishes a range of weather-related information which can be found here: https://www.metservice.com/

About Smart Power:

Smart Power is a full-service Energy Management consultancy. Apart from Energy Procurement, Smart Power can also provide:

Technical advice on how to reduce your energy use & emissions

Sustainability Reporting

Invoice Management Services

We also offer boutique energy and water billing services for landlords/property developers.

Contact us here or call one of our offices to talk to our experienced staff about how we can assist you with achieving your energy goals.

Market Update August 2024

September 5, 2024 by magnum

The Wholesale Electricity Market

Spot prices in the wholesale electricity market went ballistic at the start of August increasing to close to $900/MWh on a rolling 7-day basis at the start of the month before crashing back to earth at the end of the month. Average spot prices for the month ranged from $429 in the central North Island (up from $338 in July), up to $526 in the upper South Island (up from $414).

The following chart shows average weekly spot prices over the last 2 years. August’s massive volatility can be clearly seen.

Electricity Demand

Electricity demand through August was variable with higher levels corresponding to some cold spells, before reducing to unseasonably low levels of demand towards the end of the month. Some large industrials shut down due to the elevated wholesale market which will have pulled overall demand down.

Electricity Generation Mix

Through August, reduced demand and increased wind generation, along with maximum thermal generation meant that hydro generation was kept to a minimum for the month. Low demand at the end of the month allowed thermal generation to back off.

HVDC Transfer

August saw further attempts to conserve South Island storage by reducing northward transfer and increasing southward transfer. Transfers in each week of August were almost exclusively southward – something not seen very often. High uncontrolled inflows in the SI in the last week of the month allowed southward transfer to reduce.

The Electricity Futures Market

The following graph shows Futures pricing for CY 2024, 2025, 2026 and 2027 at Otahuhu (Auckland) for the last 2 years.

Note that $100/MWh equates to 10c/kWh.

Forward prices climbed at the start of August particularly for CAL 2025, which peaked at $318/MWh on the 5th August, before falling. CAL 2025 ended the month at $233 – down 10%. CY 2026 price was down 2% at $171 while CY 2027 closed down 3% at $162/MWh.

Known new generation projects are shown below (additions / removals / changes highlighted in bold).

Hydro Storage

Inflows remained below average at the start of August, however they picked up, particularly in the SI at the end of the month.

These low inflows resulted in energy storage levels continuing to fall at the start of August reaching a minimum of 1,481GWh on the 22nd August, before the high inflows hit at the end of the month raising storage to 1,914 (42% full) at the end of the month – an increase of 209GWh over the month. The following chart shows the latest breakdown of storage across the main hydro catchments.

Security of supply risks decreased at the end of August with storage levels increasing. This is shown in the following risk curves.

Snowpack

Snowpack is an important way that hydro energy is stored over the winter months and released as hydro inflows in the spring. The following graph shows that the snowpack in the important Waitaki catchment increased through August and is now close to the 25th percentile levels seen in the last 30 years for this time of year.

Climate outlook overview (from the MetService)

Climate drivers — El Niño Southern Oscillation (ENSO) remains neutral, and should remain this way through September, with the most influential climate drivers originating closer to New Zealand. Longer-range models are picking a near-even chance of a weak La Niña developing in the October-December time frame.

The negative Southern Annular Mode (SAM), which directed an enhanced westerly flow across the South Island over the last few weeks, is expected to remain negative over the coming fortnight, though a weakening trend is likely during the second week of September with the frequency of westerly systems dropping slightly. The Tasman Sea Index (TSI) is picked to trend slightly positive by the middle of next week, with the North Island seeing a slight respite in the active weather seen recently as high pressure moves ashore.

The second half of September is likely to show near-normal SAM and positive TSI, with hints of a drier North Island under slow-moving high pressure, while the odd front slips over the South Island to bring near-average conditions.

September 2024 Outlook — An active westerly flow brings frequent bursts of rain to western regions over the coming days, with Westland and Fiordland seeing the highest accumulation. Expect strong but warm westerly winds to extend across eastern New Zealand in advance of these systems. The flow tips towards a cooler southwesterly later next week, with temperatures falling slightly below normal across the South Island by the weekend. Model data supports a risk of widespread frosts and snowfalls from later next week in the south, particularly for inland Canterbury and Otago.

Little change during the second week of September, with a generally chilly outlook persisting across the country. Marginally wetter-than-normal conditions are expected for western South Island, along with an elevated risk for quick-moving snow events. Cooler than average for the North Island with near-average rainfall, with the one exception being in the southwest which could see an uptick in showers.

The southwesterly flow likely eases towards mid-month as a high pressure anomaly develops and becomes slow-moving east of the country. Chilly mornings but warming afternoons will be the norm as ridges shift across New Zealand, while a gradual return to westerlies are possible, particularly across the South Island. A front or two is likely to bring brief bursts of rain in the south each week, with diminishing returns further north. Soil moisture content is near saturation country-wide, but this is likely to decrease during the final weeks of September, with longer spells of fine weather becoming more likely.

The Wholesale Gas Market

Spot gas prices in August increased even further from the already very high levels seen in July peaking at more than $50/GJ on daily trades before crashing at the end of the month due to reduced demand for gas for electricity generation. Prices for the month averaged $39/GJ – an 11% increase compared to July. Average prices remain more than 250% higher than they were at the same time last year.

Some gas retailers are refusing to offer contracts to end users even where they are the incumbent retailer. Some tenders are getting no offers at all from retailers. Nothing of any substance has come from the Government appointed Gas Security Response Group tasked to look at how to improve the gas supply situation.

On the supply side, most fields again managed to maintain output levels from last month. Maui produced 79TJ/day – down 1%. Pohokura maintained output at around 43TJ/day. McKee / Mangahewa produced 51TJ/day – up 2%. Kupe maintained around 45TJ/day apart from a short outage at the end of the month.

The following graph shows production levels from major fields over the last 6 years.

The demand side was where all the action was in August. Methanex did a deal with the large electricity generators to shut down its Motunui site in the middle of August through to the end of October. Gas usage had already reduced to 50TJ/day but dropped to zero on the 15th August. At the same time Huntly usage increased from 42TJ/day to over 60TJ/day, and TCC increased usage from 35TJ/day to more than 50TJ/day.

The following graph shows trends in the major gas users over the last 6 years.

Internationally, LNG netback prices ended the month up at $16.28/GJ – up 4% from last month. Forecast prices for 2024 increased to $15.31 – up 2% compared to July. Forecast prices for 2025 were up 4% at $17.98/GJ. (Note that netback prices are indicative of international prices – they are produced by the ACCC and quoted in Australian dollars. They are net of the estimated costs to convert from pipeline gas in Australia to LNG, hence the term “netback”).

The following graph shows the Saudi Aramco LPG pricing for the last 3 years as well as forecast pricing for the year ahead. There has been an increase in futures pricing over the last month.

The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. There has been a significant increase in the last month which will put downward pressure on NZ LPG pricing.

The Coal Market

The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. Prices in August were largely flat, ending the month at US$143/T – a 2% decrease on the July close. These prices are finally returning to levels close to what we expect to see as shown in the following graph of prices over the last 10 years.

Like gas, the price of coal can flow through and have an impact on the electricity market. Last month Genesis reported that it had imported additional coal. Stockpiles had reduced to 231,000 tonnes at the end of June – down from 624,000 tonnes at the end of March. Genesis says that it usually aims to hold about 350,000 tonnes of coal.

Carbon Pricing

EU Carbon Permits increased in August to 70 Euro/tonne – up 4%.

About this Report

This energy market summary report provides information on wholesale price trends within the NZ Electricity Market.

Please note that all electricity prices are presented as a $ per MWh price and all carbon prices as a $ per unit price.

All spot prices are published by the Electricity Authority. Futures contract prices are sourced from ASX.

Further information can be found at the locations noted below.

Transpower publishes a range of detailed information which can be found here: https://www.transpower.co.nz/power-system-live-data

The Electricity Authority publishes a range of detailed information which can be found here: https://www.emi.ea.govt.nz/

Weather and Climate data – The MetService publishes a range of weather-related information which can be found here: https://www.metservice.com/

Disclaimer

This document has been prepared for information and explanatory purposes only and is not intended to be relied upon by any person. This document does not form part of any existing or future contract or agreement between us. We make no representation, assurance, or guarantee as to the accuracy of the information provided. To the maximum extent permitted by law, none of Smart Power Ltd, its related companies, directors, employees or agents accepts any liability for any loss arising from the use of this document or its contents or otherwise arising out or, or in connection with it. You must not provide this document or any information contained in it to any third party without our prior consent.

About Smart Power

Smart Power is a full-service Energy Management consultancy. Apart from Energy Procurement, Smart Power can also provide:

Technical Advice on how to reduce your energy use/emissions
Sustainability Reporting
Invoice Management services.

We also offer boutique energy and water billing service for landlords/property developers.

Contact us at https://smartpower1.wpenginepowered.com/contact/ or ring one of our offices to talk to one of our experienced staff about how we can assist you with achieving your energy goals.

Market Update July 2024

August 6, 2024 by magnum

The Wholesale Electricity Market

Spot prices in the wholesale electricity market increased markedly in July from their already very high levels. Average spot prices ranged from $338 in the central North Island (up from $248 in June), up to $414 in the upper South Island (up from $286).

The following chart shows average weekly spot prices over the last 2 years. July’s significant increases can be clearly seen.

Electricity Demand

Electricity demand through July was variable with higher levels corresponding to some cold spells, before returning to more “normal” winter levels of demand.

Electricity Generation Mix

Through July the generation mix saw even more thermal power running to try to conserve hydro as much as possible given the level of demand.

HVDC Transfer

July saw further attempts to conserve South Island storage by reducing northward transfer and increasing southward transfer. Net transfers for the month were southward – something not seen very often.

The Electricity Futures Market

The following graph shows Futures pricing for CY 2024, 2025, 2026 and 2027 at Otahuhu (Auckland) for the last 2 years.

Note that $100/MWh equates to 10c/kWh.

Forward prices were up in July for all future years, but particularly CY2025. This ended the month up 30% at $259. CY 2026 price was up 2% at $174 while CY 2027 closed up 4% at $167.5/MWh.

Known new generation projects are shown below (additions / removals / changes highlighted in bold).

Hydro Storage

Inflows were very low across both the North and South Island during July, following on from already very low inflows particularly in the South Island this year to date.

These very low inflows resulted in energy storage levels continuing to fall through July. NZ storage ended the month at 1,705GWh or 37% full, down 477GWh. The following chart shows the latest breakdown of storage across the main hydro catchments.

Security of supply risks increased further in July with storage levels decreasing. This is shown in the following risk curves.

Snowpack

Snowpack is an important way that hydro energy is stored over the winter months and released as hydro inflows in the spring. The following graph shows that the snowpack in the important Waitaki catchment is currently close to the minimum levels seen in the last 30 years for this time of year.

Climate outlook overview (from the MetService)

Climate drivers — El Niño Southern Oscillation (ENSO) remains neutral, and should remain this way through the rest of winter and into the first part of spring, with the most influential climate drivers originating closer to home.

The Southern Annular Mode (SAM), a measure of how far north or south strong westerlies lie in the Southern Ocean, trends slightly positive for the first half of August as high pressure shifts northeast across New Zealand, with below average rainfall most likely to occur from central North Island southwards towards eastern South Island. The Tasman Sea Index (TSI) is also a good indicator – this is currently slightly negative, which denotes lower pressure and increased rainfall across parts of the upper North Island, but there are hints this also turns positive next week. Some uncertainty remains within the weather models as to how strongly and quickly these indicators shift back to negative territory, and there is a risk that western regions trend slightly wetter during the first two weeks of August.

The back half of August is likely to see both SAM and TSI remain in a more negative regime as high pressure moves eastwards, paving the way for an influx in westerly weather makers to spread across New Zealand. In the longer-term, there remains a heightened chance of a La Niña developing later this spring, with effects most likely to be felt during the summer months.

August 2024 Outlook — A Tasman low brings a burst of rain across the upper North Island over the coming days, while the remainder of the country remains notably drier as strong high pressure builds northwards. This low moves away later this weekend, allowing the ridge to spread elsewhere and bring a spell of dry weather most places. Another low pressure system makes its presence known by the middle of next week across southern South Island, though temperatures may remain too warm for another low-level snow event in the prevailing northwesterly flow. Soils are currently near saturation across most regions, but expect to see soil moisture content decrease from central North Island down to eastern South Island over the coming week.

The second week of August sees the ridge weaken and shift over the North Island, while a more active northwesterly pattern emerges over the South Island. A quick-moving front or two is likely to spread across the South Island with near-average rainfall picked, and these may progress further north depending on how quickly the ridge weakens. Temperatures are expected to remain a bit warmer than average, particularly across eastern and southern South Island.

A broad area of low pressure spreads across New Zealand during the final two weeks of August, bringing with it an increased chance for weather makers to spread over the country. While models are currently picking near-average precipitation country-wide, there is a risk that western and southern regions see increased amounts in a windier westerly pattern. This includes an increased possibility for late winter cold snaps and mobile westerly snow makers as long as New Zealand remains under a cooler Southern Ocean influence.

The Wholesale Gas Market

Spot gas prices in July increased even further from the already very high levels seen in June, averaging $35/GJ. Wholesale prices are 300% higher than they were at the same time last year.

We have seen signs that gas retailers are refusing to offer contracts to end users even where they are the incumbent retailer. Some tenders are getting no offers at all from retailers. Nothing of any substance has come from the Government appointed Gas Security Response Group.

Smart Power has been able to source some gas for clients who are approaching the end of their current contracts. If you are in a similar position, please contact us and we will see what we can do to assist you.

On the supply side most fields managed to maintain output levels from last month. Maui even managed a small increase – up around 5% to close to 80TJ/day. Pohokura maintained output at around 43TJ/day. McKee / Mangahewa had a period of reduced output in the middle of the month but rebounded to just above 50TJ/day at the end of the month. Kupe maintained around 46TJ/day through the month

The following graph shows production levels from major fields over the last 6 years.

On the demand side, Methanex Motonui’s continued to largely provide the buffer for the reduced supply. Usage decreased to almost 50TJ/day by the end of July – down from 80TJ/day at the start of the month. Huntly power station decreased, averaging 42TJ/day, while TCC continued its extended running since May, averaging close to 30TJ per day during July.

The following graph shows trends in the major gas users over the last 6 years.

Internationally, LNG netback prices ended the month flat at $15.65/GJ – up 0.5% from last month. Forecast prices for 2024 increased to $15.04 – up 0.5% compared to June. Forecast prices for 2025 were up 4% at $17.32/GJ. (Note that netback prices are indicative of international prices – they are produced by the ACCC and quoted in Australian dollars. They are net of the estimated costs to convert from pipeline gas in Australia to LNG, hence the term “netback”).

New Zealand does not have an LNG export market, so our domestic prices are not directly linked to global prices.

The following graph shows the Saudi Aramco LPG pricing for the last 3 years as well as forecast pricing for the year ahead. There has been a decrease in futures pricing over the last month.

The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. There has been a significant drop in recent times which will put upward pressure on NZ LPG pricing.

The Coal Market

The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. Prices in July were up, ending the month at US$140/T – a 6% decrease on the June close. These prices are finally returning to levels close to what we expect to see as shown in the following graph of prices over the last 10 years.

Like gas, the price of coal can flow through and have an impact on the electricity market. This month Genesis reported that it had imported additional coal. Stockpiles had reduced to 231,000 tonnes at the end of June – down from 624,000 tonnes at the end of March. Genesis says that it usually aims to hold about 350,000 tonnes of coal.

Carbon Pricing

EU Carbon Permits increased marginally in July to 68 Euro/tonne – up 1%.

About this Report

This energy market summary report provides information on wholesale price trends within the NZ Electricity Market.

Please note that all electricity prices are presented as a $ per MWh price and all carbon prices as a $ per unit price.

All spot prices are published by the Electricity Authority. Futures contract prices are sourced from ASX.

Further information can be found at the locations noted below.

Transpower publishes a range of detailed information which can be found here: https://www.transpower.co.nz/power-system-live-data

The Electricity Authority publishes a range of detailed information which can be found here: https://www.emi.ea.govt.nz/

Weather and Climate data – The MetService publishes a range of weather-related information which can be found here: https://www.metservice.com/

Disclaimer

About Smart Power

Smart Power is a full-service Energy Management consultancy. Apart from Energy Procurement, Smart Power can also provide:

Technical Advice on how to reduce your energy use/emissions
Sustainability Reporting
Invoice Management services.

We also offer boutique energy and water billing service for landlords/property developers.

Contact us at https://smartpower1.wpenginepowered.com/contact/ or ring one of our offices to talk to one of our experienced staff about how we can assist you with achieving your energy goals.

Market Update June 2024

July 5, 2024 by magnum

The Wholesale Electricity Market

Spot prices in the wholesale electricity decreased in June but remained at very high levels. Average spot prices ranged from $248 in the central North Island (down from $301 in May), up to $286 in the upper South Island (down from $320).

The following chart shows average weekly spot prices over the last 2 years.

Electricity Demand

After several months of being higher than expected, electricity demand through June came back to the levels seen in winter months in recent years as shown below.

Electricity Generation Mix

Through June the generation mix remained reasonably constant as shown below, with hydro being conserved as much as possible given the level of demand.

HVDC Transfer

June saw further attempts to conserve South Island storage by reducing northward transfer and increasing southward transfer.

The Electricity Futures Market

The following graph shows Futures pricing for CY 2024, 2025, 2026 and 2027 at Otahuhu (Auckland) for the last 2 years.

Note that $100/MWh equates to 10c/kWh.

Forward prices were up in June for all future years. CY 2025 ended the month up 10% at $200. CY 2026 price was up 9% at $171 while CY 2027 closed up 8% at $161/MWh.

Known new generation projects are shown below (additions / removals / changes highlighted in bold).

Hydro Storage

Inflows were very low again in the South Island during June. The North Island had below average inflows at the start of the month, however they picked up later to almost end up at average levels for the month.

Very low inflows resulted in energy storage levels continuing to fall through June, though at a reduced rate compared to May. NZ storage ended the month at 2,182GWh or 48% full, down 419GWh. The following chart shows the latest breakdown of storage across the main hydro catchments.

Security of supply risks increased further in June with storage levels decreasing. This is shown in the following risk curves.

Snowpack

Snowpack is an important way that hydro energy is stored over the winter months and released as hydro inflows in the spring. The following graph shows that the snowpack in the important Waitaki catchment is currently close to the minimum levels seen in the last 30 years for this time of year.

Climate outlook overview (from the MetService)

Climate Drivers — June was a good reminder that winter can throw up all sorts of weather maps, especially when large scale climate drivers, like the El Niño Southern Oscillation (ENSO) are firmly in neutral territory. ENSO will remain neutral through the winter months and the most useful climate drivers to monitor over coming months will be those closer to home, including the Southern Annular Mode (SAM).

SAM is measure of how far north or south a belt of strong westerlies sits in the Southern Ocean. When strongly positive, the storms tend to run further south – through the Southern Ocean as high pressures are favoured around New Zealand. When SAM is strongly negative high pressure sits well to the south with lower-than-normal pressure around the Chatham Islands and enhanced westerlies across New Zealand. SAM is an important tool for medium range forecasting in New Zealand and you can find more information here; https://blog.metservice.com/Southern-Annular-Mode.

SAM has taken a bit of a nosedive over recent days, and this has helped inject cold air over NZ to start the month. Cool airmasses are likely to hang around with SAM remaining largely negative over the first week of the month, before a strong and prolonged positive phase is forecast through week two towards mid-month, hinting at a spell of settled and dry weather nationally. Expect SAM to be increasingly volatile later this month, with fast-moving weather patterns and changeable weather redeveloping.

Sea surface temperatures around and south of New Zealand remain just below average overall, despite a slight warming since May. There remains a heightened chance of La Niña developing this spring, with flow on effects possible as we approach the summer months.

July 2024 Outlook — uly started off with a very mobile Southern Ocean low (thank you negative SAM) crossing the country and a burst of heavy rain for all, followed by cold south-westerly showers. The lower South Island also saw snow to low levels as cold air flooded in. Despite the mild June, this event has really helped kick ski resorts into gear with many of the South Island ski fields seeing 30-60cm of fresh snow as this system moved through and now looking in fantastic shape for the start of the school holidays next week.

Cold and sometimes brisk southerly quarter winds remain on the cards for most of the country into early next week, beginning Monday 8th, as high pressure near Tasmania extends a dominant ridge north-eastward across the Tasman Sea. Whilst we might see the odd shower at times in this flow, there will be plenty of fine, dry, sunny afternoons and crisp, frosty mornings, but watch out for sharp winds in exposed windward and mountainous areas. As we move into the start of calving season, farmers should keep one eye on those minimum temperatures, with some of the coldest weather we have seen this year likely by the end of this week and widespread rural frosts forecast.

This high-pressure cell will become centred over New Zealand itself early next week, then only gradually drift eastward towards mid-month. These cold, winter highs can often be quite slow to move away and should offer up a prolonged spell of dry, settled weather nationwide. However, different weather hazards can present themselves in these set-ups including widespread frosts, icy roads, cold daytime temperatures, thick valley fogs and persistent low cloud. Despite the lack of forecast rain, it will pay to check in with your latest forecast at metservice.com.

As we head towards mid-month, weather models gradually move this high pressure away from our shores, with a weather system brewing in the Tasman Sea and a return of milder N-NW winds across the country. Expect a more unsettled window to develop as this Tasman system moves in, with northern and western facing portions of NZ most at risk of seeing heavy rain as it moves in. This feature might bring a few days of inclement weather, but don’t expect it to stall for weeks on end to the west of the country like we saw in June. Indeed, through the second half of July, expect the weather maps to change regularly as low pressure systems and fronts move through much more quickly than last month. Expect temperatures to bounce around through the second half of July too, with some very mild spells followed by sharp cold snaps.

So, despite a cold and dry opening salvo this July, a much more unsettled outlook from mid-month means overall we may end up fairly close to July averages for monthly rainfall and temperatures right across the country, albeit with some drier anomalies favoured for Canterbury and central parts of North Island.

The Wholesale Gas Market

Spot gas prices remained at the very high levels seen in May, averaging $28.6/GJ for June. Wholesale prices are 227% higher than they were at the same time last year.

We have seen signs that gas retailers are refusing to offer contracts to end users even where they are the incumbent retailer. Some tenders are getting no offers at all from retailers.

The Government has set up a body, the Gas Security Response Group, to “coordinate a response to reports of an increasingly tight gas supply from the GIC and the broader gas sector. It will verify gas supply and demand and identify actions to address the situation.” It will be interesting to see what they come up with, however it is difficult to see what they can do in the short term apart from reducing supply to some large gas users to free up supply for others.

On the supply side all fields showed a continuation of a gradual decline in production from already low levels. Pohokura started the month producing around 48TJ/day, reducing to 42TJ by the end of the month. Maui averaged around 76.5TJ/day – down 2.5%. McKee / Mangahewa averaged 55TJ per day, down from 60 in May. Kupe also dropped slightly from 47TJ per day down to 46.5.

The following graph shows production levels from major fields over the last 6 years.

On the demand side, Methanex Motonui’s usage remained at the lower levels experienced in recent months providing the buffer for the reduced supply. Usage averaged close to 75TJ/day through June – down from 80TJ/day in May. Huntly power station increased marginally, averaging 48TJ/day, while TCC ran all month, averaging close to 30TJ per day.

The following graph shows trends in the major gas users over the last 6 years.

Internationally, LNG netback prices ended the month at $15.56/GJ – up 14% from last month. Forecast prices for 2024 increased to $14.95 – up 1% compared to May. Forecast prices for 2025 were also up marginally at $16.57/GJ.

New Zealand does not have an LNG export market, so our domestic prices are not directly linked to global prices.

The following graph shows the Saudi Aramco LPG pricing for the last 3 years as well as forecast pricing for the year ahead. There has been a significant increase in futures pricing over the last month.

The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. As shown below this has been falling over the last few years adding to domestic LPG prices.

The Coal Market

The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. Prices in June were down, ending the month at US$132/T – an 8% decrease on the May close. These prices are finally returning to levels close to what we expect to see as shown in the following graph of prices over the last 10 years.

Like gas, the price of coal can flow through and have an impact on the electricity market. In April, Genesis reported that coal stockpiles had been reducing over the last couple of years. The Huntly coal stockpile held 624,000 tonnes as at 31 March 2024, down from 731,000 tonnes at 31 December 2023, 859,000 tonnes at 30 September 2023, and 968,000 tonnes a year earlier.

Carbon Pricing

EU Carbon Permits decreased in June to 67.5 Euro/tonne – down 9%.

About this Report

This energy market summary report provides information on wholesale price trends within the NZ Electricity Market.

Please note that all electricity prices are presented as a $ per MWh price and all carbon prices as a $ per unit price.

All spot prices are published by the Electricity Authority. Futures contract prices are sourced from ASX.

Further information can be found at the locations noted below.

Transpower publishes a range of detailed information which can be found here: https://www.transpower.co.nz/power-system-live-data

The Electricity Authority publishes a range of detailed information which can be found here: https://www.emi.ea.govt.nz/

Weather and Climate data – The MetService publishes a range of weather-related information which can be found here: https://www.metservice.com/

Disclaimer

About Smart Power

Smart Power is a full-service Energy Management consultancy. Apart from Energy Procurement, Smart Power can also provide:

Technical Advice on how to reduce your energy use/emissions
Sustainability Reporting
Invoice Management services.

We also offer boutique energy and water billing service for landlords/property developers.

Contact us at https://smartpower1.wpenginepowered.com/contact/ or ring one of our offices to talk to one of our experienced staff about how we can assist you with achieving your energy goals.

Market Update May 2024

June 9, 2024 by magnum

The Wholesale Electricity Market

Spot prices in the wholesale electricity increased again in May from their already very high levels. Average spot prices ranged from $285 in the lower South Island (up from $211 in March), up to $312 in the upper South Island (up from $230).

The following chart shows average weekly spot prices over the last 2 years. The high peak in the middle of the month is greater than any time in the last 10 years (on a rolling 7-day basis).

Electricity Demand

Electricity demand through May remained above levels seen in recent years as shown below. There also appears to be an early seasonal increase due to cooler weather, with May being the coldest in NZ since 2009.

Electricity Generation Mix

Through May the increased demand was largely picked up by thermal generation. An increase in wind and geothermal generation also allowed hydro generation to back off.

HVDC Transfer

May saw attempts to conserve South Island storage by reducing northward transfer and increasing southward transfer.

The Electricity Futures Market

The following graph shows Futures pricing for CY 2024, 2025, 2026 and 2027 at Otahuhu (Auckland) for the last 2 years.

Note that $100/MWh equates to 10c/kWh.

Forward prices were down in May for all future years except CY 2027. CY 2025 ended the month down 3% at $182. CY 2026 price was down 5% at $157 while CY 2027 closed up marginally at $149/MWh (+0.3%).

From a demand perspective, at the end of May it was announced that 20-year electricity supply contracts had been signed with New Zealand Aluminium Smelters, providing certainty to the market that the largest load in NZ will remain after the current contracts expire this year. This should now provide the confidence to get a large number of muted projects committed, and hopefully see some longer term electricity price reductions.

Known new generation projects are shown below (additions / removals / changes highlighted in bold).

Hydro Storage

Inflows were very low in the South Island during May – reported as the second lowest in 90 years of data. The North Island had below average inflows at the start of the month, however they picked up later to almost end up at average levels for the month.

Very low inflows resulted in energy storage levels plummeting in May. NZ storage ended the month at 2,601GWh or 58% full, down 835GWh. The following chart shows the latest breakdown of storage across the main hydro catchments.

Security of supply risks increased significantly in May with storage levels decreasing. This is shown in the following risk curves.

Snowpack

Snowpack is an important way that hydro energy is stored over the winter months and released as hydro inflows in the spring. The following graph shows that the snowpack in the important Waitaki catchment is currently close to the minimum levels seen in the last 30 years for this time of year.

Climate outlook overview (from the MetService)

Climate Drivers — The El Niño Southern Oscillation (ENSO) is now in neutral territory and should remain so throughout winter. Whilst our 23-24 El Niño event has had a definitive say on our weather maps since March, its influence is now expected to wane as short-term variability takes the lead during the winter months.

This, combined with cooler than normal sea surface temperatures around and south of New Zealand (again, very different to last year), is likely to drive a fairly typical winter season as a whole, with lots of variability, plenty of cold snaps and seasonal rainfall and temperature patterns not departing too far from long term climate averages.

This might not seem like a very bold prediction, but following on from 4 of the 5 warmest winters NZ has seen since winter 2020, and the wettest winter on record in 2022, just seeing typical winter weather may come as quite a shock to the system! Of course, this doesn’t mean we won’t see departures from normal at a regional level across the country, especially month-to-month, but over the whole season we can expect things to feel different to the winters of recent years which were set against a prolonged La Niña event.

There remains a heightened chance that another phase of La Niña will develop this spring, but its strength and effects on NZ remain far from certain and would likely only become influential over summer.

June 2024 Outlook — After a cold Autumn, we start winter on a milder note with the opening half of the month seeing some warmer northwest to northerly airmasses affect the country. At this time of the year these can often be accompanied by broad rain-bearing weather systems moving out of the Tasman Sea, and as we head into the later parts of this week (beginning Mon 3rd) through mid-month a number of these systems could bring bouts of rainfall quite widely, with the heaviest falls favoured around North Island and upper South Island. Portions of the lower South Island, Westland and Fiordland in particular, are expected to see a much drier start to the month than normal, but there is a chance of warm NW rain before mid-month here too.

These weather patterns can also bring very windy spells east of the South Island main divide, and across central NZ. As always as this time of year, watch for when low pressure systems exit eastwards into the Pacific Ocean for any significant snow or cold weather. There remains lots of uncertainty with rainfall and wind details with these systems before mid-month at this stage, and it will pay to keep up to date with your latest forecast at metservice.com.

The second half of the month should see increased potential for multi-day runs of cold, clear and dry weather with higher pressure favoured to become more influential right across NZ. SW winds would be the order of the day, and the North Island should see a drier second half of the month, whilst western areas of South Island see more typical, changeable weather roll through by months end.

So, temperatures should end up near normal, or even slightly cooler than normal, for the month as a whole with colder weather increasingly likely during the second half of the month. Much more uncertainty around rainfall patterns with lots of day-today variability, but a wetter than normal spell before mid-month for North Island, especially the eastern half, drives a wet anomaly here around Bay of Plenty, Gisborne and the Hawkes Bay. Drier than normal conditions are forecast for western South Island, Otago and Southland, but less confidence in this aspect of the forecast where much could depend on just one heavy rain event before mid-month. The rest of the country should see near-normal rainfall this June.

The Wholesale Gas Market

Spot gas prices increased significantly again in May averaging $28.65/GJ – up 31% in the month. Wholesale prices are now 208% higher than they were at the same time last year.

We have seen signs that gas retailers are refusing to offer contracts to end users even where they are the incumbent retailer. Some tenders are getting no offers at all from retailers.

On the supply side there was very little change in output over the month – still at a low level compared to historical levels. Pohokura maintained output at just below 50TJ/day – still below the pre-shutdown output of 57TJ per day. Maui held output through the month at around 78.5TJ/day. McKee / Mangahewa averaged slightly below 60TJ per day across the month. Kupe also maintained output at 47TJ per day.

The following graph shows production levels from major fields over the last 6 years.

On the demand side, Methanex Motonui’s usage remained at the lower levels experienced in April providing the buffer for the reduced supply. Usage averaged close to 80TJ/day through May. Huntly power station increased marginally, averaging 44.5TJ/day, while TCC restarted midway through the month, averaging close to 30TJ per day once running.

The following graph shows trends in the major gas users over the last 6 years.

Internationally, LNG netback prices ended the month at $13.62/GJ – up 8% from last month. Forecast prices for 2024 increased to $14.81 – up 9% compared to April. Forecast prices for 2025 were also up 12% at $16.46/GJ.

New Zealand does not have an LNG export market, so our domestic prices are not directly linked to global prices.

The following graph shows the Saudi Aramco LPG pricing for the last 3 years as well as forecast pricing for the year ahead.

The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. As shown below this has been falling over the last few years adding to domestic LPG prices.

The Coal Market

The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. Prices in May were largely flat, ending the month at US$143/T – a 1% decrease on the April close. These prices are finally returning to levels close to what we expect to see as shown in the following graph of prices over the last 10 years.

Carbon Pricing

EU Carbon Permits increased in May to 74.1 Euro/tonne – up 3%.

About this Report

This energy market summary report provides information on wholesale price trends within the NZ Electricity Market.

Please note that all electricity prices are presented as a $ per MWh price and all carbon prices as a $ per unit price.

All spot prices are published by the Electricity Authority. Futures contract prices are sourced from ASX.

Further information can be found at the locations noted below.

Transpower publishes a range of detailed information which can be found here: https://www.transpower.co.nz/power-system-live-data

The Electricity Authority publishes a range of detailed information which can be found here: https://www.emi.ea.govt.nz/

Weather and Climate data – The MetService publishes a range of weather-related information which can be found here: https://www.metservice.com/

Disclaimer

About Smart Power

Smart Power is a full-service Energy Management consultancy. Apart from Energy Procurement, Smart Power can also provide:

Technical Advice on how to reduce your energy use/emissions
Sustainability Reporting
Invoice Management services.

We also offer boutique energy and water billing service for landlords/property developers.

Contact us at https://smartpower1.wpenginepowered.com/contact/ or ring one of our offices to talk to one of our experienced staff about how we can assist you with achieving your energy goals.

Market Update April 2024

May 7, 2024 by magnum

The Wholesale Electricity Market

Spot prices in the wholesale electricity market remained very high through April. Average spot prices ranged from $211 in the lower South Island (down from $224 in March), up to $232 in the upper North Island (up from $220).

The following chart shows average weekly spot prices over the last 2 years. Prices started the month high, reduced with some high inflows in the middle of the month before climbing again at the end of the month. The recent high prices can be clearly seen to the right of the graph.

Electricity Demand

Electricity demand through April remained above levels seen in recent years as shown below.

Electricity Generation Mix

Through April thermal generation was able to back off slightly with some increased hydro generation.

HVDC Transfer

April saw increased SI inflows allow for more northward transfer while southward transfer decreased to close to zero.

The Electricity Futures Market

The following graph shows Futures pricing for CY 2024, 2025, 2026 and 2027 at Otahuhu (Auckland) for the last 2 years.

Note that $100/MWh equates to 10c/kWh.

Forward prices were up again in April for all future years. CY 2025 ended the month up 8% at $188.5. CY 2026 price was up 4% at $166 while CY 2027 closed up marginally at $148.5/MWh (+0.3%).

Known new generation projects are shown below (additions / removals / changes highlighted in bold).

Hydro Storage

Inflows were above average in both islands in April as shown in the following charts. The South Island had a large inflow event in the middle of the month.

Above average April inflows resulted in energy storage levels increasing. NZ storage ended the month at 3,436GWh or 77% full, up 357GWh. The following chart shows the latest breakdown of storage across the main hydro catchments.

Security of supply risks decreased in April with storage levels increasing. This is shown in the following risk curves.

Snowpack

Snowpack is an important way that hydro energy is stored over the winter months and released as hydro inflows in the spring. The following graph shows that the snowpack in the important Waitaki catchment is currently close to the mean levels seen in the last 30 years for this time of year.

Climate outlook overview (from the MetService)

Climate Drivers — Key oceanic markers are now below El Nino thresholds, and as we head towards neutral territory in the central and eastern tropical Pacific Ocean the 23-24 event is drawing to a close. However, it will still have a diminishing say on our weather maps through the rest of Autumn, with the atmosphere and weather often lagging the oceans. This means our enhanced southwest flows of March and April are still expected to be with us for a little while longer. Neutral El Nino Southern Oscillation (ENSO) conditions are expected through Winter, and this would typically see increased variability on our weather maps as shorter-term climate drivers take precedence. There is a growing signal that La Nina will develop into early Spring. Any effects from La Nina are unlikely to be seen until the summer and will be very dependent on its strength, which remains far from certain. The end of April also marks the end of the Southwest Pacific Tropical Cyclone Season. While Tropical Cyclones have been known to form in May in the past, this year the risk is considered Very Low to Low.

May 2024 Outlook — May 2023 was the warmest May on record in New Zealand as northerly airmasses plagued the weather maps, with a widespread marine heatwave in the waters surrounding the country. Fast-forward one year, and one El Nino event, and we are looking at a much-changed picture in the waters around New Zealand, with cool anomalies emerging right around the country and in the Southern Ocean to our south. With the weather maps expected to continue to sing off the Nino hymn sheet for a couple more months yet (albeit increasingly out of tune!) enhanced south-westerly winds are still likely to continue with us throughout May, often dragging in some very cold air from the south. With this air moving over much cooler seas this May than last, cool snaps are likely to have some notable bite to them over the final month of Autumn, making for a very different feel to this time last year. This will especially be the case over the opening fortnight of May where very cold southerly winds will be persistent, as high pressure sits slow-moving west of the South Island. While the odd front will move through, it is likely that our opening cold front on May 1st will bring the best of any rainfall for the majority of the country in the first half of the month. This front saw some very heavy falls for Wellington in particular, where 40-80mm fell in just 12 hours. Lots of dry Autumnal days with crisp sunshine are expected to develop during these opening two weeks, especially across the bulk of South Island, with only really Southland and Clutha tapping into more frequent southerly showers. Whenever winds are brisker, especially on those exposed coasts, woolly hats will be essential! The second half of May sees the axis of highest-pressure shift northwards into the northern Tasman Sea, opening the door to increased volatility and more regular frontal visitors from the west or southwest. This is your standard Autumnal fare, with two or three fronts a week moving quickly across the country, generally fading as they move over the North Island. A few of these fronts could pack a punch in terms of rainfall, especially for western and southern areas of New Zealand, so whilst the umbrellas might gather some dust early in May, it’ll pay to keep them handy from mid-month. With the increased volatility, temperatures should bounce around a bit more with some milder weather a possibility at times.

The Wholesale Gas Market

Spot gas prices increased significantly again in April averaging $21.85/GJ – up 12% in the month. Wholesale prices are now 145% higher than they were at the same time last year.

On the supply side there was a little relief with some increased output from some fields, though still not fully recovering to the levels of a few months ago. Pohokura increased mid-month from 36TJ/day to close to 50TJ/day – still below the pre-shutdown output of 57TJ per day. Maui maintained output through the month at around 77TJ/day. McKee / Mangahewa averaged low 60TJs across the month. Kupe also maintained output at 47.5TJ per day.

The following graph shows production levels from major fields over the last 6 years.

On the demand side, Methanex Motonui’s usage remained at the lower levels experienced in March providing the buffer for the reduced supply. Usage averaged close to 80TJ/day through April. Huntly power station decreased slightly, averaging 43TJ/day, while TCC shut down on the 10th April and remained that way for the rest of the month.

The following graph shows trends in the major gas users over the last 6 years.

Internationally, LNG netback prices ended the month at $12.56/GJ – up 15% from last month. Forecast prices for 2024 increased marginally to $13.62 – up 2% compared to March. Forecast prices for 2025 were also up 4% at $14.71/GJ.

New Zealand does not have an LNG export market, so our domestic prices are not directly linked to global prices. However, some of our large gas users deal in international markets which are impacted by global gas prices, and they may try to produce more in NZ (increase demand) to take advantage of lower gas prices when they occur.

The following graph shows the Saudi Aramco LPG pricing for the last 3 years as well as forecast pricing for the year ahead.

The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. As shown below this has been falling over the last few years adding to domestic LPG prices.

The Coal Market

The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. Prices in April were up, ending the month at US$145/T – a 20% increase on the March close. These prices are finally returning to levels close to what we expect to see as shown in the following graph of prices over the last 10 years.

Like gas, the price of coal can flow through and have an impact on the electricity market. Last month Genesis reported that coal stockpiles had been reducing over the last couple of years. The Huntly coal stockpile held 624,000 tonnes at 31 March 2024, down from 731,000 tonnes at 31 December 2023, 859,000 tonnes at 30 September 2023, and 968,000 tonnes a year earlier.

Carbon Pricing

EU Carbon Permits increased in April to 72 Euro/tonne – up 17%.

About this Report

This energy market summary report provides information on wholesale price trends within the NZ Electricity Market.

Please note that all electricity prices are presented as a $ per MWh price and all carbon prices as a $ per unit price.

All spot prices are published by the Electricity Authority. Futures contract prices are sourced from ASX.

Further information can be found at the locations noted below.

Transpower publishes a range of detailed information which can be found here: https://www.transpower.co.nz/power-system-live-data

The Electricity Authority publishes a range of detailed information which can be found here: https://www.emi.ea.govt.nz/

Weather and Climate data – The MetService publishes a range of weather-related information which can be found here: https://www.metservice.com/

Disclaimer

About Smart Power

Smart Power is a full-service Energy Management consultancy. Apart from Energy Procurement, Smart Power can also provide:

Technical Advice on how to reduce your energy use/emissions
Sustainability Reporting
Invoice Management services.

We also offer boutique energy and water billing service for landlords/property developers.

Contact us at https://smartpower1.wpenginepowered.com/contact/ or ring one of our offices to talk to one of our experienced staff about how we can assist you with achieving your energy goals.

Market Update March 2024

April 17, 2024 by magnum

The Wholesale Electricity Market

Spot prices in the wholesale electricity market increased significantly in March. Average spot prices ranged from $211 in the lower North Island (up from $153 in February), up to $245 in the upper South Island (up from $145).

The following chart shows average weekly spot prices over the last 2 years. After a small fall at the start of March, prices rose steadily throughout the rest of the month. The recent upward trend in prices can be clearly seen to the right of the graph.

Electricity Demand

Electricity demand through March remained at the high end and above recent years as shown below.

Electricity Generation Mix

Throughout March thermal generation has picked up displacing hydro to try to conserve hydro storage.

HVDC Transfer

March saw northward transfer reduce and southward transfer increase to conserve SI hydro storage.

The Electricity Futures Market

The following graph shows Futures pricing for CY 2024, 2025, 2026 and 2027 at Otahuhu (Auckland) for the last 2 years.

Note that $100/MWh equates to 10c/kWh.

Forward prices were up in March for all future years. CY 2025 ended the month up 7% at $175. CY 2026 price was up 9% at $160 while CY 2027 closed up at $148/MWh (+6%).

Known new generation projects are shown below (additions / removals highlighted in bold).

Hydro Storage

Inflows were below average in both islands for most of March as shown in the following charts.

Below average March inflows resulted in energy storage levels falling. NZ storage ended the month at 3,079GWh or 69% full, down 375GWh. The following chart shows the latest breakdown of storage across the main hydro catchments.

Security of supply risks increased in March with storage levels decreasing. Note that since the start of April significant inflows have occurred which have brought storage back to close to the level we would typically expect to see for this time of year; and well above the risk zones. This is shown in the following risk curves.

Snowpack

Snowpack is an important way that hydro energy is stored over the winter months and released as hydro inflows in the spring. The following graph shows that the snowpack in the important Waitaki catchment is currently close to the mean levels seen in the last 30 years for this time of year.

Climate outlook overview (from the MetService)

Climate Drivers — El Nino is nearly at its end, with equatorial sea surface temperatures likely to return to neutral conditions in the next two months. However, as atmospheric markers generally lag oceanic indicators, New Zealand is still likely to see periods of enhanced westerly flows through much of autumn. Models are split evenly between keeping a neutral El Nino state or developing a weak La Nina over the coming months, and any effects are unlikely to be seen until the summer. The next pulse of Madden-Julian Oscillation (MJO) is expected from the middle of April, though early indications are downplaying its intensity in favour of maintaining an active westerly flow across the country. Regardless, there remains a slightly increased risk of tropical influence from mid-month, particularly across the upper North Island.

April 2024 Outlook — Cooler conditions prevail during the first week of April as a weakening front brings a burst of heavy rain to parts of western South Island, while the remainder of New Zealand remains largely dry with gradually warming afternoon temperatures but chilly mornings. A more active weather pattern emerges next week, with a hybrid system approaching from both the Tasman Sea and Southern Ocean. This is likely to be the wettest week this month across many regions, with some heavy rain and potential for downpours. This could also be the warmest period of April across the North Island if a large-scale northerly wind stalls over the country. The strong low pressure anomaly stalls southeast of New Zealand by mid-month, with a heightened risk of south-to-southeasterly winds delivering much colder conditions across the board. Frosts may become commonplace about inland areas during this time, and the odd hard frost cannot be ruled out about the South Island high country. Rainfall should trend close to normal under passing showers, though western South Island is at-risk of seeing below-normal precipitation. The final week of April sees very little in the way of rainfall or temperature anomalies, with a likely mix of weakening fronts spreading across the country alongside passing highs.

The Wholesale Gas Market

Spot gas prices increased significantly in March averaging $19.5/GJ – up 22% in the month. Wholesale prices are now about 59% higher than they were at the same time last year.

On the supply side the gradual decline in output across most fields continued through March, exacerbated by an 18 day shutdown at Pohokura, followed by a significant drop in output on its return. Maui started the month producing just under 80TJ per day, reducing to mid 70s by the end of the month. Pohokura started the month averaging 57TJ per day, returning after its shutdown averaging mid 30TJ per day. McKee / Mangahewa averaged low 60TJs across the month. Kupe also dropped away during the month from mid- 50s at the start of the month to 47.5TJ per day at the end of the month.

The following graph shows production levels from major fields over the last 6 years.

On the demand side, Methanex Motonui’s usage declined through March providing the buffer for the reduced supply. Usage started the month in the low 120TJ/day, dropping to close to 80TJ/day for the rest of the month – even after Pohokura returned. Huntly power station decreased slightly, averaging 46TJ/day, while TCC operated throughout the whole month, averaging 25TJ per day.

The following graph shows trends in the major gas users over the last 6 years.

Internationally, LNG netback prices ended the month at $10.94/GJ – down a further 9% from last month. Forecast prices for 2024 increased to $13.32 – up 4% compared to February. Forecast prices for 2025 were also up 5% at $14.1/GJ.

The following graph shows the Saudi Aramco LPG pricing for the last 3 years as well as forecast pricing for the year ahead.

The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. As shown below this has been falling over the last few years adding to domestic LPG prices.

The Coal Market

The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. Prices in March were down slightly, ending the month at US$121/T – an 8% drop on the February close. These prices are finally returning to levels close to what we expect to see as shown in the following graph of prices over the last 10 years.

Like gas, the price of coal can flow through and have an impact on the electricity market. However, coal stockpiles at Huntly are at the highest they have been for many years helping to assure the market that there is plenty of fuel available in the event of dry conditions in the hydro catchments.

Carbon Pricing

EU Carbon Permits Increased in March to 62 Euro/tonne – up 10%.

About this Report

This energy market summary report provides information on wholesale price trends within the NZ Electricity Market.

Please note that all electricity prices are presented as a $ per MWh price and all carbon prices as a $ per unit price.

All spot prices are published by the Electricity Authority. Futures contract prices are sourced from ASX.

Further information can be found at the locations noted below.

Transpower publishes a range of detailed information which can be found here: https://www.transpower.co.nz/power-system-live-data

The Electricity Authority publishes a range of detailed information which can be found here: https://www.emi.ea.govt.nz/

Weather and Climate data – The MetService publishes a range of weather-related information which can be found here: https://www.metservice.com/

Disclaimer

About Smart Power

Smart Power is a full-service Energy Management consultancy. Apart from Energy Procurement, Smart Power can also provide:

Technical Advice on how to reduce your energy use/emissions
Sustainability Reporting
Invoice Management services.

We also offer boutique energy and water billing service for landlords/property developers.

Contact us at https://smartpower1.wpenginepowered.com/contact/ or ring one of our offices to talk to one of our experienced staff about how we can assist you with achieving your energy goals.

Market Update February 2024

March 6, 2024 by magnum

The Wholesale Electricity Market

Spot prices in the wholesale electricity market decreased in February. Average spot prices ranged from $133 in the lower South Island (down from $183 in January), up to $165 in the upper North Island (down from $204).

The following chart shows average weekly spot prices over the last 2 years. After falling at the end of January, prices rose steadily throughout February. The recent see-sawing in prices can be clearly seen to the right of the graph.

Electricity Demand

Electricity demand through February remained at the high end and above recent years as shown below.

Electricity Generation Mix

Throughout February thermal generation has picked up displacing hydro to try to conserve hydro storage.

HVDC Transfer

February saw northward transfer reduce and southward transfer increase to conserve SI hydro storage.

The Electricity Futures Market

The following graph shows Futures pricing for CY 2024, 2025, 2026 and 2027 at Otahuhu (Auckland) for the last 2 years.

Note that $100/MWh equates to 10c/kWh.

Forward prices were down slightly in February for most future years. CY 2025 was up slightly at $163 (+0.5%). CY 2026 price was down 3% at $147 while CY 2027 closed down slightly at $139/MWh (-0.5%).

Known new generation projects are shown below (additions / removals highlighted in bold).

Hydro Storage

Inflows were above average in the NI at the start of February before dropping away later in the month. Inflows remained below average for the SI for the whole month as shown in the following charts.

Below average February inflows resulted in energy storage levels falling. NZ storage ended the month at 3,454GWh or 78% full, down 280GWh. The following chart shows the latest breakdown of storage across the main hydro catchments.

Security of supply risks increased in February with storage levels decreasing. We are currently slightly below the level we would typically expect to see for this time of year; but remain well above the risk zones. This is shown in the following risk curves.

Snowpack

Snowpack is an important way that hydro energy is stored over the winter months and released as hydro inflows in the spring. The following graph shows that the snowpack in the important Waitaki catchment is currently below mean levels seen in the last 30 years for this time of year.

Climate outlook overview (from the MetService)

Climate Drivers — Oceanic sea surface temperatures about the equatorial Pacific Ocean are declining, indicative of a weakening El Nino event. While this El Nino event is expected to ease and become neutral over the coming months, New Zealand should expect an enhanced westerly flow to persist through much of autumn. The Madden-Julian Oscillation (MJO) is expected to make its return to the Southwest Pacific around mid-March, bringing with it an increased potential for warmer (and wetter) subtropical systems across the North Island under an enhanced northeasterly flow. The South Island may see some of this tropical moisture as well, but these will be more of a ‘boom or bust’ scenario.

March 2024 Outlook — A dreary start to autumn as a Southern Ocean cold front sweeps up the country and brings a burst of rain and wind to much of New Zealand as the active westerly weather pattern persists. After this front, some respite is likely as high pressure settles across the country. However, with clearing skies and lighter winds comes falling temperatures, and parts of the lower South Island could see overnight lows approaching freezing by the middle of next week. This pattern shifts around the middle of the month as the MJO once again becomes active in our neck of the woods, which brings an increased potential for a subtropical low or two to approach the country. Peak risk is from mid-month into the third week of March, with the North Island most likely to see warmer temperatures, a potential rainmaker and an uptick in thunderstorm activity, though this is a ‘boom or bust’ situation. The South Island may see some northerly rain as well if a low can drive further south. However, if a subtropical low does not affect New Zealand, then much of the country can expect an overall drier-than-normal month. March ends on a transitional note, as high pressure builds back across the North Island and lower pressure returns once again further south. Although El Nino is on an easing trend, its impacts will likely be felt well into autumn.

The Wholesale Gas Market

Spot gas prices increased again in February averaging $16/GJ – up 5% in the month. Wholesale prices are now about 58% higher than they were at the same time last year.

On the supply side the gradual decline in output across most fields continued through February. Maui started the month producing just under 85TJ per day, reducing to low 80s / high 70s by the end of the month. Pohokura maintained high 70s throughout February while McKee / Mangahewa averaged mid 60TJs across the month. Kupe maintained the increased level noted last month with production averaging mid- 50s.

The following graph shows production levels from major fields over the last 4 years.

On the demand side, Methanex Motonui’s usage declined through February from around 140TJ/day to low 120s by the end of the month. Huntly power station increased, averaging 50TJ/day, while TCC started the month shut down, then started up on the 11th Feb averaging 30TJ per day for the rest of the month.

The following graph shows trends in the major gas users over the last 4 years.

Methanex reported earnings during January when it was noted that their NZ production was forecast to be lower this year, at least partly due to expected gas supply constraints.

Internationally, LNG netback prices ended the month at $12.03/GJ – down a further 14% from last month. Forecast prices for 2024 fell again to $12.77 – down another 8.5% compared to January. Forecast prices for 2025 were also down 7.5% at $13.4/GJ.

The following graph shows the Saudi Aramco LPG pricing for the last 3 years as well as forecast pricing for the year ahead.

The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. As shown below this has been falling over the last few years adding to domestic LPG prices.

The Coal Market

The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. Prices in February increased, ending the month at US$132/T – a 14% lift on the January close. These prices are finally returning to levels close to what we expect to see as shown in the following graph of prices over the last 10 years.

Carbon Pricing

EU Carbon Permits decreased further in February to 56 Euro/tonne – down 11%.

About this Report

This energy market summary report provides information on wholesale price trends within the NZ Electricity Market.

Please note that all electricity prices are presented as a $ per MWh price and all carbon prices as a $ per unit price.

All spot prices are published by the Electricity Authority. Futures contract prices are sourced from ASX.

Further information can be found at the locations noted below.

Transpower publishes a range of detailed information which can be found here: https://www.transpower.co.nz/power-system-live-data

The Electricity Authority publishes a range of detailed information which can be found here: https://www.emi.ea.govt.nz/

Weather and Climate data – The MetService publishes a range of weather-related information which can be found here: https://www.metservice.com/

Disclaimer

About Smart Power

Smart Power is a full-service Energy Management consultancy. Apart from Energy Procurement, Smart Power can also provide:

Technical Advice on how to reduce your energy use/emissions
Sustainability Reporting
Invoice Management services.

We also offer boutique energy and water billing service for landlords/property developers.

Contact us at https://smartpower1.wpenginepowered.com/contact/ or ring one of our offices to talk to one of our experienced staff about how we can assist you with achieving your energy goals.