A year is a long time in the world of electricity. A lot happens.
And when you’re watching the wholesale electricity market like we are, you see it all: the blink-and-miss spikes, the calm plateaus, the short-lived highs and the lingering lows.
But that’s why we’re in this business. Because over that very same year – despite the ups and downs – if you’re buying electricity with Flick on our Freestyle plan and taking advantage of the spot price of power, your long term gains are likely to be in the black.
So how does it work?
Approximately 80% of New Zealand’s electricity is harnessed from renewable sources, like wind farms, hydropower stations and geothermal plants. By its very nature, that also means that our weather will influence how much electricity these sources generate. In short, lots of wind and rain = lots more electricity (there’s always a silver lining!).
So, what does that mean for you? Basically, it comes down to seasonal supply and demand, which is why it’s so important to look at spot prices and savings over the course of the entire year, not just day-by-day or week-by-week.
So what happens over the year?
In the colder months when the days are short, treacherously wet and windy, and you’re huddled inside by the fire, the wholesale price of electricity tends to drop because, usually, there is plenty of wind to spin the turbines and rain to fill the rivers and lakes.
If you’re with a traditional power company though, you won’t notice the oversupply of electricity from all that NZ rain because you pay a higher fixed rate. That means that any savings made during these wet and windy months goes straight to your power company. In fact, it’s more than likely that your power bill will increase because you’re using more electricity to combat the cold weather, while still paying the same fixed price.
But Flick’s Freestyle customers can rejoice – the cheaper price of electricity is passed directly on to you! While we might see the occasional higher price or spike, in general, more wind and rain means more savings in your bank account.
And in the event of a dry winter?
When we see less rainfall than expected, lakes can become low and less hydro (cheap and renewable!) energy becomes available to meet demand. If this happens during the colder months when demand for electricity is high, the price of electricity on the spot market can increase.
It’s during a dry winter that your Flick smart tools really shine! By keeping an eye on power prices via the Flick app, responding to high price notifications and shifting your power usage to off-peak times of the day when the cost of power is low, like overnight and on the weekends, you can get through a dry winter and still save money on your power bill with Flick.
But what about in the summertime?
In summer and autumn, when the days are long and warm and the weather tends to be calm and sunny (mostly…), the spot price of electricity increases thanks to less wind and rain. Supply is generally lower. But at the same time, demand for power also decreases – the heaters are turned off, lighting isn’t needed until much later at night, and the washing is dried on the line.
Your power bill under the traditional flat-price model of electricity will generally be lower than usual because you’re using less. By wholesale standards though, the fixed rate prices are still quite high.
For our Freestyle customers, spot prices may be slightly higher than usual. But because you use less electricity over this time, it’s not going to affect your power bill too much. And the spot prices will generally still be lower than what you’d pay on a standard fixed rate contract. Check out your latest power bill and see how your kilowatt charges compare to the spot prices listed below.
What else happens in the year?
So much! We mention off-peak times above – did you know that there are certain times of each and every day when spot prices are low? At Flick we have our eyes and ears on the market, so we can tell you exactly when the least people are using their electricity (this is what’s known as ‘off-peak’ times). Less users means less demand and lower spot prices. And if you’re aware of these off-peak times, you can be a bit more picky about when you use your power each day. Think of the savings over the course of the year!
But what about price spikes?
Occasionally, prices will spike when there isn’t enough low-cost electricity in the market to meet demand (for example, if the wind drops and there isn’t enough reserve generation, or if a snowstorm rolls in and everyone cranks up their heaters!). But don’t stress – this usually only lasts for one or two 30-minute trading periods before generators release electricity from alternative sources to catch up with demand. If you’re still silently freaking out at the thought of price spikes, have a read of our price spikes blog to calm your nerves.
So it really is a long-term game?
Yip, it really is. Most weeks you’ll see savings, others you won’t. But in the past 24 months, Flicksters riding the Freestyle spot price wave have saved an average of $600 (as at September 2018). That’s huge!
And if, for some reason, you find that Freestyle’s just not your jam, we’ve still got you covered. That’s because we’ve introduced a new way of doing Flick - FIXIE! It’s a pricing product that lets you fix your generation price - a.k.a the moving spot price - for 6 months at a time. You’ll still get all the costs of supply passed through without any margin and our Flick charges are still completely separate and transparent (we wouldn’t have it any other way!).
Plus, if you’re on a network plan where you pay a different price for getting power to your place depending on the time of day, week, or season, you’ll still get these different prices. So, you know when to move your energy use around to take advantage of lower price times. And we’ll still let you know when it’s the best time to use power in your Flick app. #Flickyeah!
What’s more, you can easily switch between Freestyle and FIXIE - just give us a bell on 0800 4 FLICK or send us a line at email@example.com.
Make the change to Flick: we’re flickin’ confident that you’ll be better off in the long run.
*This blog was written in 2016, and edited again in 2017. Though spot pricing circumstances have changed as at 2019, we continue to display this blog because it highlights the current volatile nature of NZ’s wholesale electricity market, and reinforces our view that regulatory changes are needed in order to deliver a market that functions as it should, in the best interests of Kiwi electricity users.