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What's Up With The Market? 4 July 2019

Kia ora, Flicksters! It feels like we’re racing through the year at a rate of knots, with the first month of winter coming and going quicker than you can say “Flick!”. So how’s the market looking, where are hydro lake levels at, and what can we expect for July? Let’s take a look.

Lake levels

Hydro storage has dropped over the last 4 weeks - as is typical for this time of year - though overall it sits at a nice, healthy level of around 108% of average. North Island storage has fallen to 69% of average for this time of year, while South Island hydro storage remains strong at around 120% of average for this time of year.

We’ve got gas

Gas fulfils about 21% of NZ’s energy needs, so it’s great news that we’ve had no issues lately with thermal fuel availability. In fact, Contact Energy, who’s secured gas for this current winter, has now also entered into a gas supply agreement with Maui for the winter months of 2020 to 2024. On top of that, MBIE info suggests that gas reserves have increased by 7% (based on proved plus probable data). Taking into account our average consumption levels over the past four years, it’ll mean we have around 11 years of supply without any further exploration and development.

HVDC maintenance

The HVDC cable, which transports electricity between the islands, encountered a few oscillation issues (also known as dips in voltage) over recent weeks, and this meant that Pole 2 of the HVDC cable was taken out of service for a few hours on Monday. Fortunately, the maintenance was carried out during off-peak times and over a warmer evening, so there was no impact on the market.

Fine but frosty

Although the beginning and end of June were fairly frosty and cold, according to Metservice it was a warmer and drier month overall. As expected, some nippy temperatures saw a jump in demand for electricity, with the highest peak load of 2019 so far (6400MW) being reached on Wednesday 19th of June, and on a number of those frosty and calm days when wind generation was low, we saw a few price spikes. On the whole, June spot prices averaged $105/MWh (or 10.5c/kWh) - a little higher than prices this time last year.

What’s ahead?

Metservice’s rainfall projection for July is suggesting some unsettled and wet weather (and possibly a few good snowfalls for you mountain lovers out there!), with the first half of July predicted to be warmer than usual, but colder than usual in the second half. Rainfall levels for the country look set to be between near normal and above normal, and inflows are expected into the North and South Island hydro lakes over the next few days which should stop levels dropping for several days.

Until the next update, Flicksters!