The Blog

The #CleverFlicker's Monthly Market Update - 6 MARCH 2020

Kia ora, Flicksters! It’s been a few weeks between electricity market updates (we still can’t quite believe we’re into March) and there’s been lots happening in the electricity world. So without further ado, let’s check out what’s been going on, and what’s coming up.

Lake levels lookin’ good

It’s been a wet summer down south in the catchment areas for our biggest hydro lakes, with a number of extreme weather events drenching the West Coast and Southland. After several decent inflows through February, hydro storage is around 85% of nominal full, and storage in the South Island has exceeded its nominal full for the second time in as many months. Overall, NZ’s storage is looking healthy at 115% of average for this time of year. Yeow!

How’s the HVDC?

As you might already be aware, we’re currently in the throes of a major outage on Aotearoa’s HVDC cable (the cable which transfers power between the North and South islands). The outage started in January and will run through to April 2020 while the team carries out inspections, maintenance and replacement of HVDC equipment.

With so much work required, it’s meant that the two poles which make up the HVDC, known as Pole 2 and Pole 3 (original names, huh!) have each required outages at different stages. Pole 2 has finished its outage and there’s currently an outage on Pole 3, which will limit how much electricity the HVDC can transfer from the South Island northwards. There are 2 more bipole outages (where both poles will be out of action) scheduled on 7th and 21st of March, before things wrap up in early April.

Watching the spot

Constraints on the HVDC link - and therefore the amount of power it can carry - can produce big differences between North Island and South Island electricity prices (known in the industry as price separation). We’ve seen this recently, where February’s average spot price reached $77MWh (or 7.7 c/kWh) in the North Island, and $40MWh (or 4.0 c/kWh) in South Island. The price differences are also exacerbated by heavy rains in the South Island and low wind days in the North Island.

While the HVDC work continues, it’s possible we’ll see the market come under a little stress at times, but if you’re keen to stay informed (go you!), follow this link over to Transpower.

What about gas?

There are a few gas outages planned, too, including: - An outage of the Pohokura gas production plant (11-24 Mar), and inspections of the infrastructure which might lead to further outages. - Minor reductions in gas deliverability at Kupe, Maui, Pohokura and Kapuni.

Let’s talk Tiwai

In October last year, the owners of the Tiwai aluminium smelter announced a strategic review of the site and said they’d be considering all options, including scaling back operations and closing down the plant. The review’s expected to be completed by the end of March, and with Tiwai being NZ’s largest user of electricity, a closure (or any sort of change from the current operation) is likely to have big impacts on the electricity market. Watch this space!

UTS update

In December of last year, we (along with a few other independent power companies) supported a claim to the EA accusing two generators, Meridian and Contact, of overcharging for South Island hydro generation while at the same time spilling water. The EA has said it intends to release its decision by the end of April. Check out our blog on the situation back in December here.

How’s that weather?

Those of you with low rainwater tank levels or limp-looking vege gardens will know that February was extremely dry, sunny and warm, particularly in the North Island and northeast of the South Island, with a number of areas now experiencing drought conditions. Meanwhile, down in Southland an extended period of heavy rain saw over a metre of rain recorded early in the month. Talk about contrasts!

For March, Metservice is forecasting drier than normal conditions in western areas of the North Island, as well as Nelson, Marlborough and Canterbury, and near-average rainfall for other areas.

That’s it for now, Flicksters - stay tuned for the next #CleverFlicker’s market update!