Kia ora, Flick whanau,
It’s been a minute since our last market update, and during that time we’ve seen some flooding, a confirmation that La Niña’s here, and, of course, an election. So, what does all that mean for the wonderful world of electricity? Let’s check it out.
Hey, hey, hydro
Although October was a warmer and drier month across much of the country, hydro inflows increased to help lift national storage from the lower lake levels we saw at the end of September. Since then, good ol’ spring has seen a fairly wet November and some more steady inflows. Last week’s heavy downpour led to the heaviest inflow event in the North Island for over a year, and North Island storage increased to above average for the first time since March. Niiiice. Overall, that means our lake levels are looking good once again - national storage currently sits at a healthy 112% of average.
Some sweeter spot prices
With lake levels on the rise, we’ve seen spot prices decline a little over the last month. From 18 October through until 18 November, prices have averaged 9.6 c/kWh - that’s down from 12.1 c/kWh for the period 18 September through to 18 October.
With Labour back in, Megan Woods has once again been handed the portfolio for Minister for Energy and Resources. Our view? We’re hopeful that this continuity between Governments will mean good things for the electricity market, and an escalated push to bring in the changes of the Electricity Price Review.
Meridian and Contact’s spilling
Our complaint against Meridian and Contact Energy regarding the unnecessary spilling of water from their hydro stations is an ongoing saga. Last Friday, the Electricity Authority (EA) released another consultation paper asking for more submissions on the issues from the initial investigation. They’re also looking into the possibility of extending the period of the complaint by 11 days, which more accurately reflects our view of how long the spilling continued for. The EA intends to make a final decision in December - we’ll keep you posted!
Projects in the pipeline
Transpower has been busy! The Clutha Upper Waitaki Lines Project is well underway, which will increase capacity of the lines from 600MW to 1000MW. That’ll improve electricity supply to Southland during dry periods, and allow more lower South Island generation to be exported northwards from Southland (a big project in the post-Tiwai world, when surplus generation becomes available).
And good news for renewable generation - there’s a new wind farm taking shape in South Taranaki! Waipipi Wind Farm is due to be completed by March next year, and its 31 turbines will generate 133MW, adding more renewable generation to the mix and also additional generation when things are tight.
Demand is a-changing
Dry ground meant that spring irrigation kicked off a month earlier in the South Island this year (compared to last year), and that’s having an interesting effect on the traditional seasonal demand. Where once demand peaked in the winter, in the South Island Transpower has noted similar demand levels across summer and winter, with demand dropping off in the shoulder seasons, and that’s largely to do with the use of irrigation. Interesting stuff!
What’s ahead, weather-wise?
The team at NIWA have confirmed a La Niña event is looking likely (a 96% chance) and that all signs are pointing to it - but what exactly is La Niña, and what will it mean for the electricity market? La Niña tends to bring more northeasterly winds and rainfall to the northeastern North Island, and reduced rainfall to the lower-western South Island. It’s also likely to mean above average temperatures, and an elevated risk of ex-tropical cyclones near our coastlines.
Transpower has suggested this could mean fluctuations in hydrological inflows, with possible above-average inflows from June to December and below-average inflows from January to May.
That’s it for now, folks - we’ll post again before Christmas!