Electricity Prices Climbed Again In July
Average wholesale electricity prices continued their steep upward trend in July as icy temperatures around the country saw demand soar. Demand for electricity in July was around 6.9% higher than the same time last year and around 2.5% higher than in June. Other contributors to the price increase included lower than average inflows and transmission constraints.
The average monthly price at Benmore, the South Island reference point, rose sharply to 23.82 c/kWh, up from 16.97 c/kWh in June. The lower North Island reference point at Haywards recorded a similar price increase to 23.68 c/kWh, up from June’s figure of 16.61 c/kWh. The average price at Otahuhu, the reference point for the upper North Island, also rose to 14.90 c/kWh from 7.39 c/kWh in April.
Dryer than average conditions failed to replenish the country’s main hydro lakes, which also contributed significantly to July’s high wholesale prices. At the end of the month national storage was at 1,328GWh, 56% of the average for that time of year, with South Island storage at 56% of average. Lakes Tekapo and Pukaki, which account for almost 55% of New Zealand’s total storage capacity for hydro-electric generation, recorded storage levels of 33% and 41% respectively at the end of the month.
Transmission constraints limited the volume of electricity that could be transported from generation plant in the Taranaki region, which meant other generation had to be used instead. The grid operator has since eased this constraint. Additional constraints around the Wellington region and in the South Island led to occasional price spikes, which impacted significantly on average wholesale prices.
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