Wholesale electricity prices fall in July
Wholesale electricity prices fall in July despite HVDC restriction
Thu, 5 Aug 2004
The unplanned partial outage on the inter-island HVDC link that occurred on June 23 resulted in HVDC flows being restricted to 700MW throughout July. At times this created significant price separation, with North Island prices being higher than South Island prices. In 10 half-hour trading periods in July, the difference between the final Haywards price and the final Benmore price exceeded 10c/kWh.
Despite the HVDC restriction and high demand levels, average prices for the month were down on the June figures due to the above average hydro storage levels. The average price for July at the Haywards reference node was 2.61 c/kWh, down from the June average of 3.35 c/kWh. The average price at Benmore, the South Island reference node, also decreased from 2.72 c/kWh in June to 1.77 c/kWh in July. Prices at Otahuhu, the upper North Island reference node decreased from 3.63 c/kWh in June to an average of 2.86 c/kWh for July.
During the evening peak period on 2, 10 and 12 July, the HVDC restrictions combined with a shortage of standby reserve (back up generation and interruptible load) saw North Island prices spike to approximately $1/kWh. This resulted in the Crown's Whirinaki reserve plant being dispatched on those days. Northward HVDC flows were at their maximum during these periods, meaning no additional South Island generation could be used to meet the projected shortfall.
Average daily demand for July was 114.5 GWh, up from 109.6 GWh in June. The 22 July demand of 122.3 GWh was the highest level recorded for a single day since the wholesale electricity market began operating in 1996.
July inflows were 104% of the average and by the end of the month storage was 125% of average. Storage levels began the month at 3,899 GWh and by 31 July were at 2,986 GWh.
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