EA Review Suggests Wholesale Market Not Broken
A first look into the Electricity Authority’s review of the wholesale electricity market suggests the market is not broken, BusinessNZ Energy Council (BEC) says.
While the review poses questions around competition, BEC Executive Director Tina Schirr says there is still no reason to allege consumers are not getting a fair deal when paying for electricity.
The review claims consumption from the Tiwai aluminium smelter is responsible for higher electricity prices. Ms Schirr says the report omits the smelter’s role in assisting with demand.
"This ignores the Tiwai smelter being able to respond to fluctuations in system demand and help out in dry years, potentially providing up to 25% of what’s needed."
Responding to the review’s query of wholesale market competition, Ms Schirr notes that gas still has a role to play in energy security and affordability.
New Zealand’s overall energy system is blessed by an abundance of renewable hydro-electricity - but we need other forms of energy available for when rainfall is low.
Our current gas supply constrain is not likely to ease before 2023 and more investment is needed to support energy security and affordability. Looking ahead, Ms Schirr says a more diverse renewable electricity mix will help to bring down electricity prices in the future.
"The Energy Trilemma- tells us our overall energy system is strong. The Electricity Authority’s review indicates that the electricity component of our energy system is working well."
Ms Schirr says she is looking forward to reading closely both the review and issues and options papers, out for review, in the coming weeks.
Each year the World Energy Council’s Energy Trilemma Index rates how well countries achieve the energy ‘trilemma’ - comparing how a country balances energy security, equity, and sustainability. New Zealand consistently scores within the top 10, ranking ninth of 127 countries in 2021.
Read the Electricity Authority’s full review here