New Zealand Electricity Market Update
Welcome to our latest edition of Between the Lines, Tenco's publication, highlighting our capability, people, and ideas. This edition gives you an update on the electricity supply market in New Zealand, covers electric vehicles, and talks about distributed generation—a subject that comes up regularly as more and more of our clients want to produce their own electricity. We also get to know Tenco's Data and Transformation Lead, Duncan Golby. Duncan has held positions at Meridian Energy and Orion, bringing insightful knowledge and technical proficiency to the expanding Tenco team
New Zealand Electricity - Market Update
What Do I Need To Know?
The New Zealand electricity market is overseen and regulated by the New Zealand Electricity Authority and is owned and operated by Transpower. The electricity futures market allows electricity buyers to purchase a forward contract. This contract protects buyers against volatile spot prices by fixing their electricity prices for a specified period. Forward prices reflect expectations of future electricity demand and generation costs. Market buyers and sellers determine these prices and represent the consensus view of future prices. The electricity futures market indicates where market participants see the spot market moving in the future, providing a valuable proxy for the direction of retail contracts.
Current Market Commentary
The electricity market remained stable in October 2023. Wholesale electricity prices were little changed from the previous month, with hydro generation remaining close to average and hydro storage levels remaining slightly above average, with the month ending at 109% of average, down from 115% at the end of September 2023.
Forward prices have decreased for all calendar years in the six months to 31st October 2023, with the calendar year 2024 price decreasing by 3.9% and the calendar year 2025 and 2026 prices falling by 7.8% and 8.7% for the same period, respectively. The first trading of calendar year 2027 futures commenced on 2nd October 2023, reflecting a pullback from the calendar year 2026 prices due to the new generation under construction planned to be in the market by the start of 2027.
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If you have any energy supply agreements expiring in the next six months, you must consider your contract renewals now. Tenco operates an in-house tender desk and is well-versed in sourcing electricity and gas contracts for your business.
Electric Vehicles
Like many other countries, New Zealand has been experiencing a growing interest in electric vehicles (EVs) as a more environmentally friendly and sustainable transportation option. A range of electric vehicle models from various manufacturers is available in the New Zealand market. These include well-known brands like Tesla, Nissan, Hyundai, and others.
New Zealand's commitment to reducing greenhouse gas emissions and transitioning to a more sustainable future is a driving force behind the promotion of electric vehicles. EVs produce fewer emissions compared to traditional internal combustion engine vehicles, contributing to a reduction in the country's carbon footprint.
The adoption of electric vehicles in New Zealand is expected to grow as technology advances, charging infrastructure improves, and consumer awareness increases. The government's commitment to sustainability and reducing emissions further supports this trend. In October 2023, EV registrations increased again, accounting for 17.4% of all vehicle registrations, with consumers taking advantage of the opportunity to purchase electric vehicles while Labour's fee-rebate scheme is still in effect.
Distributed Generation
Tenco is fielding requests from private utility network clients and their respective consultants for distributed generation installations. These requests are specific to photovoltaic solar systems at this time but may include other technologies in the future. The volume of these requests is expected to increase as project costs continue to decline and the efficiency levels of solar systems improve.
Tenco provides administrative support to our clients who intend to install distributed generation within their embedded networks, which we manage on their behalf. Many Tenco clients have already installed generation systems, typically solar systems, within their embedded networks.
Tenco has prepared an information form that your nominated consultant can complete. Tenco collects certain relevant information regarding the generation so we can confirm the intended design of the metering and comply with specific electricity market requirements. The form is also designed to remind your consultants of specific market requirements, especially those from the local network company.
Request an Installation Control Point (ICP) Number
This form should be used to request ICP numbers for new connections and alterations to existing connections within Tenco managed embedded networks. Every connection to your network has its own ICP number, a unique 15-character number that identifies it as an individual power connection.
Please fill out the form below to request an installation connection point (ICP) to connect your electricity to your network via your retailer. Tenco will generate your ICP number and send you an email along with details of the connection type that has been supplied. To activate the power supply at your site, please provide your ICP number to your chosen energy retailer. They will set up your electricity account. Your selected energy retailer will request (as a legal obligation) an electrical inspection, and a meter will be installed. Once your site is live, your energy retailer manages ongoing usage, billing, and maintenance.
Team Spotlight
Originating from Walsall in England, Duncan moved to New Zealand in 1995 and completed a Bachelor of Commerce majoring in Economics. Post studies, Duncan has had a lengthy and fruitful career in the energy sector.
In his eleven years with Meridian Energy, he performed various senior analytical roles in electricity pricing, revenue assurance, and marketing. During his ten-year stint at Orion, Duncan worked as a Commercial Analyst, setting distribution prices in compliance with regulatory frameworks and overseeing Orion's regulatory reporting requirements.
Since joining Tenco 15 months ago, Duncan's extensive industry knowledge and advanced SQL, SAS, and Power BI skills have strengthened an already operationally strong team.
Summary of Tenco Services...
Tenco is the largest private utility network provider in New Zealand – serving over 200 clients across 350+ networks -- with specialist expertise built up over two decades. We have invested in best-in-class technology and people, so you do not have to do so.
Tenco provides its clients with an in-house ICP management service and is a registered electricity retailer. By managing gateway services under our retailer registration, we set ourselves apart by eliminating the risk of a third-party opting not to provide these services -- or increasing the cost of doing so. Tenco took this approach to mitigate any risk that would otherwise fall back on our clients.
Our Tenco Insights platform is available to all our embedded network clients (at no cost) for asset management and sustainability reporting purposes. Various performance metrics can be analysed to support green building compliance and asset optimisation.
Additionally, Tenco offers water, gas, and fibre broadband billing solutions and an in-house tender desk adept at sourcing competitive electricity and gas supply contracts. We are well-positioned to provide a wide range of utility-related services designed to increase the value of your asset.
Gordon Napier, Head of Client Services
027 605 4585
gordon.napier@tenco-ebs.co.nz
