We’ve been asked many times recently why spot prices are so high, so this has prompted me to finally put fingers to keyboard for another blog. The spot prices are a function of low hydro storage, restricted fuel supplies, and plant outages.
Price Spikes Hit the Big Time
By Greg Sise, May 31, 2018
Since 23rd May we’ve seen big price spikes, to over $1,000/MWh at Otahuhu for example, consistently during the peak demand at the end of the day. In this post we take a brief look at what’s causing these spikes.
End of an Era in Exploration
By Greg Sise, April 18, 2018
It’s ironic that this month’s announcement that there will be no new offshore oil and gas exploration permits issued in New Zealand was titled “Planning for the future…”. This announcement was totally out of the blue and if there is a “plan” somewhere, it appears that no one outside of government knows what it is.
Gas versus Coal – ‘Storage Wars’
By Shelley Mackay, March 12, 2018
It’s been a while since our last blog post due to workload and other factors, but it’s a new year and it’s going to be another interesting year in the electricity industry, an industry undergoing change. In this post we look at the recent announcement by Contact Energy of the sale of the Ahuroa Gas Storage facility to First Gas.
The Cost of Inter-island Power Transfers
By Greg Sise, November 27, 2017
I’ve given talks recently at the Energy Trader Forum in Wellington and at the Otago Energy Research Centre’s annual symposium in Dunedin, including an overview of how recent upgrades on the HVDC link have changed the cost of transmission between the islands.
Issue 100 of the Electricity Industry's Best Kept Secret
By Greg Sise, July 19, 2017
The majority of direct and indirect participants in the electricity market, from generators and retailers through to large consumers, aren’t aware that there is an essential piece of market intelligence available free on this very web site. And this month we publish it for the 100th time.
Records Fall as Dry Period Continues
By Greg Sise, July 19, 2017
Inflows into the South Island’s major hydro lakes since February rank as the lowest on record, by quite a margin.
1992 Shortage Revisited
By Greg Sise, June 23, 2017
With the storage lakes falling fast, it got me thinking about other ‘dry year’ events we’ve experienced, which really helps to put the present, and the market, into context.
Competition, the Internet and the Customer
By Greg Sise, May 28, 2017
I was privileged to speak at the Energy Management Association of NZ (EMANZ) annual conference in Wellington last week and showed how market reforms over the last two decades, and now the Internet, are working together to disrupt the retail electricity market.
Should I stay on spot or switch?
By Greg Sise, May 26, 2017
After a long period of low spot prices and low volatility in spot prices, hydro storage lakes are emptying out and it’s a timely reminder that the hydro situation can change very quickly. But it raises the question: when spot prices start to rise, should I stay on a spot pricing plan, or should I switch to a fixed price plan?
Cost on the Line – The rising cost of delivering electricity
By Greg Sise, May 5, 2017
The charges for delivery of electricity (a.k.a. lines charges) include the cost of providing local networks and the transmission grid, and are published by local network companies, typically from 1 April for the year ahead. Now that the dust has settled from the most recent round of price adjustments, let’s take a look at what’s happening to line charges in major centres around the country.
Is the Answer Blowing in the Wind - an Update?
By Greg Sise, April 24, 2017
I was once again privileged to speak at NZWEA’s annual conference held in Wellington last week, updating some aspects from 2016 and posing a paradox for 2017.
Energy Link’s April 2017 Price Path
By Greg Sise, March 27, 2017
Our Price Path is a forecast of electricity spot prices at over 200 nodes on the national grid. The latest version was released last week and covers the period from April 2018 to March 2033.
Energy Exchange Reverse Auctions
By Greg Sise, March 12, 2017
Since launching in August 2016, the Energy Exchange has run reverse auctions covering a range of site types and sizes, proving its ability to deal with the wide range of needs typical of many larger electricity consumers.
What drives electricity prices?
By Greg Sise, March 6, 2017
What drives electricity prices? Demand? Fuel costs? Losses? Transmission constraints? Carbon costs? The cost of new generation? Inflows? Well they all have an impact to a certain degree. The time frames vary but the answer in the long run is surprising, especially given that we are currently running at over 80% renewable generation.
Back-casting 2016
By Greg Sise, February 26, 2017
One of the many challenges for anyone forecasting electricity spot prices, as Energy Link has done since first trading in 1996, is that some key factors affecting spot prices are fundamentally unpredictable in the short to medium term: inflows to the hydro lakes are a case in point.
2016 in Retrospect
By Greg Sise, February 5, 2017
Over the last 20 years, spot prices in the electricity market were highly volatile. But 2016 will be remembered as one of the least volatile years on record.
Energy Link’s January 2017 Price Path
By Greg Sise, December 22, 2016
This week we released our latest quarterly Price Path, a long term forecast of spot prices, to our subscribers. 2016 has indeed been an uneventful year on the spot market, a function of a warm winter and lots of rain for generation and for pastures. However, the last quarter delivered up some very significant news on the gas front.
New Zealand’s First Electricity Auction
By Greg Sise, November 21, 2016
Last Thursday 17th November our new Energy Exchange web site ran New Zealand’s first live internet reverse auction for electricity supply for the Southern Hemisphere Proving Ground, attracting bids from six retailers. By Greg Sise, Managing Director
Futures Efficiency and 100% Renewables at the OERC Symposium
By Greg Sise, November 17, 2016
The 10th annual Symposium of the Otago Energy Research Centre (OERC) was held in Dunedin on 10th and 11th November. I presented at the conference, and Fergus Bevin-McCrimmon gave a presentation of the results of his research on the efficiency of electricity futures markets. Energy Link was very pleased to sponsor the prize for the best student presentation, won by PhD candidate Paul Crane for his presentation titled “Helping Support Energy Management Systems at the University of Otago”.
2017 Course Dates are Now Available
By Greg Sise, November 17, 2016
Our courses are widely recognised as the most comprehensive in their subject areas. For 2017 we are running three sets of public courses, all in Wellington. We are also available to run these courses or customised courses in-house.
Is the Electricity Futures Market Liquid?
By Greg Sise, October 13, 2016
This is the third and final post in a series which draws on research undertaken in collaboration with the Department of Accountancy and Finance at the University of Otago. In the first post, we looked at evidence for premia in electricity futures prices. In the second post we found some surprising drivers of premia observed in futures prices. In this post we look at liquidity in the futures market, how it has evolved, and what developments or events caused it to change.
Energy Link’s October 2016 Price Path
By Greg Sise, September 21, 2016
Yesterday we released our latest quarterly Price Path, a long term forecast of spot prices, to our subscribers. It was an uneventful quarter since publishing our last Price Path update in July, but this update included some significant revisions of probabilities on extreme scenarios, and a large section on the viability of the thermal fleet.By Greg Sise, 21 September 2016