The CFD index fell by around 20% this month, not because contract prices fell, but because nine of the 16 CFDs included in the index have terms of five years or greater. This tends to average out some of the high prices currently making up the ASX forward curve.Four CFDs have terms of 10 years. FPVV terms are also longer than the typical, but none went beyond five years.
By Lydia Maclean, April 26, 2022
By Lydia Maclean, March 28, 2022
The Electricity Authority’s Market Development Group (MDAG) recently consulted on the initial phase of its investigation into price formation, with 100% renewable generation in our energy-only market. Energy Link contributed to this work and has also submitted.
By Lydia Maclean, March 22, 2022
The CFD index pushed up again this month, toward the ASX three-year average, but the FPVV index went down slightly on a greater volume (relative to CFDs). So overall, the main index rose by 1.8% to 11.3 c/kWh.
By Ruth McKinlay, March 14, 2022
We have often pointed out that ASX futures prices don’t always appear to behave rationally. In this post we look at the spread (difference) between the ASX futures prices at Benmore and Otahuhu.
By Greg Sise, March 7, 2022
As we make the transition to net-zero carbon, it’s always interesting see forecasts of emissions in the future. Every time we run our quarterly long-term forecast, the ‘Price Path’, we get updated forecasts of how emissions might change in the electricity sector.
By Greg Sise, January 18, 2022
The frequency of blog posts fell off last year after October as we found ourselves in an early Christmas rush period. We hope to be more consistent this year. First up, our submission on the Electricity Authority’s wholesale market review.
By Greg Sise, December 20, 2021
CFD index went down, FPVV index went up, so no change to the overall index this month, which stayed at 11.1 c/kWh ($111/MWh)
By Greg Sise, November 22, 2021
The main index fell by 7.6% this month, mainly the result of a fall in the FPVV sub-index. This month the data showed six new long-term contracts of ten year terms, following on from the three that appeared last month.
By Claudia McHerron, September 28, 2021
The main index continued its fall this month, as did both the FPVV and CFD indexes. The traded volumes in the indexes were relatively low again this month, perhaps as a result of lockdowns, but this may be pure coincidence.
By Greg Sise, September 17, 2021
This week Greg Sise provides a summary of his presentation on the problem of price formation with 100% renewable electricity, which he presented at the the Electricity Authority’s Market Development Advisory Group (MDAG) recently.
By Paul Chapman, August 31, 2021
Forecasts of spot prices are an important tool in the hedging toolkit, and this post provides an overview of the role of forecasts in hedging.
By Claudia McHerron, August 24, 2021
The main index fell this month, as we expected it would. But there were only three contracts to include in the indexes, one each for CFD and FPVV, which is unusual, but not unprecedented.
By Greg Sise, August 17, 2021
The blackout event of Monday 9th August caused a huge amount of negative publicity for the electricity market, but let’s take a closer look at some interesting aspects of this event.
By Claudia McHerron, July 23, 2021
The main index rose this month, but it does look like the market is at a peak, and the CFD index actually dropped like a stone this month, though this was on only one CFD contract that could be included in the indexes.
By Greg Sise, July 23, 2021
Total storage increased 283.6 GWh over the last week. South Island controlled storage increased 11.4 % to 1894 GWh; South Island uncontrolled storage increased 6.2 % to 509 GWh; with Taupo storage increasing 63.9 % to 156 GWh.
By Greg Sise, July 9, 2021
Spot prices averaged $175 at Benmore, $195 at Otahuhu, with a spike into the $400's in trading period 43.
By Greg Sise, July 9, 2021
Total storage increased 1.1 GWh over the last week. South Island controlled storage increased 1.4 % to 1713 GWh; South Island uncontrolled storage decreased 2.4 % to 570 GWh; with Taupo storage decreasing 6.2 % to 123 GWh.
By Claudia McHerron, June 15, 2021
There were only 3 contracts traded that were eligible to include in the index calculations this month, following the trend in April of low volumes of trading.
By Paul Chapman, May 28, 2021
“Are there any risks in using CFDs to hedge wholesale electricity prices?”
By Greg Sise, May 21, 2021
Electricity contract prices have risen, and could rise further. Every month we publish the electricity contract index, but I thought it's instructive to delve deeper into the underlying contract data.
By Greg Sise, May 16, 2021
In New Zealand the contract-for-differences (aka CFD) is the most common off-exchange method for hedging the price of electricity traded on the wholesale market for a specified quantity and time period. In other words, the CFD is a fundamental tool in the hedging toolbox.
By Greg Sise, April 23, 2021
“We’re about to launch a new, free tool on our web site. It calculates the LCOE of your generation project. But what the f*&% is it?"
By Paul Chapman, April 18, 2021
This blog post follows on from Hedging Fundamentals Part 1 and answers "Why are spot prices in the NZ wholesale electricity market so volatile?"
By Greg Sise, March 28, 2021
What’s behind the high spot prices? We take a more detailed look at who is setting prices, when and why.
By Paul Chapman, March 19, 2021
This blog post breakdown the fundamentals of hedging and provides an answer to the question "What is a hedge?".
By Greg Sise, March 12, 2021
If you have some small-scale generation, how do you sell its generation output? This post briefly describes some common scenarios.
By Greg Sise, February 1, 2021
We now know that the Tiwai smelter is likely to be around for another four years to December 2024; but prior to 14th January we didn’t know this. What do futures prices tell us about futures traders’ views of the probability of Tiwai staying longer than August 2021?
By Greg Sise, January 21, 2021
The Tiwai Pt aluminium smelter has received a stay of execution, with the news last week that Meridian Energy and the smelter’s majority owner, Rio Tinto, reached agreement on 13th January to amend their existing agreement so that its termination date is now 31st December 2024, and not August 2021.
By Greg Sise, January 21, 2021
The FPVV sub-index went up this month, but the CFD sub-index went down. The net result was the main index more-or-less went sideways, increasing by just over 1% to 8.9 c/kWh.
By Greg Sise, July 13, 2020
Rio Tinto, the majority owner of the Tiwai Pt aluminium smelter, announced last Thursday, 9th July, that it has terminated its electricity contracts with Meridian Energy and that it will close the smelter by August 2021. This will have a profound impact on the electricity sector which will be felt for years to co
By Greg Sise, July 13, 2020
Rio Tinto, the majority owner of the Tiwai Pt aluminium smelter, announced last Thursday, 9th July, that it has terminated its electricity contract with Meridian Energy and that it will close the smelter by August 2021. The announcement is short on details, and many questions remain unanswered.
By Greg Sise, April 21, 2020
A thought on everyone’s mind these days, or at least those involved in electricity supply, is what is Covid-19 doing to electricity demand? Well, the answer to this question is not simple, and we are working on it, but the answers will come highly qualified by the uncertainty surrounding the disease in New Zealand, the econ
By Greg Sise, December 2, 2019
The HVDC link will be operating with only one pole (one half) in service for most of the first quarter of 2020, to allow essential maintenance to be carried out. When this was first announced back in December 2017, futures prices barley moved, but they now show an expectation of a price difference between upper north and mid-south islands in the vicinity of $55/M
By Greg Sise, September 27, 2019
Spot prices surged late last year when there was a prolonged, unplanned outage at the Pohokura gas field offshore Taranaki. But they haven’t come back down to where they were prior to the gas outages. In this post we look at the reasons why and ask the question on everyone’s mind – will they remain high?
By Greg Sise, August 21, 2019
The fixed price electricity contract index increased by 16% this month to 10.0 c/kWh ($100/MWh) on a total of 15 contracts traded, representing 758 GWh from Jul-19 to Dec-23.
By Greg Sise, July 16, 2019
This is the third in a series of three posts on what I see as the most important issues for the electricity market for the 2020s and beyond. The first issue was woeful lack of disclosure in the gas market, and the second issue was the ineffectiveness of the electricity hedge market. This third and final issue is on the challenge of moving toward extremely high level
By Greg Sise, July 10, 2019
The government released a consultation paper yesterday on the Clean Car Standard and Clean Car Discount. The Clean Car Standard would require importers of new and used vehicles to lower the average emissions of the vehicles they bring into the country. The Clean Car Discount increases the cost of vehicles t
By Greg Sise, July 6, 2019
By Greg Sise, June 14, 2019
Daily average spot prices at key nodes ranged from $73 at Benmore to $95 at Otahuhu, with HVDC transfers hitting 918 MW north in trading period 38.
By Greg Sise, June 10, 2019
This is the second in a series of three posts on what I see as the most important issues for the electricity market for the 2020s. The first issue was disclosure in the gas market, which has as much impact on electricity as it has on gas, and is woefully inadequate. The second issue, and the topic of this post, is the electricity hedge market: how it is not working for new retail