Grant Cleland in this month’s “Parliamentary Economic Review”, looked at storage levels of hydro lakes in New Zealand and how much the New Zealand consumer was being charged. Hydroelectric power accounts for 11% of the total primary usage in New Zealand with imported oil and oil products making up 70% of the primary energy. Hydroelectric power accounts for 57% of the total electricity generation in New Zealand
In early February 2,521 Gigawatt hours (GWh) of water was stored in New Zealand’s lakes – normally around this time of year 3,100 – 3,200 GWh is available. This reduction in supply has pushed up the spot price of electricity from approximately 2.5 cents per Kilowatt hour (c/KWh) last year to 11.7 cents earlier this month.
It is interesting to look at the close correlation between lake levels and electricity prices in the graph below. Notice as lake levels are higher than what is normal for the time of year the spot price drops and vice-versa.