Market Update April 2025

May 6, 2025
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Market Update

The Wholesale Electricity Market

Spot prices in the wholesale electricity market for April increased again from March’s already very high levels. Average spot prices for the month ranged from $308 in the central North Island (up from $272 in March) to $350 in the upper South Island ($320 in March).

The following chart shows average weekly spot prices over the last 2 years. The large increase since January can be clearly seen.

Electricity Demand

Electricity demand in April was close to average for most of the month, compared to what we have seen in recent years, but dropped to below average towards the end of the month, as shown below.  

Electricity Generation Mix

Some reasonable inflows allowed for increased hydro generation at the start of April, though this reduced throughout the month. Thermal generation increased in week 2; however, increased wind in week 3 and geothermal in weeks 3 and 4 allowed thermal to back off a little.

HVDC Transfer

Power transfers on the HVDC link connecting the North and South Islands are important both in showing relative hydro positions and the reliance on thermal power to meet demand. High northward flow tends to indicate a good SI hydro position, whereas the reverse indicates a heavy reliance on thermal power to make up for hydro shortages.

With some increased South Island inflows early in the month, April saw some net northward transfer at the start of the month, however, that reversed later in the month, returning to net southward transfer.

The Electricity Futures Market

The Futures Market provides an indication of where market participants see the spot market moving in the future. They are based on actual trades between participants looking to hedge their positions (as both buyers and sellers) into the future against potential spot market volatility. They are also a useful proxy for the direction of retail contracts.

The following graph shows Futures pricing for CY 2025, 2026, 2027 and 2028 at Otahuhu (Auckland) for the last 2 years.

Note that $100/MWh equates to 10c/kWh.

Forward prices were up for all years through April. CAL 2026 ended the month at $209/MWh – up 7% over the month. CY 2027 price was up 4% at $186.5 while CY 2028 increased 3% at $186. 

Known new generation projects are shown below (additions / removals / changes highlighted in bold). 

Hydro Storage

Inflows in both the North and South Islands increased in April, though the North Island remained below average. The South Island inflows were above average at the start of the month before returning to below average later in the month.

These inflows resulted in energy storage levels increasing 105GWh through the month to end at 2,780GWh (62% full). Storage remains well below the average level seen at this time of year. The following chart shows the latest breakdown of storage across the main hydro catchments.

Security of supply risks decreased through April with storage levels increasing as shown below.

Snowpack

Snowpack is an important way that hydro energy is stored over the winter months and released as hydro inflows in the spring. The following graph shows that the snowpack in the important Waitaki catchment stayed at minimal levels through April, and it is currently (on the 26th April) near the minimum levels seen in the last 30 years for this time of year.

Climate Outlook Overview (from the MetService)

Climate Drivers — The El Niño-Southern Oscillation (ENSO) index is now firmly at neutral levels as sea surface temperatures around the eastern Equatorial Pacific return to normal. However, atmospheric conditions in these regions still exhibit La Niña-like traits (e.g. more northerly lows), though this is forecast to gradually ease away as we head into winter.

Both the Tasman Sea Index (TSI) and Southern Annular Mode (SAM) are currently in negative territory given the ongoing low-pressure system, but these are both forecast to trend much more positive (settled) from this weekend and persist through mid-month. The risk for tropical development also eases by mid-May.

Sea Surface Temperatures (SST) are much warmer than average, particularly surrounding the South Island, which may add fuel to the ongoing rain event.

May 2025 Outlook — An intense low-pressure system affects the country this week, delivering large amounts of rainfall to eastern regions with Christchurch and parts of Canterbury in the firing line, and the strongest southerly wind burst across the lower North Island since the June 2013 storm. With winter soon on its way, a rush of heavy snow is also expected for the Canterbury High Country, with snow already settling at higher stations. A State of Emergency has already been declared for the Selwyn District, and more rain is on the way before easing this evening. Expect gradually improving conditions through this weekend as the low moves away.

Next week sees high pressure build across the country with warming afternoons but chilly mornings, with largely dry weather. Fiordland may still cop the occasional passing Southern Ocean cold front with above normal rainfall, but any feature should significantly weaken as it spreads northwards. However, there are signals for another northerly low late in the week, so keep an eye to the sky for any further development.

High pressure moves east and weakens around mid-month, allowing for the return of a more seasonal progression of quick-moving fronts across the country. The North Island should trend near average or slightly drier-than-average, but conditions further south are looking close to normal with a passing front or two.

The last two weeks of autumn see more seasonable conditions (e.g. near-average rainfall) across most of the motu, but a strengthening westerly flow across the Southern Ocean hints at higher rainfall across Westland and Fiordland, while the odd northerly low will remain possible. With winter right around the corner, it will become increasingly important to be mindful that any southerly change accompanying a frontal passage would bring a short but sharp cold snap with potential for snow.

The Wholesale Gas Market

Spot gas prices in April remained close to the very high levels seen last month. Prices for the month averaged $20.6/GJ – a 2% increase compared to March. Average prices were 5% below what they were at the same time last year.

On the supply side, McKee / Mangahewa was the only producer to increase output – up from 44TJ per day in March to around close to 60TJ/day by the end of April. Turangi and Kowhai maintained the higher output seen since late January, averaging 66.5TJ/day through April. Maui production reduced slightly over the month, falling to 49TJ/day. Pohokura also decreased output slightly, averaging around 35TJ/day. Kupe also reduced slightly to 40TJ/day.

The following graph shows production levels from major fields over the last seven years.

Methanex gas usage maintained the reduced level seen in March, averaging close to 50TJ/day before increasing to around 60TJ per day in the last week of April. Huntly usage increased in April, averaging over 60TJ/day. After running for most of March, TCC shut down and did not operate at all in April.

The following graph shows trends in the major gas users over the last seven years.

Gas storage is becoming increasingly important as falling production coincides with more variable demand, particularly from gas-fired electricity generation. The following chart shows how storage at Ahuroa maintained its level through April. It remains above average levels seen at this time of year over the last few years.

Internationally, LNG netback prices ended the month at $16.88/GJ – down 8.5% from last month. Forecast prices for 2025 were down 10% at $16.76/GJ. Forward prices for 2026 were also down 10% at $14.71/GJ. (Note that netback prices are indicative of international prices – they are produced by the ACCC and quoted in Australian dollars. They are net of the estimated costs to convert from pipeline gas in Australia to LNG, hence the term “netback”)

New Zealand does not (yet) have an LNG export/import market, so our domestic prices are not directly linked to global prices. With recent gas supply issues, the Government is now talking about the possibility of facilitating the building of an LNG import facility.

LPG is an important fuel for many large energy users, particularly in areas where reticulated natural gas is not available. The contract price of LPG is typically set by international benchmarks such as the Saudi Aramco LPG – normally quoted in US$ per metric tonne.

The following graph shows the Saudi Aramco LPG pricing for the last 4 years as well as forecast pricing for the year ahead. Futures pricing were down over the last month and are trending down through 2026.

The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. The exchange rate was volatile during April, dropping as low as 0.55 but closing near its monthly high of 0.59. This remains near the lowest levels seen in recent years. This would tend to push up LPG prices when quoted in NZD.

The Coal Market

The global energy crisis has been as much about coal as it has gas. The war in the Ukraine has driven energy prices, including coal, up. Prices in April fell to a low of US$93/T before picking up to end the month at US$98/T – a 2% fall over the month. These prices are finally returning to levels close to what we expect to see, as shown in the following graph of prices over the last 10 years. 

Like gas, the price of coal can flow through and have an impact on the electricity market. In March, Genesis reported that it expects to import about 630,000 tonnes of coal between now and September. The company says it currently holds about 515,000 tonnes at Huntly and has plans in place to make a third dual-fuel Rankine unit there available this winter if gas supplies and lake storage remain tight. Genesis says that 500,000 tonnes is the equivalent of about 1,000GWh of electricity storage or 22% of maximum hydro storage in NZ.

Carbon Pricing

NZ has had an Emissions Trading Scheme (ETS) in place since 2008. It has been subsequently reviewed by several governments and is now an “uncapped” price scheme closely linked to international schemes. However, there are “upper and lower guardrails” set up to prevent wild swings in carbon price that act as minimum and maximum prices. These increased in December 2023 to $173 and $64 respectively. Carbon prices decreased 15% in April to $49.

As the carbon price rises, the cost of coal, gas or other fossil fuels used in process heat applications will naturally also rise. Electricity prices are also affected by a rising carbon price. Electricity prices are set by the marginal producing unit – in NZ this is currently typically coal or gas or hydro generators, with the latter valuing the cost of its water against the former. An increase in carbon price can lead to an increase in electricity prices in the short to medium term (as the marginal units set the price). A carbon price of $50/t is estimated to currently add about $25/MWh (or ~2.5c/kWh) to electricity prices. In the long term the impact should reduce as money is invested in more low-cost renewables and there is less reliance on gas and coal-fired generation.

EU Carbon units decreased in April to 66 Euro/tonne – down 3%.

About this Report:

This energy market summary report provides information on wholesale price trends within the NZ Electricity Market. Please note that all electricity prices are presented as a $ per MWh price and all carbon prices as a $ per unit price. All spot prices are published by the Electricity Authority. Futures contract prices are sourced from ASX.

Further information can be found at the locations noted below.

  • Weather and Climate data – The MetService publishes a range of weather-related information, which can be found here: https://www.metservice.com/

Disclaimer: This document has been prepared for informational and explanatory purposes only and is not intended to be relied upon by any person. This document does not form part of any existing or future contract or agreement between us. We make no representation, assurance, or guarantee as to the accuracy of the information provided. To the maximum extent permitted by law, none of Smart Power Ltd, its related companies, directors, employees or agents accepts any liability for any loss arising from the use of this document or its contents or otherwise arising out of or in connection with it. You must not provide this document or any information contained in it to any third party without our prior consent.

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