The Wholesale Electricity Market
Spot prices in the wholesale electricity market fell significantly during June from the very high levels seen in the last few months. Average spot prices for the month ranged from $119 in the central North Island (down from $195 in May), up to $132 in the upper South Island ($221 in May).
The following chart shows average weekly spot prices over the last 2 years. The recent drop off in prices can be clearly seen.
Electricity Demand
Electricity demand in June picked up early in the month and was largely in the band of what we have seen in recent years as shown below.
Electricity Generation Mix
Continued high inflows allowed for increased hydro generation through June. This allowed thermal generation to remain backed off compared to a couple of months ago.
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.
Northward transfer remained at the higher levels seen towards the end of May, however southward transfer also persisted through most of the month due to high North Island hydro inflows.
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 down for all years through June. CAL 2026 ended the month at $191/MWh – down 2% over the month. CY 2027 price was down 4% at $174 while CY 2028 decreased 7% at $171.
Known new generation projects are shown below (additions / removals / changes highlighted in bold).
Hydro Storage
Inflows in the North Island were well above average for all of June. The South Island started the month with below average inflows, but they picked up at the end of the month as shown below.
These inflows resulted in energy storage levels increasing 78GWh through the month to end at 3,126GWh (69% full). Storage is now close to 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 May 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 increased during June but remains close to the 25th percentile levels seen in the last 30 years for this time of year.
Climate outlook overview July – September 2025 (from NIWA)
- ENSO-neutral (El Niño – Southern Oscillation) conditions remain present in the tropical Pacific.
- In June 2025, atmospheric patterns in the Pacific continued to be intermittently consistent with weak La Niña conditions. In contrast, ocean temperatures shifted away from previous La Niña-like characteristics.
- A consensus of international guidance indicates about a 70% chance for the tropical Pacific to remain in an ENSO-neutral state over the outlook period. Chances for La Niña conditions to re-emerge by the end of the calendar year have diminished.
- For New Zealand, lower than normal atmospheric pressure is expected northwest of the country. There is a high likelihood for tropical and sub-tropical influences and low pressure systems to affect the country over the three-month period, leading to potentially significant rainfall and flooding events.
- Seasonal air temperatures are expected to be above average across all regions of New Zealand for the three-month period. Thus, while cold snaps and frost will occur, they are expected to be less frequent than usual.
- July – September rainfall totals are expected to be above normal for the north of the North Island and the north of the South Island. Near normal or below normal rainfall is forecast for the west of the South Island. For all remaining regions of New Zealand, near normal or above normal rainfall totals are about equally likely. Chances for heavy rainfall events are considered elevated during the three-month period, potentially leading to flooding, particularly in areas with saturated soils.
- During July – September 2025, near normal or above normal soil moisture levels are expected for all regions of New Zealand, except for the North of the South Island, where above normal soil moisture levels are most likely. River flows are forecast to be near normal in the north and west of the North Island and the west of the South Island, while above normal river flows are expected in the north of the South Island. In the eastern regions of both islands, near normal or above normal river flows are equally likely.
- Sea surface temperatures (SSTs) remain above average mostly off the west coasts of both the North and South Islands. These areas continue to experience Marine Heatwave (MHW) conditions—defined as five or more consecutive days with SSTs above the 90th percentile. In contrast, ocean waters off the east coasts of the North and South Islands have cooled compared to previous months and in some areas are slightly below average. Coastal SST anomalies for the month of June (estimated using data to 29 June) ranged from +0.25°C to +1.04°C. Forecasts for July–September 2025 indicate that above-average SSTs are likely to persist around New Zealand, although the intensity of these anomalies is expected to lessen.
The Wholesale Gas Market
Spot gas prices in June decreased with falling demand. Prices for the month averaged $16.4/GJ – a 17% decrease compared to May. Average prices were 42% below what they were at the same time last year.
On the supply side there was a mixed bag of increases and decreases in output. Maui increased slightly averaging 47TJ/day. Pohokura started the month down at less than 20TJ – increasing to 34TJ/day at the end of the month. McKee / Mangahewa was reasonably consistent through the month averaging 57TJ/day. Turangi and Kowhai maintained the higher output seen since late January, averaging 65TJ/day before dropping at the end of the month to the mid 50TJ/day.
The following graph shows production levels from major fields over the last 7 years.
Methanex gas usage maintained the reduced level seen in March and April, averaging close to 50TJ/day before shutting down completely in the middle of May. Methanex had arranged another fuel swap with Contact and Genesis, as they did last year, this time to run for 8 weeks. Huntly usage actually decreased slightly from last month to just over 50TJ/day. TCC utilised some of the gas obtained from Methanex for a couple of weeks consuming 30-35TJ per day before shutting off again late in the month.
The following graph shows trends in the major gas users over the last 7 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 increased through June. It remains well above average levels seen at this time of year over the last few years.
Internationally, LNG netback prices ended the month at $16.64/GJ – up 9% from last month. Forecast prices for 2025 were up 1% at $17.49/GJ. Forward prices for 2026 were also up 3% at $16.15/GJ. (Note that netback prices are indicative of international prices – they are produced by the ACCC and quoted in Australian dollars. They are net of the estimated costs to convert from pipeline gas in Australia to LNG, hence the term “netback”)
New Zealand does not (yet) have an LNG export/import market, so our domestic prices are not directly linked to global prices. With recent gas supply issues, the Government is now talking about the possibility of facilitating the building of an LNG import facility.
LPG is an important fuel for many large energy users, particularly in areas where reticulated natural gas is not available. The contract price of LPG is typically set by international benchmarks such as the Saudi Aramco LPG – normally quoted in US$ 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 up over the last month but remain 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 hovered around 0.60 for much of June, dropping to 0.595 in the middle of the month before increasing, closing at its monthly high of 0.61. 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 June increased ending the month at US$109/T – a 6% rise 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 guard-rails” 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 increased 2% in June to $56.7.
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 increased in June to 71 Euro/tonne – up 1%.
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.
- Transpower publishes a range of detailed information, which can be found here: https://www.transpower.co.nz/power-system-live-data
- The Electricity Authority publishes a range of detailed information, which can be found here: https://www.emi.ea.govt.nz/
- Weather and Climate data – The MetService publishes a range of weather-related information, which can be found here: https://www.metservice.com/
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