The Wholesale Electricity Market
Spot prices in the wholesale electricity market increased markedly again in March. Average spot prices for the month ranged from $145 in the lower South Island (up from $38 in February), up to $153 in the upper North Island ($51 in February).
The following chart shows average weekly spot prices over the last 2 years. The extreme low prices in the last few months can be clearly seen, as well as the recent increases
Electricity Demand
Demand in March was close to the highest levels seen for this time of year in the last few years as shown below.
Electricity Generation Mix
Thermal generation increased through March with reduced wind generation and hydro generation starting to back off.
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 in March initially picked up as high NI inflows at the end of February fell away. Higher NI inflows later in the month resulted in falling northward transfer. Again, southward transfer was very low.
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, 2028 and 2029 at Otahuhu (Auckland) for the last 5 years.
Note that $200/MWh equates to 20c/kWh.
Forward prices were up for all years through March. CAL 2026 increased ending the month at $146/MWh – up 12%. CY 2027 price was up 4% at $162 while CY 2028 was up 3% at $149. CY2029 was up 9% at $148.
Known new generation projects are shown below (additions / removals / changes highlighted in bold).
Hydro Storage
NI inflows were below average for most of March before increasing to slightly above average at the end of the month. SI inflows remained below average all month, as shown below.
The generally lower inflows resulted in storage falling further through March. Energy storage levels decreased 424GWh through the month to end at 3,589GWh (81% 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 remained low in March with storage levels close to the average levels 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 decreased during March but remains slightly above the average level seen in the last 30 years for this time of year.
Climate outlook overview September - November 2025 (from NIWA)
- Seasonal air temperatures for April – June 2026 are most likely to be near average for all regions of New Zealand with the exception of the west of the South Island, where near average or above average temperatures are about equally likely. Cold snaps may be more common in the latter part of the outlook period.
- Rainfall totals for April – June 2026 are about equally likely to be near normal or above normal across all regions of the North Island. There is an elevated risk of heavy rain events and flooding, particularly during April. In the west and north of the South Island, rainfall amounts are expected to be near normal or below normal, while near normal totals are favoured in the east of the South Island. Nationally, the risk of drier than normal conditions is expected to increase as the season progresses.
- During April – June 2026, near normal soil moisture levels and river flows are expected for all regions of the North Island as well as the east of the South Island. For the north and west of the South Island, near normal or below normal soil moisture levels and river flows are about equally likely for the next three month period as a whole.
- Easterly-quarter flow anomalies are expected at the beginning of the outlook period, accompanied by an elevated risk of heavy rainfall events linked to sub-tropical or tropical influences. Later in the outlook period, air flow patterns are expected to favour a more southeasterly direction, then southwesterly air flows, characteristic of El Niño conditions, potentially emerging towards the end of the three-month period.
- The 2025-2026 Southwest Pacific tropical cyclone (TC) season will officially conclude at the end of April. The Tropical Cyclone Outlook for the season indicates a normal or elevated risk for ex-TC interaction for New Zealand. The risk for tropical cyclone development continues early in upcoming three month period. After a quiet start to the year, the increase in tropical activity over the last month is set to persist through April.
- Neutral El Niño–Southern Oscillation (ENSO) conditions are currently present in the tropical Pacific, although the atmosphere continues to exhibit lingering influences from the weak La Niña conditions experienced during summer.
- Subsurface ocean temperature anomalies in the Pacific are increasingly supportive of the development of a potentially significant El Niño event later this year
- There is about an 85% chance for ENSO-neutral conditions to remain in the Tropical Pacific over the forecast period (April – June 2026).
- Later in the year, El Niño conditions become increasingly likely, with the probability of emergence rising to around 80% for June - August 2026.
- The next three-month period is expected to reflect ongoing weakening of La Niña influence, with a gradual shift toward more El Niño-like conditions.
The Wholesale Gas Market
Spot gas prices increased through March. Prices for the month averaged $12.1/GJ – a 26% increase compared to February. Average prices are 39% below what they were at the same time last year. Note that spot gas prices include the cost of carbon (currently around $2/GJ)
On the supply side most fields maintained output through March. McKee / Mangahewa’s output was variable – down at the start of the month then lifting to close to 80TJ/day later in the month. Turangi and Kowhai maintained around 55TJ/day. Pohokura maintained output at 27TJ/day at the start of the month before a brief outage, then a gradual increase back to the 27TJ/day at the end of the month. Maui increased output to average 41TJ/day. Kupe also held output at 33.5TJ/day.
The following graph shows production levels from major fields over the last 7 years.
On the demand side Huntly gradually increased gas usage through the month starting in the low 30TJ/day increasing to the high 40s by the end of the month. Methanex reduced usage slightly down to just under 60TJ/day average for March.
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 maintained the same high level seen in February. It is close to the maximum levels seen at this time of year over the last few years
Internationally, LNG netback prices surged on the conflict in the middle east. Prices in March jumped 42% to $19.23/GJ. Forecast prices were up 60% at $21.09/GJ for 2026 and 62% at $19.32 for 2027. (Note that netback prices are indicative of international prices – they are produced by the ACCC and quoted in Australian dollars. They are net of the estimated costs to convert from pipeline gas in Australia to LNG, hence the term “netback”)
New Zealand does not (yet) have an LNG export/import market, so our domestic prices are not directly linked to global prices, though this may change with the Government announcing that an LNG import terminal will be built in the next few years.
LPG is an important fuel for many large energy users, particularly in areas where reticulated natural gas is not available. The contract price of LPG is typically set by international benchmarks such as the Saudi Aramco LPG – normally quoted in US$ per metric tonne.
The following graph shows the Saudi Aramco LPG pricing for the last 5 years as well as forecast pricing for the year ahead. The war in the middle east has resulted in a large increase in Futures pricing over the last month.
The other main contributing factor to LPG prices in New Zealand is the exchange rate against the USD. The exchange rate was around 0.6 at the start of the month, falling consistently to end the month at 0.575. This is below the average levels seen in recent years. The recent decreases would tend to push up LPG prices when quoted in NZD.
The Coal Market
The conflict in the middle east has resulted in coal prices increasing along with other international energy commodities. To date the impact has not been as great as that observed during the initial years of the Ukraine war. Prices in March jumped, ending the month at $140/tonne – up 18% 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.
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 in March, up 22% at $41.5.
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 March to 74.6 Euro/tonne. Australian Carbon Units also fell, down 3% at AUD$36.3
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.
- 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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