The Wholesale Electricity Market
Spot prices in the wholesale electricity market decreased significantly during September. Average spot prices for the month ranged from $109 in the central North Island (down from $166 in August), up to $125 in the upper South Island ($189 in August).
The following chart shows average weekly spot prices over the last 2 years. The drop in prices in the second half of September can be clearly seen.
Electricity Demand
Cool spring weather through September meant that electricity demand was near the highest levels seen for this time of year in the last few years, though as expected demand is falling off as we move away from winter.
Electricity Generation Mix
Reduced demand and strong wind generation meant that hydro generation could back off from the high levels seen in recent months. Thermal generation also reduced particularly at the end of the month.
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.
Southward transfer decreased during September and northward transfer increased as SI storage improved.
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 September. CAL 2026 decreased ending the month at $194.5/MWh – down 4%. CY 2027 price was down 3% at $179 while CY 2028 also decreased 1.5% at $175.
Known new generation projects are shown below (additions / removals / changes highlighted in bold).
Hydro Storage
Inflows were above average in both islands last month, particularly in the SI as shown below.
The high inflows and reduced hydro generation resulted in storage increasing rapidly through September, especially later in the month. Energy storage levels increased 808GWh through the month to end at 2,858GWh (65% full). Storage is now back above 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 September 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 significantly during September and is now above the mean level seen in the last 30 years for this time of year.
Climate outlook overview September - November 2025 (from NIWA)
- ENSO-neutral (El Niño – Southern Oscillation) conditions remain present in the tropical Pacific, but a La Niña Watch is in effect.
- Negative sea surface temperature (SSTs) anomalies (cooler than average ocean waters) strengthened in the central and eastern equatorial Pacific in September 2025.
- Subsurface ocean temperatures also became increasingly La Niña-like, characterised by cooler-than-average waters in the eastern Pacific and warmer-than-average waters in the western Pacific.
- International guidance suggests La Niña conditions are likely (about a 60% chance) to become established before the end of the calendar year. This is further supported by forecasts developed by Earth Sciences New Zealand for the Relative Oceanic Niño Index (RONI), which accounts for the broader warming trend across the tropical Pacific. These forecasts suggest a high probability (about 85%) of La Niña conditions prevailing during the October–December 2025 period.
- A minor Sudden Stratospheric Warming (SSW) event developed over the South Pole in September 2025, near the top of the atmosphere. The impacts of this SSW will propagate downwards towards the troposphere (the part of the atmosphere where our weather occurs) over the next month. Possible impacts include changing the normal strength and position of the jet stream, storm tracks, and surface pressure patterns, resulting in wetter conditions over parts of New Zealand. The effects of this SSW are expected to be most pronounced during October, influencing short-term atmospheric circulation and weather patterns.
- For New Zealand, the combined influences of the recent SSW and developing La Niña are expected to drive notable circulation changes over October–December 2025. October is likely to begin on a relatively active note, with increased chances of rainfall and storm activity. As the month, and in particular the season progresses, a shift toward more anticyclonic conditions, or settled weather, occasionally interrupted by northeasterly flow anomalies, is expected. The risk of tropical influences and heavy rainfall events remains elevated, particularly for the northern North Island.
- Seasonal air temperatures for the next three-month period are about equally likely to be near average or above average for all regions of New Zealand, except for the north of the North Island, where above average temperatures are most likely.
- October – December rainfall totals are expected to be near normal or above normal for the north of the North Island. Near normal or below normal rainfall is forecast for the east of the North Island as well as the west and east of the South Island. Near normal rainfall is expected for the west of the North Island and the north of the South Island. Sub-seasonal, or monthly, projections of rainfall and dryness are updated daily through the NIWA35 forecast.
- During October – December 2025, soil moisture levels and river flows are forecast to be below normal or near normal for the north and east of the North Island, while near normal or above normal soil moisture levels and river flows are forecast for the west of the South Island. Near normal soil moisture levels and river flows are expected in the remaining regions of New Zealand.
- SSTs cooled markedly around New Zealand during September 2025. Notably, large areas east of the North Island are now experiencing below-average ocean temperatures. Meanwhile, the extent and intensity of marine heatwave (MHW) conditions off the west coast of the South Island have diminished. Coupled General Circulation Model (GCM) forecasts suggest SSTs will generally remain near or slightly above average for the remainder of the year, with warming expected later in the period, particularly off the east coast of the North Island. Monitor the SST update for updates.
The Wholesale Gas Market
Spot gas prices in September dropped significantly. Prices for the month averaged $14.1/GJ – a 29% decrease compared to August. Average prices were 60% above what they were at the same time last year. Note that spot gas prices include the cost of carbon (currently around $3/GJ)
On the supply side producers increased or maintained output through August. Maui maintained output at approx.. 41.5TJ/day. Pohokura increased output marginally – averaging 34TJ/day for the month. McKee / Mangahewa lifted output from the low 50s TJ/day, rising to more than 70TJ/day later in the month. Turangi and Kowhai was again consistently in the low 60sTJ/day.
The following graph shows production levels from major fields over the last 7 years.
On the demand side Huntly maintained usage from last month at 53TJ/day while TCC had low usage at the start of September, dropping to zero early in the month. Increased supply allowed Methanex to increase usage – from 50TJ/day at the start of the month increasing to the mid 60TJ/day by the middle of the month. Balance Agi-Nutrients (not shown in our data but uses about 20TJ/day) had announced in August that it would close its Kapuni urea plant at the end of September for 4 months. This month Genesis notified a short-term arrangement to supply gas to Balance for 3 months. Longer-term, a full closure of the plant is possible if an affordable and secure supply of gas can't be found.
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 decreased again through September. It is now below average levels seen at this time of year over the last few years.
Internationally, LNG netback prices ended the month at $14.96/GJ – down 4% from last month. Forecast prices for 2025 were down 0.5% at $16.95/GJ. Forward prices for 2026 were also down 3% at $14.31/GJ. (Note that netback prices are indicative of international prices – they are produced by the ACCC and quoted in Australian dollars. They are net of the estimated costs to convert from pipeline gas in Australia to LNG, hence the term “netback”)
New Zealand does not (yet) have an LNG export/import market, so our domestic prices are not directly linked to global prices. The Government announced this month that it intends to build an LNG import terminal in NZ as a measure to improve energy security of supply. The target is for this to be in place in 2027.
LPG is an important fuel for many large energy users, particularly in areas where reticulated natural gas is not available. The contract price of LPG is typically set by international benchmarks such as the Saudi Aramco LPG – normally quoted in US$ per metric tonne.
The following graph shows the Saudi Aramco LPG pricing for the last 4.5 years as well as forecast pricing for the year ahead. Futures pricing were down over the last month and 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 increased to close to 0.6 during the month before falling, ending the month close to 0.58. 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 September decreased ending the month at US$105/T – a 4.5% 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 July Genesis reported that it purchased about 186,000 tonnes of coal in the June quarter. The company says it currently holds about 699,000 tonnes at Huntly, up from 474,000 at the end of March and 231,000 a year earlier. 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 decreased 2% in September to $57.
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 September to 79 Euro/tonne – up 6%. Australian Carbon Units also increased 2% to AUD$38
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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