The Electricity Authority’s Market Development Group (MDAG) recently consulted on the initial phase of its investigation into price formation, with 100% renewable generation in our energy-only market.  Energy Link contributed to this work and has also submitted.

Price formation at 100% renewables (100%RE) is a complex topic, and the nine consultation documents present the impressive amount of thought and work that has gone into the project so far. This includes a review of the relevant international literature.  

However, New Zealand’s electricity market has some characteristics which add up to making the challenge of the 100%RE market unique to this country, including our reliance on hydroelectricity and the lack of any physical connection to other electricity markets (that could provide power during periods of low hydro lake levels, for example).

Our submission was quite short, and we agreed with a lot of the MDAG’s findings. But the main issue we raised is that the reference case used for modelling prices at 100%RE is based on key assumptions that are untested, or otherwise quite restrictive.  Some of this was deliberate, for example not considering the impact of various plant outages. Future phases of the project may test these assumptions, and they need to be tested in order to ensure the project covers all bases.

Our submission is posted along with the other 28 submissions on the Authority’s 100% renewables project page.