Power Plays: Navigating New Zealand’s Electricity Market
By David Fyfe, Portfolio Manager
Critics often argue that New Zealand’s electricity system lacks sufficient investment in new generation capacity, contributing to price volatility and supply pressures. However, the numbers tell a different story. Over the past two decades, billions of dollars have been invested in renewables, even amidst significant market uncertainty. A recent report by Concept Consulting¹, highlights that the industry has developed approximately 1400 iMW of net new capacity since 1999—a 16% net increase in capacity despite major fossil fuel retirements, such as the upcoming (delayed²) closure of Contact Energy’s Taranaki Combined Cycle Plant.
Rational Investments Amid Uncertainty
The investment landscape for gentailers (generator-retailers) has been challenging, with uncertainties around factors such as the future of the Tiwai Point aluminium smelter, the Lake Onslow Battery Project, fluctuations in gas supply, emissions trading scheme policies, and transmission capacity concerns, just to name a few. Despite these hurdles, companies like Contact Energy, Meridian Energy, and Mercury have made bold moves, committing significant capital to renewable projects in the last few years. For instance:
Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.
You will also be able to comment on articles on Good Returns.
