Determination of the 2024 Electricity Allocation Factor

The Electricity Authority Te Mana Hiko has published the Determination of the 2024 Electricity Allocation Factor report. This report documents our calculation of the electricity allocation factor.

The electricity allocation factor is the estimated impact of the Emissions Trading Scheme on the price of electricity. It reflects the increase of electricity price due to the additional cost of carbon used in electricity production. The electricity allocation factor is used as an input to calculate eligible industrial producers’ annual industrial allocation.

Firms in industries that are emissions-intensive and trade-exposed receive emission units from the government each year through industrial allocation. Around one-third of the annual industrial allocation is set using the electricity allocation factor.

The 2024 electricity allocation factor will inform decisions made by Cabinet later this year updating industrial allocation settings, which will be implemented by the Environmental Protection Authority in early 2025.

The electricity allocation factor for the 2024 calendar year is 0.554t CO2e/MWh, a small increase from previous years, largely due to relatively dry weather conditions leading to higher thermal generation.

We are required to calculate the electricity allocation factor under the Climate Change Response Act 2002. As part of our statutory requirements, we are required to make publicly available the market model used to determine the electricity allocation factor, and any input data necessary to operate the model.

The Determination of the 2024 Electricity Allocation Factor report's modelling and data files are available on our Github repository.