Determination of the 2026 Electricity Allocation Factor

The Electricity Authority Te Mana Hiko has today published its Determination of the 2026 Electricity Allocation Factor.

This report documents the calculation of the Electricity Allocation Factor (EAF), which estimates the impact of the New Zealand Emissions Trading Scheme (ETS) on wholesale electricity prices.

The EAF estimates the increase in electricity prices resulting from the ETS – which puts a price on carbon used in electricity production – and is therefore used as an input to calculate eligible industrial producers’ annual allocation of emissions units.

The Electricity Allocation Factor for the 2026 calendar year is 0.424t CO2e/MWh. The EAF for 2026 is almost 18% lower than the value of 0.516 tCO₂e/MWh in the 2025 calendar year.

The decrease is because of high renewable electricity generation during the 2025/26 financial year, and a corresponding decrease in coal and gas-fired generation. Relatively lower wholesale electricity prices and strong hydro inflows also contributed to the decline in the EAF.

Under the Climate Change Response Act 2002 the Authority is required to determine the EAF, and to make our market model and any input data necessary to operate the model publicly available.