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Enabling investment and innovation

Pricing in a renewables-based electricity system

The Government is aspiring to achieve 100% renewable electricity by 2030. The Market Development Advisory Group is investigating how the wholesale electricity market might operate with an electricity supply that is renewables-based.

  • Generation
  • Low emissions

    • Overview

    The Market Development Advisory Group (MDAG) consulted on an options paper on Price discovery in a renewables-based electricity system. Thanks to all those who provided a submission. The group is carefully considering all submissions and conducting further analysis and engagement before providing its recommendations to the Electricity Authority Board in December 2023. View consultation.

    MDAG is developing a series of working groups to test preferred options and consider how these work in practice. The group will also provide input on the Electricity Authority’s work on hedge disclosure and demand-side flexibility.

    Timeline

    Past activity

    Project background

    New Zealand has committed to achieving net zero emissions by 2050, with the Government aspiring to achieve 100% renewable electricity by 2030. Over the coming decades it is likely that heating and transportation in New Zealand will need to be electrified, causing a significant increase in demand for electricity. This will need to be met by large quantities of new renewable electricity generation.

    This project, led by the Market Development Advisory Group (MDAG), aims to understand how price discovery would work in the New Zealand wholesale electricity market (including spot and hedge markets), in a renewables-based electricity system. MDAG will develop recommendations for changes to the wholesale electricity market. The aim of these recommendations is to ensure economically efficient price signals (from short to long term) and the efficient operation of the electricity industry for the long-term benefit of consumers. This project has three stages:

    1. Issues discovery (completed 16 March 2022) - understanding how the electricity system is likely to behave and how the market should be designed with an electricity supply that is renewables-based.
    2. Option identification and analysis (completed 6 March 2023) - identifying and analysing solutions for future action.
    3. Recommendations and proposal (to be completed in December 2023) - reporting to the Electricity Authority’s Board.
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