The Electricity Authority said in a release yesterday wholesale electricity prices dropped dramatically in just two months — from over $280/MWh in late August to an average of $30/MWh last month.
The price drop would have little impact on most consumers who paid hedged power prices. But major industries who were hit last year with high prices will now benefit from the low prices.
The steep decrease was down to a natural reduction in electricity demand with warmer spring weather, in combination with consistently windy conditions and increased hydro generation.
Last month the highest proportion of renewable energy was used for that month in the last 10 years, and subsequently the lowest average October wholesale prices.
Wind power made up just over 6% of generation in the first two weeks in August but this pushed up to nearly 14% at the end of October. Thermal power dropped from more than 10% in August to almost completely disappearing last month.
While wholesale prices were low in October, price spikes still occurred. Some of these were related to heavy winds on October 23.
Contact Energy head of hydro generation Boyd Brinsdon said the Clutha River system had gone from a very dry winter to constantly spilling.
Storage for the dams at Roxburgh and Clyde dams is Lake Hawea and it has risen considerably.
‘‘So that controlled storage has gone up by over 5m, and we’re now looking at, it’s probably 5.7m, and we’re now looking at considering discharging that water and not be able to use it to generate downstream, unfortunately.’’
He said this was the second year in a row the company had decided to release the water in that way.
‘‘We’ve put engineering and erosion reasons, and risk of flooding reasons, that we’ve made a decision to release water, and we’re a couple of days away from needing to make that decision again.’’
Contact Energy had been trying to extend the operating range of Lake Hawea but was knocked back by the government.
‘‘We’re starting to see this happen quite often. We have to limit the discharging during the winter because we don’t want to run out of fuel on the motorway, so to speak. And then because of that, and rightly so, because of New Zealand’s now abundance of wind and soon-to-be solar, the demand in this period that co-relates with high flows just isn’t there.’’
Spilling started from the dams on September 20 so it had been going for almost two months.
Some flushing has occurred — where heavy flows are sent down to the Roxburgh Gorge to free sediment on the riverbed — but that is limited as it dirties the water.
The water coming through was also thick with sediment so some generators are out at the moment being cleaned.
There had been plenty of rain and when the rain did not occur snow melted.
‘‘Basically what we are seeing is just an enormous change in the makeup of the electricity generation system from thermal to intermittent. And we are seeing changing weather patterns.’’
