We have a situation presently in New Zealand where electricity supply just meets demand which means that electricity cost is HIGH for commercial and industrial clients*see below for some years yet.
This has been brought about by a "perfect storm" of variables:
A decrease in supply security due to:
An increase in demand due to:
- Climate change - the rain is not falling where it is needed, or there is too much or too little of it, and storm damage to infrastructure
- Reduced gas supply affecting gas fired generation - decreased well reserves, transmission and distribution issues, and a national move away from fossil fuel power resulting in decreased investment in gas supply
- Wind power volatility - persistent large anticyclones over New Zealand mean little or no wind flows, particularly over summer
As energy brokers our value-added role is to determine the most economic choice from the market players for our clients. Energy Veritas recognises this through quality request for proposal and reporting processes designed to provide confident decision making by our clients.
- The economic recovery tempered with carbon reduction awareness and commitment
- The proliferation and increased use of heat pumps and air conditioning over summer for cooling because summers are getting hotter
- The move away from fossil fuel fired plant to electrical plant to reduce CO2 emissions
- The promotion of new industries in the Southland area - green hydrogen and cloud server sites
But time is of the essence! Don't let your contract expire and then by hit by costly "standard" or "spot" pricing. Check your contract expiry date and if it is within 6 months of expiry - call us now!
* Clients using 200,000 kWh or more annually (around 17,000 kWh monthly) and on time-of-use metering.
Spot Market Energy
Energy purchased at spot market prices may be cheaper than fixed-price variable volume supply contracts, provided you have the appetite for the risk. However over the last 3 years the average spot price has (a) risen significantly and (b) is much more volatile. It is not recommended.
There are a few important catches:
But talk to us - we can give you all the support you need, and we'll help you get there if this contract type is your preferred choice.
- You need to have low access costs to this market from the retailer that provides the least cost access fees. We can help with this.
- You need to be on this option for at least five years. Why? Because you may get a bad year when lake levels are low, transmission lines break down, generators break down, etc. These are the business risks that translate into higher prices - sometimes VERY high prices. But, on the average, it may be cheaper than being on a fixed-term supply contract for that period or longer.
- You need to be prepared for monthly cost volatility. On a monthly basis costs can vary dramatically, sometimes very high, sometimes very low. If you can withstand this volatility then spot pricing may be for you.