We have a situation presently in New Zealand where electricity supply exceeds demand which means that electricity is CHEAP for commercial and industrial clients*see below for some years yet.
This has been brought about by a "perfect storm" of variables:
A flattening of demand due to:
An increase in supply due to:
- the recession. Since 2008 business people have progressively reviewed all their costs and initiated new cost-reducing efficiencies in many areas. Specifically:
- improved energy efficiency in industry and commerce, usually through equipment replacement and energy management systems
- improved energy efficiency in homes e.g. home insulation, heat pumps and LED bulbs replacing old heating systems and incandescent light bulbs
While energy brokers would LOVE to say that this is due to our efforts, it isn't true. 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 commissioning of new generation for which construction was begun some years ago in anticipation of demand that did not eventuate. However old generation is now being retired and decommissioned, reducing the excess of generation over supply.
- a higher diversity of generation, in particular wind and geothermal sources. Home solar generation is starting to have an impact
- high hydro water storage levels (although this varies seasonally)
- increased competition for customers. At present there are 30 electricity retailers in the market.although the "top 5" (Contact Energy, Genesis Energy - including its subsidiary Energy Online - Mercury Energy, Meridian Energy and Trustpower) account for almost 93% of all connections in New Zealand
But time is of the essence! Don't let your contract expire and then by hit by costly "standard" 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.