Week Two Summary - COVID & NZ Energy sector
With over one week passing since New Zealand entered into our Level 4 lockdown, we have seen significant effects on the energy sector. The following blog continues on from our first summary, providing an update on some of the key changes over the last week.
Large C&I Customers:
Updating on the key sectors we mentioned last week:
Aluminium Smelter - the Tiwai point aluminium smelter has decided to shutdown one of its pot lines, reducing its load by 50 MW. It will continue to operate the remaining three pot lines for the time being. The shutdown will take time to complete, so the effect will not be obvious in the short term.
Schools - all schools closed on the 25th of March.
Outages:
All non-essential outages have been postponed for the time being, to ensure security of supply.
The HVDC link between the North & South Island has been returned to full capacity as of Saturday the 28th of March.
Demand
As expected, we are starting to see a steady drop in demand since the lockdown period took effect on the 25th of March. We can see as the week has gone on that the morning peak is kicking in later in the day much of the population working from home and no longer commuting. It is also worth noting that the ramp rate to the peak is much slower, showing the effect of most commercial buildings no longer having their AC units running.
The evening peaks and drop offs occur at similar times, with many of us sticking to our household evening habits. This is mirrored in the ramp down rates, with these being similar to previous weeks.
Depending on the day, we are seeing demand drop anywhere from roughly 10 to 18%.
The following graph looks at NZ’s total demand for every Wednesday since the 4th of March. You will notice a notable drop on the 25th of March as NZ entered into Level 4 lockdown, with a further drop on the 1st of April as more industrial plants complete their staged shutdowns.
Pricing
Wholesale price trends
Forward price curves
Market Making rules relaxed - excerpt from Energy News Article:
“The Electricity Authority has introduced changes to voluntary market making agreements that will apply during the Covid-19 lockdown period. Market makers may now withdraw from electricity futures market obligations for any reason on seven occasions – up from the existing five such "no questions asked" exemptions – per month under one temporary move.
In another, the ASX – which operates this market – may use discretion to judge whether market makers who have not met all their obligations are in breach.
The Electricity Authority says the two temporary measures apply for three months or until Auckland and Wellington are moved off the Government’s Alert Level 4 restrictions (whichever comes first).”
Sources
Thanks to http://www.energynews.co.nz/ for keeping us all updated.
Graphs sourced from https://www.emi.ea.govt.nz/
Daily energy reports from https://www.electricityinfo.co.nz/
