Electricity wholesale price in New Zealand - Data and Analysis (2007-2034)

IBISWorld forecasts the wholesale price of electricity to drop by 14.7% in 2026-27 to $100.6 per megawatt-hour. This follows the sharp correction seen during 2025-26, when prices fell by 46.8% from the dry-year peak recorded in 2024-25. High hydro storage and increased renewable output, alongside growing storage capacity, drove spot prices to their lowest winter levels in more than a decade in July 2026. Given that over 80% of New Zealand's electricity generation is derived from renewable sources, the level of storage in New Zealand's hydro lakes is highly influential in shaping electricity prices, although gas availability, transmission constraints, thermal fuel costs, wind output and demand conditions also shape the spot price.Over the past decade, the wholesale price of electricity has been extremely volatile, driven primarily by demand and supply shifts. Fluctuations in hydropower reserves, given their large share of power generation, have also affected prices over the period. When the stored water within hydro lakes decreases, prices increase as the main input becomes scarcer and more valuable. Since 2017-18, volatility has intensified as supply has become uncertain and demand has fluctuated. In 2017-18 and 2018-19, low rainfall and dry conditions reduced hydro lake storage, ultimately curtailing hydro firms' generation capacity.Since 2019, the Electricity Authority has conducted several reviews of the wholesale electricity market to assess whether it serves consumers' interests. In 2023, the Electricity Authority released a Decision Paper outlining the regulator's conclusions following multiple reviews and setting out a series of proposals to increase competition in the wholesale market during the transition to 100.0% renewable electricity. The paper argued that New Zealand's electricity market, while far from perfect, was working broadly in the interest of consumers. Therefore, it suggested only moderate changes to market operations, including more transparent pricing mechanisms and clearer disclosure requirements.Prices have remained volatile over the past five years. Prices are sensitive to rainfall levels, meaning years with higher rainfall and hydro output tend to have lower prices, while drier years, such as 2024-25, lead to greater reliance on gas and coal, increasing prices. In 2020-21, prices rose due to unexpected supply shortages at the Pohokura wells in June and July of 2020, reducing the availability of gas for energy generation. Annual rainfall also declined sharply in 2020-21, reducing hydro storage and accelerating price rises on the wholesale market in 2021-22. As international coal and gas prices stabilised and heavy rainfall filled the hydropower reserves, wholesale prices collapsed in 2022-23. Electricity wholesale prices spiked in 2023-24 and 2024-25 due to tight supply, as dry conditions associated with El Niño lowered hydro lake levels, significantly reducing hydroelectric output and raising wholesale prices. Abundant inflows through the 2025-26 summer then reversed the trend, with spot prices falling. Overall, IBISWorld estimates the wholesale price of electricity to fall at a compound annual rate of 9.7% over the five years through 2026-27.