Interactive Electricity Generation Cost Model
This model is an interactive tool designed to provide insights into the potential costs of new electricity generation in New Zealand.
The electricity generation cost model
The model shows the:
- assumed costs of new electricity generation projects
- sensitivity of these costs to certain key assumptions such as fuel prices, emissions price and exchange rates.
It also explores how future demand growth might be met. It assumes the cheapest projects are selected first and that sufficient plant must be available to meet both energy demand and peak demand.
Interactive Electricity Generation Cost Model 2016 [XLSM 996KB]
Note that the model is illustrative only, and doesn't represent a complete list of all possible future generation projects.
About the model
In the model, projects are ranked from cheapest to most expensive, based on their estimated long run marginal cost (LRMC). LRMC is the wholesale price a generator is prepared to offer to the electricity market, on average, in order to recover capital and operating costs and earn an economic return on investment.
The model calculates the LRMC of different generation projects based on the same core data set that was used for New Zealand’s Energy Outlook: Electricity Insight.
Note that the actual modelling for the Energy Outlook:
- uses the Electricity Authority’s GEM (Generation Expansion Model) optimisation model to determine the least cost build of new generation
- takes into account additional constraints that can't be factored into a simple LRMC tool like the Interactive Electricity Generation Cost Model.
Download the document
More information about GEM can be found on the Electricity Authority’s website.