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 lowest cost projects are selected first, and that sufficient capacity must be available to meet both energy demand and peak demand.
Note that the model is illustrative and doesn't represent a complete list of all possible future generation projects in New Zealand.
About the model
In the model, projects are ranked from lowest to highest cost, 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.
Note that the actual modelling undertaken by the Ministry:
- 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.
Please note that the Ministry is currently reviewing the information it holds on future electricity generation in New Zealand.
This tool will be updated on completion of this review. In the interim, please contact email@example.com if you have any questions.
More information about GEM can be found on the Electricity Authority’s website.