Real Time Pricing Project

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What is realtime pricing? Background information Current Project Status
Project Timeline Industry Involvement  

What is real-time pricing?

The real-time pricing (RTP) project will deliver accurate and reliable spot prices to be published during or immediately after the finish of each trading period.

Currently indicative spot prices for energy and instantaneous reserve are determined in the wholesale electricity market and are are not finalised until at least two days after the trading period. This means industry participants make decisions regarding spot prices two days prior to knowing what the final prices will be. They rely instead on a series of indicative prices (i.e. forecasts of final prices) to estimate the financial consequence of their decisions.

These indicative prices are generally a sound guide to final prices, but large differences can arise—especially when the system is under stress. This makes spot prices uncertain, making it harder for parties to make efficient real-time decisions about their consumption and generation.

 

Background information - Development of the RTP proposal

In April 2016 the Electricity Authority (Authority) conducted an assessment of RTP options with a view to improving spot pricing arrangements in New Zealand’s wholesale electricity market.  The Authority’s assessment considered four RTP options, under which final spot prices would be published during or immediately after the finish of each trading period.

Following a period of consultation with industry participants, the Authority undertook (in August 2016) to further develop the 5-minute RTP option (Option b). This was later announced by the Authority as the preferred option. Since then, the Authority have developed the core design elements of the RTP system and now requires Transpower, in its role as System operator, to implement and operationalise real-time pricing in the Market System.

Details of the decision to implement and previous consultations can be found on the Authority’s website at the following locations:

The Authority also held three RTP project public briefings. Content and selected recordings from these briefings can be found on the Authority’s website at the following locations:

 

Current RTP Project status

The Authority are amending the Electricity Industry Participation Code to implement RTP in the wholesale spot market. Transpower has developed a Delivery Plan and this is currently with the Authority for approval.

 

Timeline

The delivery phase of the project will commence at the start of the 2020/2021 financial year subject to approval from the Authority. Current project timelines are for a forecast completion in quarter four, calendar year 2022.

 

Ongoing Industry Involvement

The system operator will be supporting the Authority with their planned engagement with industry over the duration of the project. As advised by the Authority this will be by way of interactive topic-targeted webinars and supporting material.

The Authority will be advising a proposed schedule of briefings and engagement groups in due course. Interested parties can register with the Authority for updates on webinars by emailing rtp@ea.govt.nz, or sign up to the Market Brief newsletter for Authority news and updates.