Feeling the heat: An electricity oversupply and plummeting wholesale prices zap revenue

Over the five years through 2017-18, industry revenue is forecast to decline by an annualised 7.7%, to $432.7 million. The decline of wholesale electricity spot market prices from a peak in 2012-13 is expected to be the main driver of this decline. Wholesale prices peaked in 2012-13 following the 2012 drought, which limited water storage at hydro-electric power generators, creating a shortage in the New Zealand electricity market. Since 2012-13 hydro-electric power generation capacity has normalised while demand growth has been weak, shifting the electricity market into a state of oversupply. This has contributed to falling wholesale electricity prices and substantial declines in industry revenue and profit margins over the past five years...read more.

Industry Statistics & Market Size
Revenue
$433m
Annual Growth 13-18
-7.7%
Forecast Growth 18-23
Profit
Employment
326
Businesses
59

Industry Report - Industry Analysis Chapter

Industry revenue is expected to decline by an annualised 7.7% over the five years through 2017-18, to $432.7 million. This poor performance is reflective of a downward adjustment in wholesale electricity prices, after a spike in 2011-12 and 2012-13 due to a nation-wide drought. The 2012-13 base year has created a distortionary effect, as abnormally high wholesale electricity prices in that year created a surge in revenue and profit margins. Overall, the industry is in a strong position, as geothermal electricity generation capacity has expanded over the past decade. Geothermal energy has proven to have lower operating costs than coal-fired electricity generation and lower capital requirements than hydro-electricity generation. Thi...purchase to read more.

Additional Insights for the Geothermal, Wind and Other Electricity Generation Industry

IBISWorld identifies 250 Key Success Factors for a business.The most important for the Geothermal, Wind and Other Electricity Generation Industry are

  • Availability of resource
  • Having an integrated operation
  • Management of seasonal production
  • IBISWorld analysts also discuss how external factors such as Electricity wholesale price and Net energy consumption in the Geothermal, Wind and Other Electricity Generation industry impact industry performance..

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    What's in this report

    What is the Geothermal, Wind and Other Electricity Generation in New Zealand Industry?

    Operators in the industry generate electricity through the operation of geothermal power plants, solar farms, biomass plants and wind farms. This electricity is sold on the wholesale spot market and transported through transmission lines to network substations.

    Industry Products
  • Geothermal electricity generation
  • Wind electricity generation
  • Bioenergy electricity generation
  • Solar electricity generation
  • Industry Activities
  • Geothermal electricity generation
  • Wind electricity generation
  • Solar electricity generation
  • Biomass electricity generation
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Electricity wholesale price
  • Net energy consumption
  • Demand from fossil fuel electricity generation
  • Demand from hydro-electricity generation

  • Current Performance
  • Weak demand growth
  • Renewable investment
  • Transmission charges
  • Chart: Revenue Growth

  • Industry Outlook
  • Profit
  • Renewable targets
  • Tiwai Point closure
  • Table: Geothermal, Wind and Other Electricity Generation Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Geothermal, Wind and Other Electricity Generation Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Mining in New Zealand
  • Electricity Retailing in New Zealand
  • Consumers in New Zealand

  • Key Selling Industries
  • Heavy Industry and Other Non-Building Construction in New Zealand
  • Heavy Machinery Repair and Maintenance in New Zealand

  • Products & Services
  • Geothermal electricity generation
  • Wind electricity generation
  • Bioenergy electricity generation
  • Solar electricity generation
  • Chart: Geothermal, Wind and Other Electricity Generation Industry Products and Services Segmentation

  • Demand Determinants
    Major Markets
  • Industrial firms
  • Households
  • Businesses
  • Agriculture, forestry and fishing firms
  • Chart: Major Market Segmentation for the Geothermal, Wind and Other Electricity Generation Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
  • Chart: Cost Structure Benchmarking – Sector vs Geothermal, Wind and Other Electricity Generation

  • Basis of Competition
  • Internal competition
  • External competition

  • Barriers to Entry
  • Table: Barrier to Entry Checklist for the Geothermal, Wind and Other Electricity Generation Industry

  • Industry Globalization
    Contact Energy Limited, Mercury NZ Limited, Meridian Energy Limited, Tilt Renewables Limited,
  • Table: Contact Energy Limited - financial performance
  • Table: Mercury NZ Limited - financial performance
  • Table: Meridian Energy Limited - financial performance
  • Table: Tilt Renewables Limited - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Geothermal, Wind and Other Electricity Generation Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Geothermal, Wind and Other Electricity Generation Industry
    Includes:
  • Industry Revenue (2009-2023)
  • Industry Gross Product (2009-2023)
  • Establishments (2009-2023)
  • Businesses (2009-2023)
  • Employment (2009-2023)
  • Wages (2009-2023)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Baseload Power
  • Electricity generators that run continuously to satisfy minimum demand from the wholesale market.
  • Centrally-Generated Electricity
  • Electricity generated at large-scale facilities that is sold into the grid.
  • Peaking Power
  • Electricity generators that can be switched on during periods of peak demand.
  • What Our Customers Say

    Why buy this report?

    IBISWorld’s Geothermal, Wind and Other Electricity Generation in New Zealand market research report is a comprehensive guide to market size and growth prospects. Our industry reports offer strategic industry analysis of the factors influencing companies, including new product developments, economic, lifestyle and demographic influences, distribution and supply chain factors and pricing issues. Full analysis accompanies our data forecasts to illustrate how the market responds to emerging industry trends.

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    This report on Geothermal, Wind and Other Electricity Generation in New Zealand:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Geothermal, Wind and Other Electricity Generation in New Zealand market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Geothermal, Wind and Other Electricity Generation in New Zealand, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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