The New Zealand Electricity Market: Challenges of a Renewable Energy System

Trading in the New Zealand wholesale electricity market (NZEM) pool began on 1 October 1996. The New Zealand pool market was the first one to use two elements of what has since become the North American standard market design, with locational marginal pricing and ancillary service cooptimization, but it was implemented in a physical and regulatory environment that differs markedly from that in North America. This article reflects on 20 years of experience with New Zealand's 1996 market design, assesses its points of difference from other jurisdictions, and speculates on some possible future directions.