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ATTRIBUTES OF RESIDUAL SUPPLY

The NZECS Residual Supply Mix - 2020/21 update

The NZECS has, as one of its core objectives, the goal of increasing information and understanding around the way electricity is generated in New Zealand. 

To this end, we make sure that generation attributes contained in certificates purchased through the NZECS are not also claimed by non-participating energy users. The mechanism by which we do this is called the Residual Supply Mix, or RSM.

The RSM describes the nature of the electricity for use by reporting energy consumers who do not purchase NZ Energy Certificates directly from generators. It is a key part of how greenhouse gas emissions are accounted for in New Zealand.

The current RSM (2020/21) is described below.

2020/21 Residual Supply Mix

The RSM has been calculated for the period from 1 April 2020 to 31 March 2021. This was the second year in which NZ Energy Certificates (NZ-ECs) were transacted in New Zealand, and so the RSM remains similar to the NSM.

National Supply Mix (NSM): the total mix of electricity generation supplying New Zealand's domestic demand.

National Supply Factor (NSF): the emissions factor of the National Supply Mix.

Residual Supply Mix (RSM): the mix of electricity generation minus volumes transacted within the NZECS.

Residual supply Factor (RSF): the emissions factor of the Residual Supply Mix.

The big change year-on-year was the difference in the underlying generation mix of New Zealand. The RSF in 2019/20 was 99kg CO2-e/MWh. In 2020/21 this increased by almost 30% to 125kg CO2-e/MWh. While the purchase of certificates contributed to the increase in carbon content of the RSF, the major driver was the reduced availability of renewable energy resources throughout the course of the year, with hydro lake inflows dropping to approximately 90% of the historical average over the period. The drop off in hydro generation was made up by increased levels of thermal generation comprised of coal, gas and oil. Consequently, the proportion of renewable generation dropped from 83% during 2019/20 to 80% during 2020/21, as shown below.

Residual Supply Mix - calculation methodology

The Residual Supply Mix (RSM) is calculated using a 'bottom-up' method - building up a model of supply by adding up generation and emissions data from each of the generation facilities in New Zealand. This method is highly transparent, and flexible to improve over time, as we will seek to improve individual assumptions in order to improve the accuracy of the output figures.

The RSM calculations are performed by EnergyLink to our specifications, incorporating transaction data from the NZECS. EnergyLink provides a description of the methodology taken in the link below. 

This document also discusses potential approaches to improving the RSM methodology.

NZECS Residual Supply Mix methodology - approach review and detail

(Prepared Dec 2019, current for 2020/21 calculation)

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Total electricity generation by fuel type: 2019/20 vs 2020/21