Is Power Cheaper at Night? This is also a super-important question, especially if you have an electric vehicle or energy-thirsty appliances.
Luckily the answer is Yes. You can use Offpeak or Night Rate electricity to in many cases significantly lower your energy cost.is a great way to save potentially a lot of money.
We show you how to check if it is a good fit for your home or business.
How does NZ use Electricity?
Peak Electricity Demand
New Zealand consumes around 40,000 GWh of electricity per year with almost two-thirds of this power is used in the North Island, according to Transpower who own and operate our national transmission grid.
The vast majority of our power is used during daylight hours. Generated by power stations, transferred around the country and consumed by our homes and businesses.
The peak period of electricity demand each year is during the colder months of June, July and August. Specifically, cold winter mornings, when we get up, boil the jug and crank the heating. This is when the national grid, generators and your local distribution company are working hard to keep up.
Typical Daily Power Consumption
The following snapshot shows a typical day in the life of New Zealand. As a whole, our lowest power usage is overnight and then peaking a few hours later mid-morning.
Our lowest power usage is overnight. Bottoming out between 4 am and 5 am each day. From there, demand quickly heats up (no pun intended) and hits the daily peak between 8 am and 10 am most days.
These peaks are caused by us cooking breakfast, making our coffee, arriving at work for the day and turning everything on.
There is typically a second, lower peak around dinner time each day and then consumption starts heading back down again.
A second snapshot below shows a breakdown of the peak demand. The upper North Island demand which is dominated by Auckland and Hamilton has a relative stable electricity demand during the working day.
Comparatively the lower North Island dips during the working day before rising again for the evening peak.
To understand how this significantly lower demand can lead to cheaper power at night, we also need to understand how the electricity network is designed and New Zealand’s generation profile.
From the Generator to You
The opportunity to get cheaper power at night stems from three components of the power industry. Power transmission, distribution and generation.
Design of a Power Distribution Network
The majority of the country’s power network is made up of transmission and distribution assets. These are the ‘poles and wires’ that carry power from the power generators, such as a hydro generator in the South Island, to your home or business which could be a load centre like Hamilton or Auckland.
When demand is the highest, on winter mornings, the transmission and distribution network is designed to carry all the electricity required to keep the country going.
So, the network is designed for the maximum demand it might see. As there would be little tolerance for the network failing on a cold winter morning.
This means at times outside of the winter mornings, the network as a whole is operating below peak demand. So there is spare capacity that is not being used, or put it another way – the network is being used inefficiently.
The Electricity Authority is advocating for distribution companies to move further towards ‘cost-reflective’ and ‘service-based’ pricing models. That is, to better reflect in their prices the cost of doing business.towards ‘price reflective’ pricing models.
A growing trend is for distribution companies to increase rates at peak load periods, and decrease rates by up to 95% at low-load periods in order to incentivise consumers to shift power from peak to off-peak.
With the increased uptake of solar power and electric vehicles, this trend will continue and New Zealanders will see an increased number of options for their power connection.
New Zealand Power Generation
For a small country, New Zealand has a large variety of power generators. From coal, gas and biomass generators to renewable geothermal power stations, hydro generators and wind farms.
A number of these fuel types are ‘base load’ generators. Which means that they prefer to run at a constant output day and night, largely irrespective of the wholesale power price. A great example is a geothermal station, which has a higher efficiency of generation at night – when the ambient temperature is cooler – and prefers to run 24/7.
Other renewable generation, such as wind farms, generate whenever the wind is present.
What I am leading to, is that overnight when power demand is significantly reduced, there is a significant portion of NZ generators that still want to operate. This will typically result in lower wholesale power pricing overnight, compared to during the day.
When you combine an under-utilised power transmission and distribution network with lower energy pricing, you get cheaper off-peak and night power.
Cost-Reflective Pricing Setups
Day Rate and Night Rate Power
There are 29 different electricity lines companies in New Zealand and unfortunately, they can all set their pricing structures differently.
Luckily most of them agree on how to define Day Rate and Night rate power.
Using our real-world Total NZ Demand chart from above, this is what Day vs Night rates look like:
And there can be a large difference in the cost.
Example – Electra Limited
One of the most progressive distribution networks in the country for cost-reflective pricing is Electra who provides power to the Kapiti Coast and Horowhenua regions. The Electra Day and Night charges look like this at the time of writing (excl. GST):
- Day Rate: 14.25 cents per unit
- Night Rate: 1.15 cents per unit
This is simply a massive difference, and a strong incentive from the distribution company to shift your expensive daytime power to the significantly cheaper power at night. This shift from Day to Night also assists Electra to manage network loadings.
Let’s look at some of the other options that might be available, then I will explain how to access these rates.
Peak, Offpeak and Night Rate Power
The Day / Night rate is a pretty common setup and historically relied upon two separate power meters, one measuring day consumption and one measuring night consumption. This is known as a ‘two-register’ metering setup.
With the event of more modern, smarter power meters a three-register setup has become increasingly common. This uses a single meter to record usage at three different rates.
This is often referred to as ‘Peak / Offpeak / Night’, ‘Peak / Shoulder / Night’ or a ‘Triple Saver’ tariff. A practical example of how this might be set up is as follows:
Having three different periods leads to a more accurate pricing structure which is smoothed over the day.
Example – Electra Limited
Using Electra as the example again, their Triple Saver rates look like:
- Peak Rate: 18.70 cents per unit
- Off-peak Rate: 2.90 cents per unit
- Night Rate: 1.02 cents per unit
This is, in my opinion, an example of a pricing structure that is truly beneficial to both the lines company and the end user. If I was operating a business on the Kapiti Coast using a lot of power for say five hours of the workday – instead of turning on my equipment at 8 am, I could defer this until the 11 am to 5 pm ‘off-peak’ period., This would allow me to access significantly cheaper power, and assist Electa in managing their network load.
Example – Waipa Networks Limited
An example of a lines company who have recently implemented cost-reflective pricing is Waipa Networks, who cover Te Awamutu, Cambridge and surrounding areas.
The use a Peak / Offpeak / Shoulder arrangement which looks like this:
Very similar to the Electra example, but with slightly different periods for Peak and Off-peak to reflect their individual network constraints.
Hopefully, now you understand a bit more about Day / Night and Peak / Offpeak / Night rates. Now let’s see how you can access these tariffs.
Should I access Night Rate or Offpeak Power?
If you are a residential or small business consumer, very likely you are on an ‘uncontrolled’, ‘anytime’ or ‘inclusive’ tariff. This means that you get charged one rate for your power, no matter what time of day you use it.
Before accessing cheaper night rate power or off-peak power, you need to consider the following questions:
- What does my power consumption look like?
- Does my power distribution company offer a night or off-peak tariff?
- Would a move to this tariff be beneficial for me?
Let’s consider each in turn.
What does my power consumption look like?
Have a think about what your day looks like from a power perspective. When do you use lighting, heating, cooking, cooling?
As a residential consumer, with no-one at home during the day, then you are probably going to be like most kiwis and use the majority of your power during the morning and evening peaks.
If you are a business, opening up at 8 am and closing at 5 pm, then you will be using the majority of your power off-peak.
A friend of That Power Guy run’s a bakery and the ovens go on at 3 am. So she uses a lot of nighttime power.
In order to get a true understanding of your consumption, you can also go one step further and ask your power retailer for an extract of your last 24 months power usage.
Does my power distribution company offer a Night or Offpeak tariff?
The easiest way is to either ask your existing power retailer. They will be able to let you know what’s available, and also the applicable retail rates.
Would a move be beneficial for me?
If you are not going to make the most of cheaper power at night and during off-peak periods, then accessing these rates is unlikely to benefit you.
Revisiting the Electra example, on an uncontrolled (‘anytime’) tariff you would pay 13.33 cents per unit + GST no matter when you use the power. If you moved to a Triple Saver tariff this would jump to 18.70. So you need to be confident you are getting the savings elsewhere.
Cheaper Power at Night and Offpeak? Let’s Do It!
If you decide to make the move, these are the steps to making the change:
Step 1a – Check Rates
I would always contact your retailer and obtain a quote for the new tariff you wish to move to. Whether it is Day / Night, Peak / Offpeak / Night or something else. They will advise the applicable retail rates.
This might also be a good time to shop around, see what rates other retailers are offering.
Step 2 – Check any Metering or Tariff Change costs
I would recommend always asking your retailer if there are any metering or tariff change fees that would apply.
If you are moving to a new two or three-register meter, then a physical meter change may be required. This may or may not incur a fee.
Fees can vary hugely from retailer to retailer. Recently I asked three retailers for meter and tariff change quotes for one of my business customers. The actual power rates were all very similar, but fees ranged from zero to $450 + GST.
Step 3 – Speak with your Electrician
If you have an old power meter or a complex metering setup then it may pay to check with your electrician before you go ahead.
In the instance of a metering contractor arriving to make a change and your existing wiring not being is not up to scratch, they may refuse to make the changes until remedial work is undertaken.
If you have a more modern home or business premises, then in my experience you are likely to be a-okay. So I would skip this step.
Step 4 – Make the Change
Once you give you power retailer the go-ahead, they will manage the meter/tariff change process. If a meter change is required, they will need to access your home or business and have a short power outage to replace the meter. If it’s only a tariff change, then this may be able to be done remotely.
Step 5 – Check, check check
Even with the most efficient business processes, you are one of around 2.1 million power consumers in NZ. Unfortunately, things can go wrong or paperwork gets lost.
Always check and double check your first two to three months of power bills to ensure that all looks okay. Especially what tariff you have been moved to, and that the rates and fees applied. Check these are the same as quoted in steps 1 and 2 above.