Fraser's fantasy: Dream or reality? Part 3
Quote:
Originally Posted by
Snoopy
The point of this post is this. Energy providers are getting quite different pricing signals from Orion, compared to what they pass on to we consumers. Orion (and Transpower) hate power peaks with a passion. If Fraser could convince we consumers to use a lot more off peak power this could benefit the end user in the pocket, but benefit the energy provider much more. I think the quest to get a lot more consumers charging their EVs at night could be a real winner for the Energy Retailers like Mercury. Time to put some big picture numbers on it!
I have been inspecting the Mercury Energy website and the deal for EV owners goes like this.
1/ You have to be signed up with Mercury as your power provider to take part (no surprises there).
2/ Charge your EV between 11pm and 7am and you can save 20% of your home's entire electricity bill between 11pm and 7am. This means you could program your washers are dryers to work overnight, for instance.
The website then goes on to talk about:
"Electricity price - $0.1724 per kWh, based on Vector Central standard user inclusive pricing as at Aug 9 2017 3:36PM, including GST, pre PPD and pre PPD and post plug-in vehicle charging discount (20%)."
However the equivalent price I pay in Christchurch for night rate electricity $0.1579 per kWh (with GST added and 20% discount taken off). So it looks like I am already on a much better deal than Mercury's 'special' rate for plug in EV owners. Admittedly this could be because Vector's network charges in Auckland could be higher than Orion's network charges in Christchurch.
Mercury lists the Nissan Leaf's (by far the most popular electric car) EV commute efficiency as 17 kWh/100km. Let's say our typical Auckland EV commuter owner travelled 150km per week. This means the annual energy used would be:
52 x 17kWh x 1.5 = 1326 kWh
The money that Mercury would charge per year for such a customer's EV use would be:
1326 kWh x $0.1724 per kWh = $229
The government goal is to put 64,000 EVs on our roads by the end of 2021. In September 2017 it was reported that 4541 EVs were on the road. So the incremental gain since the last reporting period will be roughly 60,000. As at September 2017 around half of the EV fleet was registered in Mercury's core EV target market of Auckland - 2452. So we might expect around half of the projected new EVs to be registered in Auckland.
The electricity retailers market share, based on ICP count, may be found here.
https://www.emi.ea.govt.nz/Retail/Reports/HR5D1V
The current (01 Dec to 31 Dec 2017) market share in Auckland for Mercury is 229,672/601,111 = 38%
However I believe that Mercury will be pushing above its weight in customer EV ownership, because they are specifically targeting that market. I will account for this by using an extra 20% rule of thumb multiplier. Finally then, we can estimate the total extra revenue that Mercury might expect from incremental EV uptake by the end of 2021:
$229 x 30,000 x 0.38 x 1.2 = $3.133m per year
How much of this will translate to incremental profit is another question. My hunch is most of it, because Mercury's cost of incremental energy units is low, and all of those units will be delivered 'off peak' when Transpower and Network Operators costs are very low. So lets be really optimistic and say it is all profit for Mercury. Take some tax off and I get:
$3.133m x 0.72 = $2.256m
Spread that over the 1,400m share on issue and the incremental profit works out at:
$2.256m / 1,400m = 0.16c /share
While welcome, this is barely a blip on incremental company earnings. Of course Fraser would argue that 2021 is merely a point on the journey to full electrification. But once all the early adopters are on board and road user charges kick in I predict a slow down in the rate of EV adoption. A 10% electric vehicle fleet for NZ (five times the 2021 projection) would still only mean a 0.8cps incremental profit (NPAT) gain for Mercury. Put like this, it does seem like Fraser's enthusiasm for EVs could be overselling the realistic profit gains available to Mercury Energy. Perhaps when he eventually moves on as CEO of Mercury Energy, an senior opening at Disneyworld's Fantasyland would be the logical career path for our Fraser?
SNOOPY