This really only works where you cant turn off the power generation to match supply. Geothermal is continuous and wind blows when it blows but other thermal and hydro can be shut down, eliminating the need to store that power.
Printable View
Quoting from your above reference post Vaygor:
"The companies with the correct fundamentals to go for are those that can produce (ie generate) enough electricity to feed their own customers."
"Why? Because these companies are not exposed to having to buy electricity off the others. They can look after themselves. They are safe. Conversely those who are able generate more than they retail can make a fortune at times when selling to those who can't."
Isn't the above only true in a growing market with a constrained generation supply? Indications are that over the next 5-10 years the demand for electricity will not grow and there is lots of low cost renewable power generation coming on stream.
Under the "shrinking demand plentiful generation" scenario, I would argue the best strategy would to have less generation capacity than your customers demand. I am using your same principle of 'balance' of generation and demand. But what as a power company executive I would be looking to do is balance forecast power generation capacity and customer demand. If I was CEO of MRP, I would put on standby all my gas power stations (to protect against spikes in power prices) while bolstering the power stations where I don't fuel. Oh wait, CEO Doug Heffernan has already done that. Then I would wait for periods of high wind so that I could buy power off other peoples wind farms when they are forced to sell it cheaply, while occurring no associated capital expenditure. Oh hang on, DH is doing that already too.
From where I sit, MRP are doing exactly the right thing by underutilising their generation plants and buying cheap power from their competitors to close the supply/demand gap.
SNOOPY
Dont rely on predictions snoopy-another very possible scenario is that demand grows as population grows and building activity increases . Airconditioning and even transport will eventually add-i will be buying an electic bike soon and i have a house with 4 heatpumps and would not be without-they are on almost continually-sleep better,work better .
"price submitted for grid injection by the generators"? This is contrary to what I understand how NZ Power will operate.
The generators (including MRP) will be told the price they will be paid for the energy from each of their power stations and that rate will certainly be different between hydro stations and geothermal stations. And because power generators can't up sticks their power stations elsewhere, these generators will obey and be allocated money at exactly the dollar per Megajoule level NZ Power dictates!
"Prices submitted" by generators will only apply to new generation projects, and there may not be any for ten years.
SNOOPY
I am basing my predictions on peak demand fish. Your electric bike can be charged overnight, off peak. Are you projecting air conditioning demand over summer will be a higher spike than heating over winter? Maybe with more global warming it will, but not in the next ten years I would pick.
My lower power use scenario is based on the large reduction in industrial demand through a scaling back at Tiwai point and Kawarau Pulp and Paper. I agree with you that consumer power will probably steadily increase.
SNOOPY
Snoopy - I think they will also be told what has to produce power and when - that is they could force you to use your cheaper Hydro even though you disagree with their weather forecasts and believe the water should be stored.
Re price submitters, Kiwipower would determine a plant needs to be build. Then similar to a PPP, you will submit your proposed plant and the price you will charge your power at. If your project is choosen (not necessarily the cheapest - ie an expensive wind may be chosen over cheap thermal, or peak load over base load), then you are locked into the price forever and a day (inflation adjusted one assumes).
It is not true. There is constrained electricity supply for a number of other reasons. These include:
- Sudden demand from big industry
- Not so sudden but long term demand from big industry
- Unexpected national demand during a cold snap
- Low lake levels
- Power stations taken offline for maintenance
- Unexpected shutdowns and trips
On many occasions in the last 12 months, power prices to retailers have spiked to over 300% of the 'norm'. Spot prices have sent NZ retailers with little generation broke in the past.
Believe me, MRP do not in any way wish to produce less power than their retail arm has promised to supply.
You can't put a gas fired power station on 'standby'.It takes far too long to bring up to temperature and put online. These units are put online really only to cover for a forecast extended shortage of power in the country due to prolonged periods of predicted cold weather and/or low lake levels. The stress and wear and tear on the units each time they are taken on and offline is significant and costly in the long term and the decision to fire one up is a significant one. There is no crystal ball when it comes to forecasting; the variables are many and anything can happen. They can only do their best. Your assertions about what Doug Heffernan is up to are in my view unfounded and untrue.
I don't believe they are doing that at all. MRP want to buy as little power as possible off anyone. They would dearly love to generate more than they have promised to supply.
This is where in my view you have led yourself astray a bit Snoopy. NZ Power want to use bulk-buying like some of the big industries are able to do, and like Pharmac do for drugs. Your view on NZ Power dictating sell prices cannot work on so many fronts both technically and commercially imho.