Originally Posted by
Snoopy
Good bit of insight. There is certainly long term risk in running a 'generation only' portfolio. With electricity prices spiking higher, we are probably at the opportunity end of that risk right now though. If 'Trustpower Rump' (I think that more accurately describes the company than the old 'Trustpower' monicker) can lock in a long term supply contract at today's prices, my inkling is they will do very well. The problem is 'long term' in power supply terms probably means 10 years, maybe 20 years at the outside. Hydro generation assets may have a life of hundreds of years. I can predict that some time well within the life of those hydro-generation assets, the risk profile will turn and selling power at a multi-year market low price will be the reality. At that point 'Trustpower Rump' is probably dead, and will be taken out by whatever company is on the other side of the long term power purchase contract.
Or we may see an orderly sale of those hydro generation assets much earlier.
SNOOPY