All power companies valuations goes up from marketscreener.com, because of removing uncertainty?
Printable View
All power companies valuations goes up from marketscreener.com, because of removing uncertainty?
This is not correct Rep. All the large hydro plants in Iceland, including all supplies to ALCAN (Rio Tinto), are owned by a State Owned Enterprise (Landsvirkjun).
They are having exactly the same discussion up there as has been had here regarding Tiwai. Word for word the same arguments.
https://coys.co.nz/:entity?no=156735...ELTERS+LIMITED
NEW ZEALAND ALUMINIUM SMELTERS LIMITED
Pick out the links to the Financial Statements in the list, right click to view from Companies Office site
I see the latest is year to 31 Dec 2019 with 2018 comparatives
2019 FY Loss ($355m) after Tax - but that was after ($455m) in Other Losses booked on Derivatives at Fair Value upstairs
2018 FY Surplus $220M After Tax - but after $333m Other Income booked on Derivatives at Fair Value upstairs
Note 4 (page 23) as I posted earlier "TOLLING REVENUE" 2019 FY $725m 2018 FY $698m
If I'm not wrong - "An Outfit deriving it's Revenue from processing Stuff for Others"
Why does a TOLLING Outfit billing "participants" for it's major Revenue Source have a hefty Derivatives exposure ?
It can't be - surely - north of $500 M in Derivative Assets at 2018 Y/e in relation to Power ??
Not much Change in "Raw Materials, Energy & Consumables" for the 3.72% Revenue increase between 2018 & 2019 years
either -
2019 $523.066 M v 2018 $523.517 M
Included in Non Current Receivables is this Gem:
Note 12:
'Environmental Restoration account 2019 $47.98 m 2018 $ 47.98 m'
'This is a deposit held with NZ IRD in relation to future environmental restoration cost which can be withdrawn when the environmental closure costs are incurred''
That's it - that's all the Bucks that have been put aside towards the Larger environmental costs now coming out in recent announcements
Where is the rest coming from ? $2.7 m in the bank aint going to go far
What is the turf (badly environmentally impaired presumably when close down occurs) this outfit sits on, or the blocks & four walls of improvements going to be worth in a depressed Southland economy after close down ?
Do a chernobyl and just cover it in concrete, by heavy lift helicopters. The concrete dome will then become a tourist drawcard. That would cost 48 mill. A proper cleanup would cost a lot more. Of course, the chernobyl option, would be a disaster, just like chernobyl.
I stand corrected (memory going in old age) - That’s the smelter that Norske Hydro looked at buying a couple of years ago.
The Alcan smelter in British Columbia at Kitimat is powered by the Kemano Power House which is operated by Rio Tinto.
The Saguenay - Lac-Saint-Jean region has four smelters, an alumina refinery and six hydro electric plants all operated by Rio Tinto. It appears to get a fair bit of assistance from the Quebec and Canadian Government for operations and makes up half of their global output.
So the Iceland smelter, Tiwai and the small one at Bell Bay (in Tasmania) are all powered by Hydro but not from a Rio Tinto powerplant - unsurprising that the Iceland was up for sale and Tiwai looking at closure and I’m wondering if Bell Bay isn’t next.
As I understand it, in the short term, there seems to be no way that the electricity produced at Manapouri can be incorporated into the national power supply. It is effectively “stranded” somewhere down in the deep south.
To “free” it will require a decent-sized piece of work from TransPower, which is likely to lead to a decent-sized bond issue.
“Hoorah!” cried the fixed-interest enthusiasts. “A new issue to stag!”
Then in the medium term, perhaps Manapouri has a strategic role as a big wet storage battery to cover for those days when the wind isn’t blowing. In some ways comparable to the “standby” thermal power stations of the 1990s.
And finally in the long term, the electrification of the transport sector of the economy (road, rail, and scooter), and possibly a hydrogen-production industry may well gobble up all of Manapouri’s output once it's available.
Whilst in the long term any hydro is a 'run of the river' station the combination of manapouri & te anau give it 660M cubic metres of head room, enough to run the station flat out for two weeks (assuming 0 inflows).
[ I hope I have got that right :scared:]
However, the design lends itself to continuous base load scenarios and in the short term, as has been commented widely, the inability to feed the maximum power output into the main grid limit how it can be used efficiently.
Manapouri is not stranded from the National Grid. There is a high voltage AC line from Manapouri to Bromley(Christchurch) with a tap point in the Twizel switch-yard. Manapouri electrons destined for the North Island via the Benmore HVDC link can travel via lines connecting Twizel OHau C and Benmore.
In a future Tiwai-less situation there is insufficient capacity in the system to carry the electrons north if both Manapouri and the Clutha stations are operating at full throttle.
Transpowers capacity constraint removal project does not involve another line of towers marching across the landscape.. Existing lines will have their capacity increased by strengthening towers and upgrading the conductor plus switch yard upgrades.
Boop boop de do
Marilyn
If this artical is correct, it will take transpower 150m and three years (2023) for the electricity to be available to the country.
https://i.stuff.co.nz/environment/cl...-for-emissions
Yes there are a number of lines:
Manapouri to North MaK and Invercargil.
Invercargil to South Dunedin and Roxburgh.
Then the constraint.
Roxburgh-Clyde-Cromwell-Twizel and
Roxburgh-Nasby-Livingston-Waitaki Cannot carry the amount of energy needed for transmission further north.
Its like having 1600 tonnes of material to be trucked, but only enough trucks to move 1000 tonnes. The upgrade referred to by yourself and Carpenterjoe will alleviate some of this mismatch, but not all of it.
The ROX-CYD-CML_TWZ upgrade to duplexing has already been completed, and some of the ROX-NSY circuit has had a thermal upgrade. The duplexing will require some new towers as the weight of the new conductors and the increased wind and snow loading will require stronger towers in places. The new, larger, towers may require resource consent, and that could delay the project past the 2023 estimate.
Longer term the solution is pumped storage hydro at Lake Onslow, and I believe Professor Bardsley will be presenting on this at the Hydrological Society Conference in December.
The key to all this is to increase the utilisation of the Transmission system . that involves batteries as Meridian are stating and as is being done overseas . You have to be careful with what you have to build. It needs new thinking by a staid industry.
Have just been pondering the same. Be good to hear the experts discussing wider ideas about boosting local consumption, e.g. the coastal shipping fleet will one day need to wean itself off diesel, if they went electric sooner they could "fill up" at Christchurch and Picton. Perhaps move core data centres to the south Is. Trams in Chch, electrify the railway. None of it simple but it all adds up now that there is new impetus (may create a few jobs as well).
If the future is electric cars and roof top solar, ect. The grid can encounter problems with over supply during the middle of the day.
Roof top solar operates when you dont really need it and individual residential batteries options can be as expensive as the solar panels. Also during the life of the solar panels you may need 1-2 replacment batteries. Alot of people have affordable systems installed in Australia but do not get the expensive batteries. Pre-covid this was an issue in queensland the grid was charging households to export electricity to the grid. Yes this only happened on a few occasions and for a short time, but currently the grid in australia cannot handle the speed solar is being installed. (Alot of solar plants are not operating at capacity, due to grid overloading)
Now I understand australia and nz are two very different energy generation countries. But lets put ourselves in the solar/electric car future. NZ is in the middle of a calm hot summers day and an earthquake causes a loss of controlled production (south island dams) or damages major transmission lines. There may be instant demand to use a pump to pum up to stabilise the grid, so solar systems and lack of demand do not overload and cause fire or to release water so everybody's beers stay nice and chilled.
It can work as a back up to billions of dollars worth of infrastructure assets and it is a fraction of the cost of batteries.
Look at it from a customers perspective,solar is very economic, as are batteries . In the future with H2 many people will leave the networks.
Horus with your obviousl knowledge of the industry, could you point me to any good "economic batteries" to store my residential solar production, rather than sell it back to the grid ? I am keen but have never been able to make the numbers work when I have looked at it, admittedly not for the last 18-24 months, so much may have changed in that time.
I have built my own house battery from a repurposed electric vehicle lithium battery. Linking through a hybrid inverter and imported BMS. True storage capacity around 15kWhr. Total battery & BMS cost about $7000. My labour was about 30-40 hours. I have 5.25kWp solar and am fully self sufficient for 8 months of the year. I will add another 2-3 kWp solar before next winter to keep the EV's charged through winter
But the cheapest solar battery is your electric hot water cylinder. If you haven't already, get a solar power diverter to manage your hot water heating. For about $1000 investment you will have free hot water for 9 months of the year
Thank you Carpenterjoe.
So it's basically a case of production exceeding demand in a scenario where production can't be controlled.
If I remember correctly, in that scenario, Germany sends the surplus to Norway who do indeed pump water uphill.
Yes. We recently replaced our ageing SolaHart water heating unit. All up including installation about $9k from memory. It’s working really well, just gotta hope that it lasts 10 years or more with no major issues. It’s nice to have free hot water for most of the year.
its not particularly interesting - its just simply massive batteries! Its good, its such a basic obvious solution, which is why Australia is investing so much in the worlds biggest battery farm. It actually makes a lot of sense for Auckland, whatever capacity constraint there currently is getting power from south to north can be somewhat alleviated by having the energy flow in low demand off peak times into battery storage to be used at peak demand periods.
It solves a number of problems.
1. It reduces the need for lines upgrades in the lower South Island. When there is more generation in the lower south than the lines can handle, the pumped storage station uses that excess energy to pump water to the upper reservoir for use later.
2. It triples New Zealand's current hydro storage allowing the country to manage droughts much more efficiently.
3. It buffers wind generation in the ratio of 2 MW of wind generation for each 1 MW of pumped storage. New Zealand is right now at the limit of grid stability for any additional wind generation. As the wind fluctuates other plant has to ramp up or down to make up the difference demanded by the changing output of wind. This means peaking plant having to start up or shut down for very short periods of time, or other plant being required to go into overload, or even worse, generate at below minimum load. Pumped storage can take up that slack much more efficiently and still provide spinning reserve or interruptible load.
Thank you for the detail Jantar. Much appreciated
So I think that my understanding as outlined in my original post and updated for the detail which so many posters have provided is (in laymans terms) roughly correct.
In the short term, the power generated at Manapouri is essentially “stranded” until some transmission upgrades are made.
In the medium term, the power generated at Manapouri can function as “a big wet battery”, but cannot do so directly.
In the long term, the power generated at Manapouri will be a very useful addition to the nation’s generation capacity as the economy electrifies itself..
So - looking forward to the TransPower bond issue. . .
Now, as far as batteries are concerned, I seem to recall reading something in the IEEE Spectrum magazine a couple of years ago about something called "Vanadium Redox Flow Batteries" being used at scale in China. However the tsubject seems to have gone quite quiet of late. Has anything happened there?
With the pace of technology change noone on a board is going to commit major capital for pumped storage .
I think that it would be a political decision, made in Wellington, "in the national interest", horus1. Very likely it would be a TransPower project in the interests of "grid stability", with some element of governmental coercion.
Read the answer below. Have put on a 10Kwhr solex battery with 15 KWH of solar and it is very economic. I have a lot of froiends from the top of the Industry and they have put on Solar.
Pretty much, Also the oblivious situation when a margin can be made on the difference in peak prices.
In Australia my
Standard rate is .1379510 per KWH
Peak usage is .2955920 per KWH
Daily supply charge of .902 per day
I'm sure I could get cheaper rates, but we do not consume enough to justify the time to re negotiate every few years.
Iceman, solar calculations can be difficult and depends on what you supplier is willing to pay you. If solar was installed at the unit i rent, I could set the battery software up to export a certain % at peak and leave enough to run the household during peak. Then consume cheaper off peak and re charge during off peak. No point exporting during off peak unless you have excess and Do not forget to apply a standard electricity appreciation value.
Got chatting to my cousin who lives in Southland on the weekend.
The sense down there is things will be grim. Not far as the crow flies from Manopouri power station to Bluff he said. Not sure why commonsense on transmission pricing couldn't have prevailed.
Academics with their fancy conceptual theories on transmission pricing have played a major part in sinking this, is what he suggested, (pretty bright guy with thousands of hectares of farm land growing all sorts of things in Southland).
ardern understood Rio Tinto was still in talks with Meridian Energy and the timing of those commercial talks would assist the Government in the timeframe it needed to support the region
https://www.stuff.co.nz/business/122...n-in-southland
slither of hope for an extension to closure date , would be a good outcome for all i reckon. i brought mcy recently
The relief that the power companies have provided in this round of negotiations for Rio Tinto far exceed any discounting they requested in terms of transmission pricing. To me this seems less about the cost of power/transmission and more about the world aluminium price and long term viability. A big company decision. Although they could be playing games and just trying to extract that last $5-10 million.
Would we see Mel writes off Manapouri Powe station because of smelter closing?
Retail investors still hold alot in this sector but I wonder how much is trickling into overseas ownership.
For contact (CEN) according to simplywst:
JP Morgan chase 7%
Blackrock 5%
Vangaurd 5%
AusSuper 2.5%
Norges Bank 1.5%
UBS 0.7%
If it is possible to do now, then it will only increase esp with the prevalence of cheap money in other places in the world.
On the way is more trillions in stimulus in the US as covid takes hold is even more robinhood newbies piling in through the above institutions.
If you could only buy and hold One power company which would it be?
Long term. Meridian.
some good opportunities to put their power to better use than the Tiwai drain. :)
The cynic in me suspects that Rio Tinto is shedding Tiwai to make its aluminum division more attractive to buyers. I recall they were trying to offload their aluminum assets when the 2013 $30m corporate welfare deal went through. Taking out a non performing plant will sweeten the deal and the resulting lower overall valuation will potentially bring it within reach for a larger pool of buyers. If this is the case, Tiwai is unlikely to get much of a stay of execution.
Are you the Minister of State Owned Enterprises King?
I have a deal for you, give me the worthless power station with a hydraulic head of 540 feet backed by two large reservoirs with a surface area of 490Km/2 and i'll give you my sawmill in the bush .
It's a great deal. Sign here......
Boop boop de do
Marilyn
Just a question..
Just wondering what to do with that station when tiwai f off.
Maybe u can buy it n power your whole life home entertainment
https://www.nzherald.co.nz/business/...ectid=12349131
Bryan Leyland: Tiwai Pt smelter a victim of Muldoon-era broken contract and dysfunctional electricity market.
The conclusion is that the smelter is being shut down primarily because the New Zealand government broke its power supply contract. Since then the smelter has been charged a price several times the cost of generation. If the smelter shut down much of the power that it is using now would have to be spilled: this power has no economic value.
Bryan Leyland reveals the likely economic cost of closure could be billions for NZ .
I was ignorant as to how high this cost might be
I now feel the narrative we have been fed from politicians and the media has been seriously deceptive.
It is an extra cost we cannot easily afford in these troubled times
https://www.newsroom.co.nz/oram-how-...275bb-97843407
Another day, another view - why it is high time NZ accepts reality and move on from smelting aluminium with clean, renewable and efficient energy.
Think long term.
Great article here - https://www.newsroom.co.nz/oram-how-...ed-tiwai-point
I'm sure most have read it but I found it to be the most intelligible and balanced article so far on the Tiwai situation. Has me really wondering why there hasn't been some proper contingency planning by government over all the years, both Labour and National are equally incompetent in this regard. If the article is right and RT are solely focusing on the big picture, it could really be a flick off the switch next August and see you later. I still don't think the market is fully pricing in this option.
The article is correct.
https://www.reuters.com/article/us-r...82Q0EA20120327
I recall RT using the possibility of Malaysia as a negotiating tactic in its negotiations with Meridian and NZ government way back in the late 2000's.
We laugh at third world or developing nations at how eager they are to secure industries and jobs but in this case, the Malays told RT that they would not do the deal and secure a US$2 billion smelter investment as the power price RT wanted was plain ridiculous.
Time for NZ to wake up and move on with better use of the clean, green and renewable energy from Manapouri.
Yes I agree. However the leave in August 21 scenario really is a bad outcome of NZ. There needs to be a way to soften the blow with at least a 2 year extension to allow both the grid to be upgraded plus some semblance of a recovery plan for Southland. If this was happening 12 months ago then I think a lot of people would have been less open to this plan but with the current uncertainty over where NZ will be in 12-18 months time it would be reckless to not try and eek out a deal.
It is rare I agree with Winston but I wonder if some deal can be done with NZ taking over the operation of the smelter and remediation liability for a 5-10 year alumina supply agreement from RT. Means that there can be a far more cushioned wind down than the hard exit currently being threatened. Unfortunately in an election year logic and well reasoned thinking are usually pushed to one side.
Do we want the problem of a 50 year old smelter or are we in fact better to bite the bullet onthis one and let it close down? Tiwai produces 0.5% of the world's Al production and prices are very low for Al right now. Getting into the Al game sounds like it would be a headache we could avoid IMHO
Thanks for posting fish. Very interesting reading
+1 Very interesting reading Fish. This is a fresh perspective that I haven't come across before.
Anecdotally, it seems that the average NZer believes that any pricing deal struck with Tiwai is manifestly unfair, and believe that their domestic power prices are artificially high directly due to the smelter.
Yeah that's the $64k question. Is it better to let them go cold turkey or find some in-between scenario that softens the landing for NZ. I may have my rose tinted glasses on as I am a holder of a few NZ generators but surely NZ inc would be better off with a controlled shut down.
Agree, good article but looking at the resume of the writer I would have to add a few grains of salt to some of his views. I think in the MEL release it stated that their proposal has the option to reduce the costs of running the smelter from around the 80th percentile to within the top 25th world wide. If they have been paying such exorbitant rates why have they kept operating for 45 years past the original deal being tossed out? Understand the point on the credibility from a NZ government perspective though, not a good look. Do RT really want to put the boot in and leave with middle finger in the air or are they really just trying to get the best for their long term bottom line?
Having read Rod Oram's article, horus 1's endorsement and a former executive's views I've come to the conclusion that exiting from the smelter contract at the least possible cost would be in NZ's best interests.
I have no idea why Brian Leyland gets so much publicity. He is a climate denier with views stuck in the 70s. My father knew him well and I have been nothing but disappointed by his public opinions over the last decade or two.
There are so many inaccuracies in his opinion piece. The idea you can just add up any costs you can think of is ridiculous. Economics is not a zero sum game. All those resources (power, labour etc) will be put to other uses, some far more valuable than making Aluminium.
If Comalco wanted a lock on power prices then should have taken the risk to fund and build the power station. That's how capitalism works, to the risk taker goes the spoils. NZ has a robust, independent legal system, the contracts were fairly negotiated.
Besides Tiwai Point got a phenomenally profitable legacy power contract for the majority of its power needs (for 4 of the 5 pot lines). This 40yr contract expired in 2013 and they largely managed to roll it over to 2030 with a lot of pressure that ultimately saw John Key buckling by going over the heads of the negotiators. Meridian et el had to make do with a few small wins, extending the termination notice from 12 to 15 months etc.
I trust Meridian and the other generators to negotiate with Rio Tinto. They understand the electricity market better than anyone else, understand the trade offs and should be left to do it. This roughly been Labour's approach, it wasn't however National's policy, the supposed "free market" party.
I remember this as well Balance and you are spot on, it was a lucky escape by Malaysia. RT plays the same games with Iceland too. It is their standard operating procedure.
Winston Peters idea is ridiculous nonsense which would leave NZ with operating losses and the huge cost of cleaning up the smelter's mess.
I am not sure if it is just the generators role to negotiate further with Rio.
The contentious point that I hear coming from Rio Tinto is the $64 million transmission costs they pay-which they say is many times the real cost .
I fail to understand how the loss of this revenue for transpower will not increase costs for consumers.
Not far at all as the crow flies for those power lines from Manopouri to Bluff. 113 km's from vague memory ?
$64m per annum seems grossly excessive and I think you have hit the nail on the head and consumers expecting cheaper prices are going to be very disappointed in more ways than one, they're not going to go down, more likely to go up !
Reported in the NBR last week Transpower are looking at having to invest ~ $700m in new infrastructure to send that power north. They will want a return on that investment and there are limits to how much power that can be sent across the Cook Straight and a lot of transmission losses between Manopouri and Auckland and last but not least there's about 2-3 years before than infrastructure can be built.
There are so many inaccuracies in your opinion piece. To start with Brian Leyland is not a climate denier. He has never denied that climate changes. But his views on climate are completely irrelevant when it come to the power industry. He is a respected electrical engineer and is a participant in the market. He is also correct in his estimate of the value of water that will be spilled. There is no way for that additional energy now available from Manapouri to be transmitted north from Roxburgh. The lines upgrade currently under way only alleviates the present constraint, but does not provide for an additional 600 MW of transmission.
Camalco wanted to fund and build the Manapouri power station, but the law of the day didn't allow anyone to build new large power stations other than the government. They got around that by the NZED building and operating the station and selling the energy to Tiwai at a price that was close to cost. There was a further benefit to Camalco in that by having the NZED do it then Tiwai was connected to and supported by the grid.
It's only one man's opinion and there are others who may have a different outlook in the end.
There is some opprtunities for electric vehicles infrastructure, dairy factory changes and maybe even data centers in the south island or whatever else our govt can attract here using our covid free and clean energy status.
Brian Leyland does not think climate change is man made nor that the planet is even warming despite all the evidence to the contrary (the last 5 years were the hottest years on record). That is the definition of a climate denier. From his own website in his own words:
He also continues to suggest nuclear generation for NZ, something no respected electrical engineer does. My own father ruled it out at university in the 50s as the output of any nuclear power station would be too large for NZ's system and thus you would need at least two of them to cover maintenance which would dominate our system even more and lead to huge waste. This was long before all the very serious negative costs of nuclear power were fully understood.Quote:
I am seriously sceptical of claims that global warming is man-made, real and dangerous. These predictions rely upon computer models that failed to predict that there would be no warming for the last 18 years. - http://www.bryanleyland.co.nz
The lines restraint is well understood and been discussed ad infinitum here. The sooner it gets built the better.
You have to look at the strategic review of NZ Steel and NZR to get the full picture. There will be further load reductions in the NI . I sold out of MEL because of that today.
....if I might fill in the dots. NZ Steel to close. NZ Refining to drastically downsize into a fuel depot and turn off the refining plant. => no growth in NI power demand.
Tiwai to close => big fall in SI power demand.
So Meridian will have a lot of spare power generating capacity down south and no obvious market to sell that power into, even if the south to north transmission lines are upgraded. Manapouri looks to be 1/3 of Meridians total generation capacity.
=> a lot of spilling to occur at Manapouri.
Manapouri looks to be producing around 1/3 of Meridian's energy.
https://en.wikipedia.org/wiki/Meridian_Energy
But it wouldn't account for 1/3 of Meridians profits because of low energy prices to the smelter. So maybe Meridian profits will drop to 5/6 (say) of what they were pre the triple shut down?
SNOOPY
How do you calculate that? At 4800 GWh per annum, Manapouri would generate about $240m of revenue (at $50 per MWh, which is in the ballpark of the Tiwai contract). Year 1 of Tiwai shut, the nodal price at Manapouri will at best average $10 per MWh (probably more like $5). They will also spill a fair chunk of the 4800 GWh, but lets conservatively say only 800 GWh. That leaves new station revenue at 40m. So a reduction in revenue from Manapouri alone of $200m. This is just the first year, you would expect things to gradually improve and possibly even get back to over $200m in year 5-10 post Tiwai. Also remember that O&M costs for hydro stations are fairly fixed, so very little (if any) savings there. Capex could be pushed out, although I would be surprised if they are spending more than $10m a year on that.
Also the remainder of their Waitaki generation will also get a lower price, although it will be cushioned somewhat due to their retail load. However, any retail load in the North Island will not be able to be hedged as well as it is now due to the higher spread between spot prices in the NI/SI compared to now. This will mean they will have to either drop retail load or purchase hedging off the other generators that have stations in the NI.
As I have said previously, I really think the market is under estimating the impact of the current proposed shutdown on the NZ market and gentailer revenue.
Perhaps they could take a few buckets of water out of Manapouri, once they do not need all the power, and tip it into Aucklands dams :)
Things will balance out in time.
NZ industry has still got many coal fired boilers, when spare electricity come available I think it is more than likely those coal fired boilers are going to be replaced by electric boilers. I can see this happening in both the North island and the South island.
Yeah I think values are based on a long term view not one year or so..
I am just finishing my PhD in climate science, and I have not been able to find any point in time at which natural variation in climate finished and anthropogenic change started. Thus I can say with confidence that climate change is NOT man made. That is not the same as saying that man isn't having an influence. Does that make me a denier as well? His comment on no warming for 18 years was made in 2016, and at that time he was correct. Even the Hadley Research unit in England (the one the IPCC uses for data) admitted that at the time.
Nuclear would be good foe NZ if the units can be made small enough at an economy of scale. Westinghouse were working on a 360 MW unit which would have been a perfect size for us, but although it was supposed to licenced for production in 2010, it just quietly was dropped. You are correct that the modern 1000 MW+ units are not suitable for NZ as we would not be able to provide both the base demand and the spinning reserve they would require.
It's probably not needed though given there are no capacity issues now or in the near term future.
Hi k14. First I want to reconcile some of these big numbers that do my head in.
If the Tiwai contract energy charge is at a ballpark rate of $50/MWh, that is $50,000/GWh. For 4800GWh of power that adds up to:
$50,000/GWh x 4800GWh = $240m of revenue (your figure)
I buy my power as an ordinary household lot. That means I buy my power by the kWh. $50/MWh is equivalent to 5000c/MWh or 5c/kWh. I am paying 27.6c/kWh for my power. So that really brings home what a good 'energy' deal the Tiwai smelter is on.
Now you say that you expect a post smelter Manapouri power price node $10/MWh which is just 1c/kWh. In consumer retail terms that is pretty close to 'free' power. You are effectively saying that there will be no use for this power. But some that power will be able to be taken north. And in three years maybe all of it. The cost of generation at Manapouri is very low. Sure if the wholesale price is as low as 1c per unit, then Meridian might be making a loss. However Meridian is also a retailer. If the retail arm of Meridian can buy their power at 1c per unit, the gross profit retail margins will be enormous. That should more than make up for any wholesale losses?
The profit margins for Gentailers are ultimately based on the difference between the marginal incremental retail price (which sets the price for new generation being economical) and the historical generation cost from each power station owned. In the case of Manapouri, the big CAPEX spend was done at late 1960s, early 1970s prices. It is those historical prices that sets the generation cost for possibly hundreds of years. Meridian owning Manapouri gives them a huge indefinite long term advantage in the generation space.
Isn't it the mooted new thermal generation in the North Island, and the respective gentailers that were talking about building those projects that will now be pushed well down the track by a Tiwai closure the real issue going forwards? Meridian isn't planning on building any new thermal stations, so they should come out of this Tiwai pull out relatively well?
I can't see Meridian losing money by operating Manapouri
What Waitaki generation? Or are you talking about Contact Energy? Do you foresee an energy unit price war in the lower South Island over the next 2-3 years?
Not sure what you mean by the bit I have highlighted in bold. Ultimately it has to be the other generators who will fill any supply holes in electricity supply, even if third parties become involved 'trading' the price differences. So really no substantial difference pre and post Tiwai?
SNOOPY
Snoopy,
10 cents of that 27 cents per Kw/h that you pay is transmission charges. So you are probably paying closer to 17 cents for your power.
Why not join Flick... I pay 22 cents for my power. Something like 10 cents transmission, 4 cents profit margin, and 8 cents per Kw/h. Better than your deal.
SNOOPY, you are not comparing apples with apples here. Your retail price of 27.4 c/kWh is made up from roughly 1/3 (or 10c) for the energy, 1/3 (or 9 c) for the local network charges, and 1/3 (or 8 c) for Transpower charges, ancillary products, like spinning reserve and frequency keeping, and EA security charges. This is all lumped into a single bill for you.
Tiwai pays all these charges separately, although to be fair, they get paid for their interruptible load as a contribution to spinning reserve. Their network charge is also very small as that 600 MW never goes through the network and they only have a small local service transformer for their essential supplies that comes off the network.
The true comparison between your energy charge and Tiwai's energy charge is the 10c component of your energy bill to the 5c component of Tiwai's energy bill. To see the true energy part of your bill go to your gentailer's monthly operation report and look at the netback. Although not an exact figure it is generally representative of the amount that the they expect from retail customers. I know that at least two of the big companies use the long term average of ASX forward price curve to set their transfer price from generation to retail.
I am seriously thinking about it Blackcap. My current power deal expires at the end of the month. I am wondering if I would need a new electricity meter though? I know the disadvantage with the likes of Flick is that you pay 'market price' during the power price spikes as well. So if I got hold of a 'household battery', along the lines of a Tesla Powerwall, and kept that charged up enough to get me over the power spikes then my operational savings might get serious.
My power meter was replaced about ten years ago with a 'smart' one that can be read remotely. But 'smart' ten years ago may not equate to 'smart' today. How do you address the 'power spike' charge issue on your own account Blackcap?
SNOOPY
I just looked at my account for June. I paid 10.8c to the energy supplier (Ecotricity) + 0.58c to the lines company as well as $ 0.95 daily to them + $20 for the month in admin etc.
It is very difficult to compare the services we get.
If I just take my June total cost divided by kWh, the cost is approx 18.7c TOTAL cost per kWh. Then Network Tasman always sends us a refund cheque each year for the lines charges, but this is probably only around 2 c. per kWh. So I guesstimate my REAL TOTAL cost of electricty is around 16c per kWh. But Ecotricity then pays me 0.0809c for my solar exports, which makes a huge difference.
But will that continue with Tiway (and maybe NZ Steel and others) closing and us having excess power production ? I suspect solar may become uneconomic in the next few years which makes the Green's policy of solar power in each state house ridiculous.
Yes it does.
Do you believe that the massive growth in greenhouse gases (produced substantially by humans) and the year on year and decade on decade increases in global temperatures are not linked?
Just because you cannot identify a definitive point in time that it happened (or started) does not mean that it is not occurring. I’m astonished that you would make such an assertion. Do you call yourself a scientist?
Personally, I find it difficult to pinpoint the exact times of year when winter becomes spring and spring becomes summer. I guess (following your reasoning) that seasons don’t happen and the temperatures in winter are the same as in summer after all.
Flick have a fixed hedge option at about 9c/kwhr. Most people I know in the indusyrt are on flick.
What I want is a meter that will sense when spot retail prices get above a certain level. At that point it will switch off the grid and switch over to my house battery supply, thus shielding me from the 'peak hour' spike in spot retail prices. Then when the prices go down below my trigger level, the house battery will disconnect and my smart meter will see me resume taking my power from the grid. Finally in the middle of the night, with retail spot power prices at their lowest ebb, my smart meter will direct the grid to fully charge my battery again in the 'wee small hours' so it will be fully charged for the next day. Where can I get a smart meter like that?
SNOOPY
The 'fixed hedge' option was Flick's answer to the October 2018 power price spike event?
https://www.stuff.co.nz/business/108...le-prices-bite
I guess any response is good. But the 9c per unit of power price isn't that different to the 10c per unit of power price bandied around here for some of the big five. The hedge option kind of removes the point of differentiation that Flick (and other spot price retailers) had from the big five IMV.
SNOOPY
Snoopy you have to look at the other charges . The big retailers put mark up on them but flick dont. Transmission is about 12 % , Distribution about 35%. All charges should nave drtopped on 1 st April as the CC reduced distribution charges but most retailers held onto the decrteases for themselves , Flick did not.
There is a link and that was shown by John Tyndal in 1856. 1.2 deg C increase in atmospheric temperature for each doubling of CO2: The effect is logarithmic, and only happens in the ~7μ region. From this we can calculate that at the present CO2 concentration about 40% of the temperature rise since the turn of the century is probably anthropogenic, but that means natural variability is still dominant. This is understandable as we are still recovering from the Dalton Minima, and the true climate deniers are those who insist that man is solely to blame.
I value your contribution
However I feel you might be underestimating the anthropogenic effect however you make the important and valid point that there is likely to be a significant contribution from natural variation .
CO2 levels have been rising since the Industrial Revolution .
Methane significantly contributes.
As temperature rises water-vapour increases and this is the biggest greenhouse gas-are you including this aspect of the anthropogenic effect?.
The worse fossil fuel by far is coal.
Its important that people understand how global warming is caused and what we can do to mitigate it .
I feel we need to push electricity and ban the use of coal in its generation.
Natural gas appears the best transition fuel
Hi Jantar,
Contact Energy seems good at regularly giving out a 'netback' figure. The other 'gentailers' not so much. So I am hoping if I can find out just how the calculation is done, then I can calculate comparative figures for other gentailers. I am wondering if it is possible to calculate the 'netback' figure from other figures presented in the monthly Contact Energy Operating Report. The first step in that process is to define what 'netback' means in the electricity market sense.
https://contact.co.nz/-/media/contac...018.ashx?la=en
Slide 7 in the above 'November 2018' operating report gives us the definition:
What is Electricity Market Netback?
Electricity Revenue from Mass Market Customers less Electricity Distribution Network Costs, Meter Costs and Electricity Levies less Direct Operating Costs to Serve the Customer (excludes Head Office allocation) equals Electricity Customer Netback
Now we move to the latest June 2020 monthly report
https://contact.co.nz/-/media/contac...020.ashx?la=en
The numbers I am using are from Slide 7.
Average Electricity Sales Price $236.67m less Electricity Direct pass Through Costs ($107.66m) less Cost to Serve ($11.90m) equals Electricity Customer Netback (?) $117.11m
However, the actual answer is $101.03m. So there is something wrong in my calculation method. Can you (or anyone else) offer an insight? Or is there not enough information given in the monthly Contact report to allow the 'netback' to be calculated?
TIA
SNOOPY
There are a few other items that are not included, but generally small in relation to the overall figure. These include losses or gains on hedge products and losses or gains on ancillary products. These are often not known until after the end of each month when Transpower carries out it reconciliation.
I have had another look at that Contact Energy June 2020 Operational report. I can't see any $/MWh hedge figures that I can dovetail into my calculation, or any other figures on 'ancillary products' for that matter. So it looks like your answer is that it isn't possible to calculate a monthly electricity netback figure from the other figures given in the monthly report. However I don't buy the argument that these 'few other items' are not known at the time of writing the report. Contact have provided a 'netback' figure. So Contact must know what these adjustment figures are and they have made their adjustments accordingly to produce their 101.03 $/MWh figure.
Adjustments small in relation to the overall figure? The difference between 101.03 $/MWh and 117.11 $/MWh is that the real figure is 13.7% smaller that the one I calculated.
I call that difference significant.
Hedge products would normally be used by a gentailer to provide input cost certainty. So I find it odd that they haven't been provided in the monthly report. Nevertheless there is probably an equal chance that any particular hedge will enhance or reduce an equivalent unhedged result. So it might be best to go with the 'unhedged and unadjusted' netback figure that I have calculated anyway. Perhaps an 'operational netback' like the one I calculated is actually a better performance measuring stick than the real thing?
SNOOPY
I think (but dont really know for sure) you will find a modern system quite smart about how it uses the solar energy supply from your PV's on the roof and your Tesla battery. That said it may not be able to dynamically react to fluctuating prices on the grid.
I doubt you'll ever find it worthwhile storing power unless you're in the game of making it as well.
Australian based, might not help for nz.
https://repositpower.com/
Not Contact but Vector using batteries to lower need to upgrade network
https://www.vector.co.nz/innovation/...-at-glen-innes