Originally Posted by
k14
To be honest, I think all large generators will be impacted. Genesis will be one of the lesser because whilst they will have to take a short term hit by closing thermal generation, at least the assets have a finite life and have high opex. Meridian, Contact and Mercury will have the value of all their hydro assets massively diminish, Meridian being the most impacted. If 5000 GWh of intra-year hydro storage is added to the NZ market, it stamps out the majority of volatility in the market. At the moment, the hydro asset owners make good margins during dry spells as the spot price can spike to over $1000, giving good returns on the assets. However, add in the big battery (Onslow) and all of a sudden the volatility range decreases from $1 (wet period) to $1000+ (dry period) to now probably being $100 (dry period) to $50 (wet period). In theory great for consumers (if the business case stacks up) but not very good for shareholders of the hydro companies.
I like the idea but think the economics are very marginal. A 24km tunnel through a mountain range, underground powerhouse and 3.8km dam, I think we are dreaming. Look at the Snowy 2.0 scheme. Touted in 2017 as costing $2B AUD, then up to $4B, current price I believe is $5.1B and they still need to build the transmission (expected to be $1-2B). It has some similarities to Onslow in having an underground powerhouse and 27km tunnel although far smaller reservoir (full to empty at max generation in ~7 days vs 170+ days for Onslow).