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Here at Ohakune we are paying about 20c a kWh for electricity from Pulse Energy, and another 20c to TLC for breaking the voltage down to 11,000 volts, then delivering it to our house.
But the pulp mill and timber mill nearby have had to close down (temporarily?) because spot bulk prices have suddenly gone from 2-10-20 cents a kWh, or an average of about $10 per MWh, to $600-$700 per MWh, (more home heating, more EVs, but less water in hydro lakes) making the production for export of pulp and dressed lumber uneconomic.
Nevertheless, power retailers are bound by contract to keep delivering power to consumers, for far less than 70c a kWh. So will Pulse and all the other power retailers make huge losses, while Genesis, Contact et al. make huge profits, sending their share prices sky high?
Last edited by Jiggs; Today at 12:27 AM.
Reason: Better grammar to make meaning clearer
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![Quote](images/misc/quote_icon.png) Originally Posted by Jiggs
Here at Ohakune we are paying about 20c a kWh for electricity from Pulse Energy, and another 20c to TLC for breaking the voltage down to 11,000 volts, then delivering it to our house.
20c per energy unit plus 20c per unit network charge equals 40c per unit (kWh) delivered to your house.
![Quote](images/misc/quote_icon.png) Originally Posted by Jiggs
But the pulp mill and timber mill nearby have had to close down (temporarily?) because spot bulk prices have suddenly gone from 2-10-20 cents a kWh, or an average of about $10 per MWh, to $600-$700 per MWh, (more home heating, more EVs, but less water in hydro lakes) making the production for export of pulp and dressed lumber uneconomic.
1,000kWh = 1MWh. So 40c per kWh equates to 40,000c per MWh or $400 per MWh.
I am not sure where you are getting your numbers from. But if a local timber mill is only paying $10/MWh on average, that is only 1/40th of the cost that the public are paying ($400/MWh) for power to the house. Tiwai got some good power deals over the years, but nothing anywhere as low as that. I think you might need to recheck your figures.
I presume the $600-$700 per MWh figures you quote are spot prices? It doesn't seem likely that a substantial manufacturer would sign a contract for their energy at $600-$700 per MWh, while domestic houses are only paying less than one third of that figure in energy costs ($200/MWh) in the same region.
Furthermore I think it is unlikely a manufacturer would sign up to buy all of their power at spot market rates. More likely they would be on a fixed price contract fro 80% of their expected power use, and 20% spot price charge for the remainder - or something like that. So while they may be paying $600-$700 per MWh for their spot power right now, the average price being paid, I am sure, is a lot lower than that.
Even so, I am not denying that the profitability of a wood plant may be put at risk by high spot power prices. But to blame more heating being turned on and more EVs being charged is unlikely to be the reason. Domestic demand is readily forecastable. Much more likely a reason for high spot electricity prices is low lake levels. Thus we are facing a 'supply side problem', not a 'demand side problem'.
![Quote](images/misc/quote_icon.png) Originally Posted by Jiggs
Nevertheless, power retailers are bound by contract to keep delivering power to consumers, for far less than 70c a kWh. So will Pulse and all the other power retailers make huge losses, while Genesis, Contact et al. make huge profits, sending their share prices sky high?
If the power market pricing was entirely determined via the spot market, then what you suggest above would happen. But pure retailers do not buy their power wholly from the spot market. Exactly what long term contracts and hedging arrangements a pure retailer has will determine their fate.
SNOOPY
Last edited by Snoopy; Today at 10:19 AM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
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![Quote](images/misc/quote_icon.png) Originally Posted by Snoopy;
Even so, I am not denying that the profitability of a wood plant may be put at risk by high spot power prices. But to blame more heating being turned on and more EVs being charged is unlikely to be the reason. Domestic demand is readily forecastable. Much more likely a reason for high spot electricity prices is low lake levels. Thus we are facing a 'supply side problem'
are the lakes dry though?
An article about this in the Herald recently questioning the methodology and incentives within New Zealand’s rather complex system paywalled tho
https://www.nzherald.co.nz/business/...KCSFCMGOX3HYA/NZ’s energy sector faces challenges - Electricity Authority warns
Last edited by peat; Today at 01:41 PM.
For clarity, nothing I say is advice....
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Lake levels are very low, and still falling. This is the primary cause of current high spot prices.
https://www.transpower.co.nz/system-...ro-information
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![Quote](images/misc/quote_icon.png) Originally Posted by mfd
so that link divides into water levels into controlled and contingent so as to I assume mitigate risk of no power at all
But, the bottom line is that the hydro generators are holding back on us and not releasing water and creating high spot prices which they (and other generators incl GNE) benefit from. See the link in my earlier post. To the detriment of NZ industry
For clarity, nothing I say is advice....
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![Quote](images/misc/quote_icon.png) Originally Posted by mfd
Another big contributor to high wholesale (spot/WITS) pricing is slow moving high pressure systems over NZ = little wind and clear sky's with cold overnight temps = reduced wind generation and high morning and evening demand peaks
And transpower now has one scenario where hydro storage drops into warning territory in October. If this eventuates, the high wholesale prices will stick around longer than expected, as initial snow melt will go towards restoring minimum lake operating levels rather than electricity generation
Whirinaki (spelling?) has been running solidly for a while now. This will be setting the wholesale price circa $800. There was a spike above $2000 recently, which will likely be reported in next week's transpower report
But these companies whining to the press about high spot prices really should not be playing in that market - they are happy to take the low prices, but cry foul when prices rise in winter. Electric Kiwi above all should know better. The generators offer PPA's and these give businesses price certainty. I think the current complainers are more politically motivated than economic
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![Quote](images/misc/quote_icon.png) Originally Posted by peat
so that link divides into water levels into controlled and contingent so as to I assume mitigate risk of no power at all
But, the bottom line is that the hydro generators are holding back on us and not releasing water and creating high spot prices which they (and other generators incl GNE) benefit from. See the link in my earlier post. To the detriment of NZ industry
Well yes, they could generate more right now. The downside is this drains the lakes and could just lead to an even more catastrophic shortage and higher prices in the future.
You say holding back, they would say rationing a scarce resource.
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