GNE - Genesis Energy

[whatsup]

https://www.nzx.com/announcements/436000


Genesis Energy confirms 85 MW of Huntly Firming Options


12/08/2024, 10:00 NZST, GENERAL


Genesis Energy has confirmed that 85 MW of Huntly Firming Options (HFOs) have been secured by multiple market participants.

HFO’s were offered to all market participants at the end of spring. Each option secures 1 MW of generation, available 24/7, for a fixed price for the next two calendar years. They offer four levels of flexibility so they can be used as often as the holder decides in accordance with the terms of the HFO.

We received bids from multiple parties totaling 270 MW which significantly exceeded the volume available. Counterparties to the transaction and price paid are confidential. The HFOs provide the opportunity of supply and price certainty to mitigate peak supply risks and shorter duration constraints.

They are backed by coal generation with Genesis seeking to replace that with biomass as soon as it is commercially viable.

Chief Wholesale Officer, Tracey Hickman, was pleased with the response and the recognition of the support Huntly Power Station’s Rankine units provide the energy market.

“The strong interest has provided a clear indication of the value the market puts on the firming and flexibility offered by Huntly and its ability to provide both energy and capacity security to meet market demands and system security,” Hickman said.

“The stressed market we are experiencing this winter from the combination of reduced gas availability, low hydro inflows and low wind, is clear evidence that Huntly’s diversity of generation units and fuels will be important for New Zealand’s energy security for the foreseeable future.”

There were no bids from independent retailers or large corporates.

To keep Huntly as the country’s largest energy security site, market support through future HFO’s will likely be required. Without that support, Huntly may not be available in future dry years or when renewables are unable to generate electricity.

Genesis plans to evolve HFO’s and offer further auctions to all market participants over coming years with greater volumes and possibly longer time periods.

Genesis intends to maintain an operational solid fuel stockpile of around 350kt. Levels above this will be driven by fuel orders of HFO holders, allowing HFO holders to manage energy risk for their customers.

ENDS

Anoop, So does this mean that those saw mills that were thinking of closing down last week due to security of Ed supply now can operate by buying some of this ed from Genesis ?

[Snoopy]

Snoop, So does this mean that those saw mills that were thinking of closing down last week due to security of Ed supply now can operate by buying some of this ed from Genesis ?

No. It means that when these large corporates had the opportunity to lock in certainty of power prices over the winter they made a calculated gamble not to do so and they lost. Genesis put the offer on the table, and in the words of the Genesis press release.

"There were no bids from independent retailers or large corporates."

SNOOPY

[whatsup]

No. It means that when these large corporates had the opportunity to lock in certainty of power prices over the winter they made a calculated gamble not to do so and they lost. Genesis put the offer on the table, and in the words of the Genesis press release.

"There were no bids from independent retailers or large corporates."

SNOOPY

Agree, but surely the current situation should open that opportunity window or was this ann just a feel good ann !

[Snoopy]

Agree, but surely the current situation should open that opportunity window or was this ann just a feel good ann !

That is not really how these hedge arrangements work. If, as a retailer, you were lucky/skillfull enough to have acquired some excess electricity units to on-sell into today's market at spot prices, why would you sell those units to a struggling manufacturer at a much lower price? These hedging power contracts offered by Genesis (buying energy units in advance) can only offset tomorrow's pricing.

No-one knows exactly what the water inflows into the hydro catchments will be in coming months. No-one knows exactly when the winds will blow, and for how strong or long. There are long term weather modelling tools that can take some of the guesswork out of such forecasts - but not all. So if you are a generator you can offer up power contracts using your best educated guess as to what the weather will do,and leave enough margin there for yourself to make a profit. But all such forecasts, taken from today, will reflect the shadow of the present. Because to buy energy at a 'normal' price you have to start from a 'normal market'.

That means any hedge contract taken out today would have to factor in high power prices until lake levels return to normal, before 'normal' prices kick in. This in turn means the contract prices offered for power today might be $200/MWh whereas historically the business might be used to paying $100/MWh. A business might reflect that paying $700/MWh for 'a short time' might still be a better bet than locking in a longer term contract at twice the 'normal' price.

So the reminder issued to the market on contracts being available by Genesis energy today is timely. But it won't bring relief to those power users caught out by high spot market prices today.

SNOOPY

[xafalcon]

But wood pellets from pine is not energy dense enough???

https://www.genesisenergy.co.nz/abou...ial-successful

https://www.stuff.co.nz/environment/...ng-short-trial

"England sees running a Huntly turbine off biomass as a better solution to the dry year problem than pumping water uphill at in the multi-billion dollar Lake Onslow hydro scheme, being investigated by government."

https://newsroom.co.nz/2022/02/28/ge...-energy-trial/

Pinus radiata wasn't suitable for building houses until some ingeneous kiwis showed how it could be used to build houses.....

Energy density can be altered by compression - halve the volume = double the energy density

But energy density is only relevant to the existing equipment design. And the current equipment is pretty close to end of life (one unit has already been retired). Simply design a furnace that is capable of burning pinus radiata based fuel, and "prove" it and improve it while the remaining furnaces still have life remaining

Fuel cost is minimal (transport and maybe a little bit of processing), fuel supply is abundant and close and domestic (100km to Kaiangaroa, 250km to east coast), it cleans up a damaging by-product, and is available year-round

I'm sure a group of smart kiwis could make this work in relatively short order

And the generators were all hell-bent on stopping Lake Onslow because it would have materially reduced their profits. They succeeded, but overall NZ will loose big time