Electricity spot pricing

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2391 posts

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#3270177 10-Aug-2024 10:21

cddt:

https://www.interest.co.nz/economy/129137/new-zealand%E2%80%99s-electricity-market-faces-scrutiny-high-prices-prompt-calls-government

This guy agrees with me...

Dry winters and limited gas supplies should not come as a surprise to an electricity sector that has long known about the need to scale up renewable generation capacity.

Despite this, new projects have been slow to be built. This may be because the sector is incentivised to build only just enough electricity supply to meet demand and not more.

Each new unit of generation added to the grid reduces the price paid for every other unit already in the market. Energy companies with large amounts of generation capacity do not want to oversupply the market and drive down prices.

thats also the principle behind the housing market. why spend money to build new when staying in your old makes you money. ie lack of investment artificially creates demand which increases prices. the difference tho is its big companies making money at the expense of people so govt steps in, where as housing its people making money at the expense of other people so govt refuses to step in.

tweake

2391 posts

Uber Geek

#3270178 10-Aug-2024 10:28

DjShadow:

Just had a survey from Genesis Energy which mostly asked about what our thoughts were on installing both Solar and Battery, one idea they tabled was letting the retailer (in this case Genesis) have control over the battery so in cases of high load (high spot prices too?) they could command the battery to sell power back to the grid

nice idea to have distributed storage. but its rather sneaky and nasty in that you pay the cost so they have the benefit.

if you charge up the battery with solar then they use that and pay you a tiny amount for it, you loose out. solar is best when you use the energy. the whole point of the battery is so you don't sell power back to the grid.

even if they pay you retail for the power, or they use the power and then replace it off peak, your still paying for the upfront costs of the battery not them.

tehgerbil

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#3270180 10-Aug-2024 10:31

JimmyH:

Typically mature companies with limited growth prospects (like utilities) have higher dividend yields than companies in sectors where future growth prospects are strong and market sentiment is "frothy". NZ's gentailers are mature utilities with limited growth prospects. Which explains why investors price their shares at a level where the dividend yield is relatively good - they are treated as income, not growth, sticks.

Thank you, I appreciate it.

Can you appreciate the optics of having 3 electricity supply companies listed amongst:
A well known morally dubious monopolistic building supplies company.
A well known morally dubious property management company.
A well known morally dubious healthcare company.
A well known morally bankrupt company casino company.
A morally dubious logistics company.

In my layman view this graph displays the retailer vs gentailer complaint quite well - Why are so many generators so reliably profitable to be listed alongside a money making factory as a Casino and biggest monopoly in New Zealand (!!) when our biggest energy retailers are going broke?

mudguard

2113 posts

Uber Geek

#3270316 10-Aug-2024 15:49

tweake:

why spend money to build new when staying in your old makes you money. ie lack of investment artificially creates demand which increases prices. the difference tho is its big companies making money at the expense of people so govt steps in, where as housing its people making money at the expense of other people so govt refuses to step in.

You make this point frequently. The reason people buy existing homes is because of the deposit requirements.

It's been some time since I worked at the bank, but from memory it was something like

Land no services = 50% deposit

Land, serviced = 30% deposit.

Then you need to come up with more funds to build. I can't remember what the deposit requirements are on a turnkey build. And once the build begins and you (the bank) have to start paying the builder, you are start to pay a mortgage. Now obviously it doesn't reach full size until you move in. But you still need to live somewhere in the meantime.

So building new vs existing is quite different financially. I mean look at sections around where you want to live? Can you pay 50% of your own money for it? Then come up with another 20% for price of the build? All the while paying rent? (I don't know if you rent, but it's just an example).

tweake

2391 posts

Uber Geek

#3270323 10-Aug-2024 16:24

yes, and there is other factors as well.

your point is more about if someone can afford to build new.

i'm commenting on the fact that people want to make money from houses and many will never build new even if they can afford it. it makes no financial sense to have a big cost and also loose a big income stream. its not a case of can't afford new, but rather 2nd hand is more profitable if your willing to put up with an old house. especially so when you know everyone else is doing the same thing, which increases demand and gives you high house prices for you to profit from.

but of course people do buy new because they want a new house, not everyone wants to live in old houses. now if there was no ability to make money on 2nd hand housing, would you be more inclined to build new if you could afford to? odds are yes you would. if there is no profit to be made, then there is no incentive to stay in old homes unless you simply cannot afford new.

Jase2985

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#3270325 10-Aug-2024 16:41

Timely video

"How electricity companies are handling high prices"

https://www.youtube.com/watch?v=Mh7mIQHbYfo

cddt

1548 posts

Uber Geek

#3270705 12-Aug-2024 08:37

Another fascinating read: https://www.linkedin.com/pulse/what-going-new-zealand-spot-electricity-prices-brian-moore-fbglc/

My referral links: BigPipe | Mercury

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raytaylor

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#3271647 14-Aug-2024 21:48

Mehrts:

Bluntj:

Ban electric cars :P

I know that's satire, but too many people actually think that EVs are the sole cause of power shortages...
Even though the vast majority are charged overnight during the cheaper off-peak period when there is excess generational capacity available.

That misses the point.

Even though its normally cheaper overnight because there is generation capacity, the issue is the low lake levels.

This is a storage issue, not a generation issue.

If there were not so many EVs charging overnight, then the taps at the dams could be turned down to reduce the flow and the lake levels would stay higher, alleviating the shortage of water further into the dry season.

If there was more solar/wind then we could also be saving more water.

A mayor said we need more gas as a backup for times like these. Actually again more solar powering the nation during the day means less hydro lake water used during that time, saves more for later.

And back to EVs,
Converting the national vehicle fleet to electric is easily done from one perspective - with time-of-use pricing, our electricity lines can handle the load by encouraging recharging between midnight and 6am.

BUT what we dont have is the water storage capacity.
Sure we can run the hydro generators overnight on high and easily charge them all up each night. But for how long can we do that before we run out of water in the lakes?

We really need the project onslow to act as the nations battery. Soaking up excess solar and wind off the grid during the day by pumping water up hill, then releasing it downhill overnight for car charging.
(Charging an electric house battery during the day to recharge a vehicle battery is not an environmentally responsible solution)

Ray Taylor

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raytaylor

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#3271650 14-Aug-2024 21:50

Dingbatt:

Just dig up some of our high quality NZ coal and burn it in the boilers at Huntly to make up the shortfall.

Oh, no, wait……….

Huntly is running at almost maximum at the moment burning coal.
Whirinaki is the same burning diesel oil.

Ray Taylor

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Spreadsheet for Comparing Electricity Plans Here

raytaylor

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#3271651 14-Aug-2024 21:58

Eva888:

We paid Genesis $339 for 1234 kWh over 28 days which they said included a change in rate. You can bet the rate change wasn’t downward. Last month was a little more for 30 days.

Jase2985:

We used pretty much the same amount of power (1260kWh) and it was about $60 cheaper($280), have you looked into a different provider?

I paid contact energy $188 (incl gst) for 996kwh over 30 days
80% of the kwh's but only 67% and 55% of the cost.

Mwa Ha ha ha haaaa

Ray Taylor

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raytaylor

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#3271653 14-Aug-2024 22:15

DjShadow:

installing both Solar and Battery, one idea they tabled was letting the retailer (in this case Genesis) have control over the battery so in cases of high load (high spot prices too?) they could command the battery to sell power back to the grid

I think i read that Tesla was looking at allowing customers that own Powerwall's to join a programme where they had a distributed power plant.

Tesla would then sell that as a service to transpower in two forms

A) Instant Load diversion. Suddenly all the powerwalls would become the main supply of electricity to the home providing an instant relief to the grid. Transpower pays big electricity consumers to be able to switch off at a moments notice.
Tesla would be able to do this by grouping many households with powerwalls together and provide the same service to transpower.

B) On-Call generation. If there was a supply emergency, all the powerwalls could start exporting to the grid at a moments notice.
Transpower pays some generators to remain in constant readyness.

Both of these are frequency stabilization services if you want to read up more about how it works.

I am not sure if it occured in NZ but tesla did have a case study recently. There was a notice issued by transpower a few months ago about generation limtations that could possibly lead to blackouts at 8-9am one morning.
Tesla instructed all their customers powerwalls to recharge overnight from the grid when generation was plentiful and then those housholds were mainly supplied off their powerwalls during that period of restricted supply.

A friend of mine was a little upset though because it recharged from the grid at his cost when because he had solar, it was a sunny morning, he could have just continued working off solar and his installation specifically does not draw a load from the grid during that time anyway. The powerwall would have recharged at zero cost from solar later that day.

But being part of a group/service would mean that they get paid monthly for providing the on-call grid stabilization and the monthly payments for that would have offset any occasional cost.

I dont think it ever took off in NZ or maybe i am thinking about california.

Ray Taylor

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raytaylor

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#3271655 14-Aug-2024 22:34

I have always said that we dont need subsidized solar in NZ like they do in south australia.

But i am changing my mind on this.
I sent an email to our local MP today saying I would like to see a programme where the solar installation labour is covered by the government up to a certain value that covers the typical installation of a 2.4kwh system.
The money is then recovered by an electricity authority levy on your ICP / Address via the retailer over 10 years.

That would mean uptake wouldnt be too bad but
- An industrywide set fee for installation would bring the labour cost down a lot as companies compete to fit within the programme.
- An uptake in competition similar to australia when subsidies came.

"Hey solar installer, go out and sell as many of these as you can, you get paid $xyz for each one sold so you have to get your pricing to fit within that if you want to make any sales"

- Some regions such as northland, hawkes bay, bay of plenty where sunlight hours are highest may include hardware to encourage uptake in those areas for the benefit of the country.

- More solar captured during the day means more water in the lakes later into the dry season.

I also suggested
- Any new 3 bedroom house or larger must have solar cabling preinstalled and a qualified installer can sign off the architects design to say a 2.4kwh system could be installed in the future, or approve the design if due to other factors such as protected trees, location / southland or hills, dense urban MDU's or multistory buildings would make a solar system unfeasible.

- Any new 4 bedroom house or larger must have a 2.4kwh solar system installed before occupation. This is a minimal cost and can be recouped by the abovementioned levy via the electricity authority on the address, at less monthly cost than buying the non-solar electricity from the grid.

- Any subdivision of 5 or more lots intended for residential SDU's need to have boundaries such that houses can be built with north facing roofs

When I say north, I mean within 30 degrees of north, and of course there would be exceptions such as landlords needing the current tenants permission first.

I was somewhat annoyed when i found after a weekend of planning that my roof is an east/west and wouldn't work for solar at a reasonable price but the boundaries could have easily been arranged so the houses could be oriented with roofs facing north.

Ray Taylor

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mattwnz

20141 posts

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#3271665 15-Aug-2024 00:58

alasta:

This. I live alone in a small unit, am rarely home, and use gas for heating, hot water and the stovetop. My annual electricity usage is about 1500kwh per year and Genesis are stating the bleeding obvious that I'm using '72% less than similar homes'. Unfortunately this means that I'm going to get smashed with the phase out of the low usage plans.

In regards to detecting hot water leakage and other such defects, I'd recommend reading your meter before and after going on holiday. If you can assess your usage when you're home versus when you're not then that will help you start to drill down on your consumption.

IMO the phase out of low energy daily rate just allows power companies to increase their profits and margins. The unit rate is supposed to drop when their put the low daily rate up each year. But in my case both rates have increased the last two times they have hiked the daily rate. The justification for removing it, IMO makes no sense and they cherry picked some pretty flimsy reasons for it's removal. High power users already get better per unit rates to compensate for a higher daily rate.

mattwnz

20141 posts

Uber Geek

#3271667 15-Aug-2024 01:05

raytaylor:

This is a storage issue, not a generation issue.

This maybe the case, but it does show that the system is broken to allow prices to spike like this. The fact that it is going to drive non gentailers to the wall, and reduces consumers choice over providers shows it is an urgent and serious problem. This is not the first year there has been a storage issue either. But the market didn't used to be setup like this. With NZs growth and raid population increase which requires more power, you would think we would be building more hydro, but hydro generation appears to have flatlined over the last few decades. I have also noticed that my gentailer power company has just pulled their refer a friend scheme, which probably shows that they don't need to compete anymore for customers from those sole retail power companies. At least one sole retail power company has stopped taking on new customers because they would apparently lose too much money taking on new customers.

Wellingtondave

156 posts

Master Geek

#3271668 15-Aug-2024 02:03

mattwnz:

raytaylor:

This is a storage issue, not a generation issue.

With NZs growth and raid population increase which requires more power, you would think we would be building more hydro, but hydro generation appears to have flatlined over the last few decades.

So people in the know say that all large hydro in NZ that can be developed already has been, I presume this is without flooding arable land or building dams that NZ can't afford Three Gorges style.

The last major dam in NZ - Clyde - was opened in 1993, when NZ had a population of 3.5 million. Nearly 2 million people ago. Yikes. And we wonder why NZ is in the crap.

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