Concerns over gas supply see wholesale electricity prices up 63% so far this year

The country's lakes have been topped up and the main gas field is back in action, but electricity prices have settled at an elevated level and aren't expected to fall. We look at what's going on

30th Aug 19, 9:51am by Jenée Tibshraeny

Wholesale electricity prices remain high as suppliers continue to be spooked by the strain the system came under last year when there happened to be outages at some of the country’s main gas fields at the same time lake levels were low.

While wholesale electricity prices have fallen from the peaks they reached last October, they’ve settled at elevated levels.

Wholesale electricity

Select chart tabs

Source: MCo

A spokesperson for the Electricity Authority says South Island lakes have been replenished, but levels in the North Island remain low. Hydro generators are conserving water and hiking prices.

While Pohokura - the gas field responsible for 40% of the country’s gas supply - is back in action, gas is neither abundant nor cheap.

Both Energy and Resources Minister Megan Woods and her predecessor and shadow minister Jonathan Young acknowledge electricity suppliers have priced in a higher level of risk around the security of gas supply.

Young points out that the Maui field doesn’t have “the same degree of responsiveness to step in when there are outages or maintenance in other fields”.

“The gas supply will be volatile until there is a significant further increase in flows.”

The Electricity Authority spokesperson acknowledges more electricity generators would use gas if it was available.

“All these fundamentals point to one thing, which is higher [wholesale] prices. We don’t see anything that’s pointing to lower prices,” the spokesperson said.

Maintenance done at Pohokura contributed to the portion of New Zealand’s net electricity supply generated from gas falling by 18% in the 2018 calendar year.

With gas only accounting for 12% of net electricity generated, imported coal helped fill the void to some extent. Its contribution increased by 31% over the year. Altogether it accounted for 3% of electricity generation.

Just under 84% of the country’s electricity supply came from renewable sources in the 2018 calendar year.

Pendulum swings back against industrial users

Industrial electricity users are currently absorbing the higher wholesale prices. However they still pay half as much as residential users per unit of electricity.

In the year to March, their cost per unit increased by 15%. This was on top of a 21% increase the previous year.

Meanwhile the cost per unit to commercial electricity users only went up 0.8% in the year to March, and residential users 0.4%.

Noting the competition between electricity retailers, the Electricity Authority spokesperson said they’d be surprised if in the short term a large portion of these higher wholesale costs were passed on to households.

A panel commissioned by the Government to review the electricity market a year ago found that since 2000, residential electricity prices had increased more in New Zealand than in other OECD countries.

Yet the Electricity Price Review didn’t take major issue with the competitiveness of the market.

Rather, it concluded: “A two-tier retail market appears to be developing: those who actively shop around enjoy the benefits of competition, and those who don’t pay higher prices.”

The panel published a second paper in February floating ways to improve the electricity sector. A number of the options it proposed centred around requiring more transparency around pricing in both the retail and wholesale markets.

Woods is due to provide an official Government response to the paper.

Gas market to become more transparent

In the meantime, Woods is trying to calm nerves around the security of gas supply by reviewing the Gas Act to (among other things) require gas suppliers to be more transparent about their activities with the market.

Legislation is expected to be introduced to Parliament before the end of the year.

Young is broadly supportive: “Transparency around outages helps major gas users to plan their own maintenance programmes to coincide with such shut-downs, which will in the long-run help them optimise their production.”

Yet without a new oil/gas field being opened up in New Zealand in the last 10 years and the country’s gas reserves expected to be depleted in the next 10 years, he said: “The issue is that fields need to be opened up - existing as well as new…

“The first eight and a half months of this year are showing wholesale electricity prices up 63% compared to the same period last year.

“It was a reckless move of the Government to discourage gas exploration and development.”

National has committed to repealing the ban of new oil and gas exploration.

Optimism around increasing renewable capacity

Working towards making New Zealand’s electricity supply 100% renewable in a normal hydrological year by 2035, Woods sees no need for gas to help generate electricity in the future.

The Electricity Authority spokesperson was fairly optimistic about renewable capacity increasing: “Remember we haven’t had any built really since the [2008] Global Financial Crisis. It’s starting to happen now.”

The Electricity Price Review panel was also optimistic: “Looking ahead, we expect decarbonisation measures and the electrification of transport to increase demand for electricity, but we don’t think this will necessarily lead to big price rises…

“New Zealand has abundant renewable energy sources, including wind and geothermal power, that are considered world-class; the cost of wind, solar and battery technology is likely to keep falling; charging electric vehicles at off-peak times will avoid the need for major network investment, lowering average network charges.

“How prices are structured may change, however. For example, whether electricity is used at peak or off-peak times may play a greater, or even primary, role in the calculation of prices.”

100% renewable target would result in over-capacity

However the Interim Climate Change Committee, in an April report on the 100% renewable target, said the electricity sector appeared on track to be 93% renewable by 2035.

The committee said there were “much more significant” emission-savings available in other sectors than pursuing the remaining 7%.

While new storage technologies are developing, it said that trying to cover dry years without using gas or coal-fired back-up generation would be prohibitively expensive.

Woods maintained gas wasn’t the “panacea” it was often held up to be.

She reportedly said in June that over-building renewables to replace fossil-fuelled plant to meet “the last 1% or 2%” of the renewable target was expensive, but only if that capacity couldn’t be monetised.

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49 Comments

by Foyle | 30th Aug 19, 10:14am 1567116856

Higher residential prices will push more to install PV - probably a good thing. Batteries will get a lot cheaper in next 5-10 years (probably by a factor of 4-5) making off-grid pv cheapest solution for a lot of NZ houses.
Govt needs to start work on an LNG import facility given they have decided to offshore the gas production and worsen our balance of trade. It will take years to build, so they need to get onto it soon.

by nigelh | 30th Aug 19, 10:58am 1567119492

Since the government are talking renewables I was keen to see if they'd put their money where their mouth is. Looked at having my natural gas supply totally disconnected and switching to electricity. Would cost about $900 to disconnect the existing gas supply only, so I requested M.Woods, Minister of Energy and Resources, asking if the govt would pay or subsidise the disconnection. No luck. If they ever considered this it is very likely to cause huge disruption if too many people disconnected over a short period of time. Cheaper option of $230 odd to seal the gas supply near the meter and leave the meter in place. Would still cause a huge disruption if people did this. Also high capital cost in a heat pump. Costs money to be green.
Agree with Foyle on the LNG but PV still some way off unless grid electrical energy sky rockets for the residential user. Have looked at PV for water heating only but have come across some technical stumbling blocks, not insurmountable if you throw money at it, but not economical at all compared with grid now. This water heating setup would be without batteries, which are huge expense. My option also requires an elec cylinder with additional element pocket which fortunately I have as its a new installation

by Pragmatist | 30th Aug 19, 12:38pm 1567125509

Until the grid is actually built out to be >95% renewable it would be counterproductive to encourage you to move from gas for heating to electricity for heating, unless you go to heat pumps for all you heating (including hot water).
Its more efficient to burn it to create heat at your premises than it is to burn gas to power a CCGT, then generate electricity at ~60% thermal efficiency, pump it down the lines to your house and convert it back to heat if using resistance elements.

by my2c | 30th Aug 19, 11:21am 1567120892

"..electricity supply 100% renewable ..by 2035"

If you think cost is high NOW can't wait till 2035 when it will be twice as high due to the crazy 100% renewable idea.

So prices spike due to GAS outage but it was also low hydro storage and no WIND (well apart from down Wellington by the beehive, lots of HOT air that could get harnessed).

We have limited hydro storage, partly well due to resource consents.

by profile | 30th Aug 19, 11:44am 1567122253

Spare a thought for workers whose jobs who are reliant on process heat from gas - whose jobs will be off-shored in the government's vainglorious attempt to change the climate back to the little ice age.

by Brendon | 30th Aug 19, 11:58am 1567123092

Pumped hydro could protect NZ from the dry year 'not normal' hydrological year. It would be a way bigger and less costly storage option than lithium batteries.
https://talkingtransport.com/2019/01/30/are-we-there-yet-hydrogen-train…

by Pragmatist | 30th Aug 19, 12:44pm 1567125860

A huge capital outlay for something that does nothing most years, except use some of the available generation to pump water up a hill . Domestic PV and batteries (once they make economical sense) would minimise the need for expanding grid scale generation assets, and would do it every single year.

by Brendon | 30th Aug 19, 1:03pm 1567126992

Possibly it could be self funding. Essentially it could buy electricity during cheap wet years to pump the water uphill so that it can sell it at higher prices to cover costs during a dry year.
Over the long term it could be designed to be cost neutral.
No amount domestic batteries will be able store enough energy to cover a dry year winter.
Domestic batteries though would be good for daily/weekly variations in demand.
I think the government should commission a cost benefit study be done on pumped hydro.

by Pragmatist | 30th Aug 19, 1:23pm 1567128220

"No amount of domestic batteries"... Hmmm, I see you chose to ignore the PV part of that equation.. 20sqm of PV on every north facing roof charging batteries during the day to keep the heat pump running at night might just drop the demand for grid generated electricity in a dry year quite a bit eh?

Or even without the batteries, with net metering, the PV panels make power during the day for offices and factories to use during the day, meaning the hydro-electric dams are using way less water during the day, and spin up at night to keep the domestic load supplied.

by Brendon | 30th Aug 19, 2:16pm 1567131363

The amount of energy needed to store for an entire dry winter is huge. It is not just the energy consumption of 1 night, or a few sunless or windless days. Dry years could mean insufficient hydroelectric power for 4-5 months over an entire winter. This will be when PV are at there lowest production capacity too.

Over summer there is likely to be spare capacity with solar and wind generation and lakes may be able to filled but the energy storage capacity in NZ lakes is quite limited. The proposed pumped hydro scheme could triple this storage capacity.

by Pragmatist | 30th Aug 19, 3:13pm 1567134838

Stop waffling on about storage.. PV panels GENERATE, they remove demand from the southern hydro lakes.

by Brendon | 30th Aug 19, 4:45pm 1567140338

Snarky pragmatist!
Here is a question for you. Why would all these PV panels be installed to do nothing but wait for a downturn in generating capacity when the hydro lakes have a dry year once or twice a decade? What will they be doing at the other times when the hydro lakes are full and are supplying low cost electricity?
Do you think it is cheaper to build PV generating capacity for these dry year events or pumped hydro storage capacity? Especially considering the number of PV panels you will need to cover a winter when electricity demand is high and PV output is low.
To be honest snarky Pragmatist you don't have a clue. Neither do I.
But I am being honest by saying storing energy might be the better option and it should be properly investigated by experts.

by Pragmatist | 30th Aug 19, 5:50pm 1567144232

"Why would all these PV panels be installed to do nothing but wait for a downturn in generating capacity when the hydro lakes have a dry year once or twice a decade? "

They wouldn't, where the hell did you get that daft idea?

"What will they be doing at the other times when the hydro lakes are full and are supplying low cost electricity?"

If the sun is shining they will be generating power, charging the homeowners batteries, heating the swimming pool or selling power back into the grid. Fossil fuel plants could probably be shutdown entirely in summer, (the CCGTs probably employed only in winter as peakers and for grid stabilisation purposes. OR they could be offgrid, in which case if the homeowners batteries are fully charged, and there is no load cause the owner is out , then yep, they'll sit there in summer doing nothing, while the homeowner completely forgets what its like to have to pay a powerbill.

"Do you think it is cheaper to build PV generating capacity for these dry year events or pumped hydro storage capacity?"

FFS, PV for EVERY year, and all year, not just winters, wet or dry. EV batteries are going to need charging.. we'll need more generation, companies switching from fossil fuel heating to electric, we'll need more generation (note: generation, not storage!)

by Laminar | 30th Aug 19, 5:59pm 1567144777

Hes trying to point out that if they are always been used then they can not be used to supply the missing marginal requirement when the dams run dry every now and then.

by Pragmatist | 30th Aug 19, 6:17pm 1567145877

And in those dry years we fire up the fossil plants that we kept as backup/peakers once they were no longer needed for baseload due to adding extra renewable generation....

by Brendon | 30th Aug 19, 6:37pm 1567147066

Thank you Laminar.
Pragmatist eventually exposed himself as a fossil fuel generator advocate.

by Pragmatist | 30th Aug 19, 7:11pm 1567149111

Yeah, promoting shutting down baseload fossil fuel generation but keeping them as emergency backups is really going hard for fossil fuels. You really are a complete *bleep*

by waymad | 30th Aug 19, 8:38pm 1567154296

No, Brendon. If hydro plus geothermal is maxed out, its dark, and the wind is variable as always, it simply isn't possible for a grid controller to ring Gaia and say 'blow harder'. In that situation, dispatchable energy from thermal of some sort, or substantial quick-response storage, is all that's between Lights On and Total Darkness. An exactly comparable situation just happened in Britain: a lightning strike caused enough transient grid disruption to trip out, in quick succession, embedded generation (home PV and other localised generation), Hornsea off-shore windfarm, and Little Barford gas power station. The gap between dispatchable reserve (kept at 1 Gw) and demand (1.5Gw) compelled controllers to shed load rapidly to let remaining generation and demand equalise again without further frequency droops. That;s how close things get if there's little to no dispatchable reserve......

by Brendon | 30th Aug 19, 9:56pm 1567158982

Waymad dry years are not sudden outages of the lightning strike variety.

Dry hydro years build up over many many months of insufficient rain/snow and the effects of the consequent insufficient hydropower generation is that the next cheapest electricity generator (as determined by bidders on the wholesale market) will need to come into the market. Typically for a whole winter. At the moment that means fossil fuel generation. What I am suggesting is some sort of market study is done to see if pumped hydro could be the next cheapest option, for this particular scenario.

I would not be surprised if pumped hydro is cheaper. Once it is built, it requires very little maintenance and it is a very long lived asset. Given the cost of borrowing currently and the possibility of a very long term bond, then the economics might add up. Whereas fossil fuel plants need more personnel, more maintenance, the coal/gas has to dug up/piped. Given the climate change agreements both main political parties have signed up to, there will be some sort of carbon tax.... Long-term extraction costs will rise as the easy sources are depleted....

by The Person | 30th Aug 19, 8:19pm 1567153193

Net metering doesn't exist. No one wants to buy your unreliable solar at retail rates and then sell you back expensive morning & evening peak power at the same rate.

by Chris Morris | 30th Aug 19, 6:07pm 1567145266

As has been discussed on a previous thread, pumped storage in NZ it is totally uneconomic at anything near current wholesale prices. Just a stupid fantasy by people that don't know what they are talking about.

by Brendon | 30th Aug 19, 9:57pm 1567159032

And your evidence is?

by Brendon | 30th Aug 19, 10:30pm 1567161056

Why is it that overseas there is huge research and development to find more geographic flexible versions of pumped hydro?

by Chris Morris | 31st Aug 19, 6:55am 1567191345

There have been plenty of reports published overseas on pumped storage. Try going on grid operators websites in their reports sections. It is only viable where you have a large thermal generation system that can't easily be turned down overnight. Then the storage (which wasn't that big) could be used economically on a daily basis. This was relevant to Britain in the CEGB days and the eastern US. Also in Europe where there are a lot of nukes. Even then , the economics is only viable when you already have generation plant built with unused capacity and relatively cheap fuel. That is why Dinorwig doesn't get much use nowadays, but it is viable because it is sunk cost.
In NZ, none of those factors for viability occur. But you have been told all this before. Just in your fantasy world, you know so much more than all these people who actually work in the industry and have lots of relevant qualifications after their names.

by Brendon | 31st Aug 19, 10:31am 1567204290

Nope many of you experts are biased due to association with existing status quo providers that have a vested interest in debunking any evidence that change in the industry is viable or even should be investigated.

There are lots of international reports and evidence, such as the Highview interviews that Interest.co.nz readers provided a link to below, that say that grid-scale batteries are needed to balance increased renewable generation.

Internationally this increasing interest is not about large generators like nuclear that are difficult to turn down.

Pumped hydro is the gold standard wrt grid-scale batteries for cost and efficiency but not geographic location. Which is why there is so much effort internationally going to finding suitable energy storage replacements.

But if NZ has good pumped hydro options that can solve problems like insufficient dry year generation. Why not use it?

by Chris Morris | 31st Aug 19, 12:00pm 1567209628

You have no understanding of how things work nor the economics behind it. If it was good or viable, it would already be done. When you put your own money up to finance a pumped storage scheme, then maybe people will listen. Until then, you are a know nothing who thinks reading articles on the Interweb written by other airheads that agree with your prejudices makes you an expert. It doesn't work that way.
.

by Foyle | 31st Aug 19, 12:47am 1567169245

Absolutely correct. There is nowhere near sufficient elevated land in NZ to provide the vast storage needed. It is only ever proposed by those incapable of doing the basic maths.

by Brendon | 31st Aug 19, 1:26am 1567171608

Is that another Natbot message?

by Henry_Tull | 30th Aug 19, 12:58pm 1567126680

We need energy policy that supports jobs and increasing of incomes.
Present policy has energy costs higher than they could be. Its hurting everyone, making us the poorer.
Seems to me the policy is based more on feelings and not science & engineering!

Bring back science & engineering.

by The_4th_estate | 30th Aug 19, 1:31pm 1567128686

Its disingeneous of National to criticise the governments current position on oil and gas. Despite being elected to turbocharge the extractives sector virtually nothing happened of significance during the 3 terms they over saw the country. Infact, they were so devoid of ideas the only thing that they acheived was shovelling millions on exploration subsidies for nil return. Oh, also bankrupted solid energy and sold it off at bargain prices and sold off half of the state owned generators. Virtually incompetant leadership. Meanwhile our natural gas sector is woefully under developed and I think the columnist ought to ask Shane Jones why the PGF doesn't build a nationwide natural gas network to tap the huge reserves located across the country. It would deliver a huge productivity boost to our industrial base and deliver abundant heating energy to households as well. In the meantime a few more development bores of the existing feilds should keep volumes flowing strongly. I don't know how its been deduced that we will ever run out, those feilds are enormous, we just fail to exploit them adequately. Oh and squawking on about importing LNG is nonsense...we get it right we could be EXPORTING it ourselves.

by RickStrauss | 30th Aug 19, 3:55pm 1567137341

Infact, they were so devoid of ideas the only thing that they acheived was shovelling millions on exploration subsidies for nil return. Oh, also bankrupted solid energy and sold it off at bargain prices and sold off half of the state owned generators.

Indeed. One of my serial-Act-voting friends found the bad deal that Kiwis were getting under the oil and gas sector status quo to be the most remarkable thing they found out about the whole sector, following the Labour govt's turning off of further exploration permits.

by Good Samaritian | 30th Aug 19, 4:43pm 1567140236

The previous National Government were corrupted by overseas interests.

Its pity obvious in the banking industry. The key is just follow the money.

As for the oil industry, these permits we sold off at mates rates to park and control future supply. The net effect is increased current prices.

Labour woke up to this fact, and along with the greens and nz first recognised renewables are the way to go for NZ inc. Thank goodness Eion Musk disrupted the status quo, whom have gamed the system for the past 100 years.

We should be celebrating renewables, which should give some power back to the people. Excuse the pun.

by Laminar | 30th Aug 19, 6:01pm 1567144908

Your comment reads like a conspiracy theorist wrote it.

by The Person | 30th Aug 19, 10:59pm 1567162740

We already export almost half of our gas production in the form of methanol.

If we ever need more gas locally, just stop exporting methanol

by Chris Morris | 30th Aug 19, 6:09pm 1567145377

It is worse than burning coal to meet the demand. They have been firing up Whirinaki on diesel to meet more than a few peaks.

by Pietro | 30th Aug 19, 6:36pm 1567147003

I was/am an early solar battery system adopter. It was a dog economically, and luckily the battery failed meaning I could get out of the very expensive contract had foolishly signed up to. I have a plain rooftop system now, no battery and it works reasonably well if we use it wisely. My advice would be that unless you can run appliances during the day, especially your hot water cylinder, don’t bother just yet. And don’t buy more panels than you need. The price for exported power is around 8c a kw, laughable really. Power companies don’t want consumers using solar, for obvious reasons. However, there are some exciting technologies around the corner, notably one where surplus power is used to freeze air during the day, and then the air is allowed to expand at night, driving turbines. Long way to go, though, so coal will have a part to play in energy security for some time, especially if the Govt keeps on canning anything to do with hydro or gas exploration.

by waymad | 30th Aug 19, 8:19pm 1567153155

The freeze-air storage tech is here: Highview Power. But note that there's (coyly) little said about about efficiency.....OTOH, it's grid-scale, and modular so allegedly quite scale-able.

by Brendon | 30th Aug 19, 10:27pm 1567160861

Business interview of potential commercialisation of Highview Power here https://www.youtube.com/watch?v=4hbyzuES5J0

by sit23 | 30th Aug 19, 7:05pm 1567148708

3% of our energy from imported coal. Industrial electricity sold at 10cents a unit. West coast hydro scheme banned. Oil and Gas exploration banned. The electricity retailers competing in the same manner as the fuel companies and banks.
Is the crookedness and stupidity obvious to all New Zealanders, really not seen by Minister Woods?

by waymad | 30th Aug 19, 8:14pm 1567152855

Real figures from a 4.8Kw array, aligned 6 panels east, 9 panels west, each at 43 degrees to horizontal, at 43.5 degrees South. Little to no shading, and all 15 panels (LG, 320W PERC) have optimisers, inverter is SolarEdge/StorEdge.

There's simply massive seasonal and daily variation - clouds, basic alignment, sea mist (in our case - evaporation clouds often from late afternoon coming in off the sea), dirt on panels etc etc. None of which the spruikers will fess up to without prolonged prodding. System is just completed its first year: public viewing site.

Ours is a grid-tied system but with a 9.8KwH lithium ion battery (LG RESU-10H - the H is High voltage - 400v), and we have the rig profiled to top up the battery between 00:01 and 06:59 hours from mains (night rate), then Maximise Self-consumption thereafter. In practise this means we pay a bit over night rate on average all year round - about 16-17c/unit and this runs a household with a heat pump, oven, lotsa power tools and a spa.

The economics don't bear analysis, but the prime motivation was simple: the capex was better off sitting on our roof than in a bank or KS, waiting for an OBR event over the estimated 25-year life of the rig. Yes, a tiny bit of Prepper there.

Power bills over the last year:
date KwH dollars
Aug-18 664.49 $112.81
Sep-18 733.7 $112.82
Oct-18 692.14 $79.41
Nov-18 679.48 $54.42
Dec-18 617.33 $61.62
Jan-19 535.77 $33.34
Feb-19 486.18 $42.61
Mar-19 516.3 $75.93
Apr-19 631.36 $102.75
May-19 597.47 $103.75
Jun-19 916.41 $151.90
Jul-19 707.57 $117.00
Totals 7,778.20 $1,048.36

And note that there's around 4-5000 more KwH which was self-consumed so (of course) does not show on the power company's data at all.

In practice, and even through the dead of winter, the night-rate battery top-up plus PV generation, keeps the house ticking over without much grid input, often until night rate clicks back in at 9 pm.

Perfectly practical for our immodest needs, and the rig is wired to direct emergency power to lights and a couple of power strings, so there's some coverage if grid goes dark.

But PV without storage, leads straight to the Duck Curve....hell on wheels for power system controllers, as the generation ramp rate needed as PV dies with sunset, and the full load switches to the grid, is often very hard to arrange.

by The Person | 30th Aug 19, 11:09pm 1567163354

Crikey, how big is your household? Those power bills are about the same is mine were with no PV and using oil column heaters (have since switched to gas heating, so power bills now much lower in winter).

by Crazylekiwi | 31st Aug 19, 7:30am 1567193450

Hi Waymad, thanks for your "actual experience" information and figures. I also live in CHC and love the idea of PV and Battery as a concept. However, I can never get myself past the economics of it all. Out of interest, can you share in ballpark terms how much a system like yours might cost?

I've also started looking at offerings from the likes of Solarcity who offer fixed monthly lease options (20 years!....scary) for a system similar to yours using Panasonic components, so no upfront capital costs and a contracted ability to save immediately (with caveats, of course...). It's a grid tied system and they also offer discounted power rates through their bulk arrangement with Ecotricity. This is reliant on wholesale spot pricing, so that concerns me.

The battery is warranted for 10 years and will be replaced at the 10 year mark, or earlier, for a new one. Also, all of the components have minimum performance levels, so if they fall below that they will be replaced. Even though technology will improve greatly over that 20 year period and get much cheaper, I can't see electricity pricing getting cheaper, so this might be a way to get into a home setup that makes some sense financially?

Of course, lots of gotchas with this type of offering, so I'd like to know if it was something you considered?

by waymad | 31st Aug 19, 2:35pm 1567218930

Capex was just over $30K, plus a new switchboard and ancillaries, another $1.2K. So the opportunity cost (using an after-tax interest-foregone rate of 1.5%) is around the $467 mark, and taking a 25-year life gives capital repayments of $1,248 pa - totalling $1,715 pa. Battery life is the big unknown: probable replacement at perhaps the 15-year mark, not costed into the above.

We did not look far and wide, and many of the schemes you mention did not exist at the time (18 months ago) as far as we knew. We simply picked the top-shelf componentry - LG make their own panels, chemistry and batteries, and the panels degrade only to 86% at year 25, used Harrisons (franchise fees and probably a first-mover profit margin), and their chosen sparky. We use Genesis as the supplier: our previous supplier (Powershop) just could not handle PV solar at that stage.

The key aspects to consider are:

A good low night rate - currently about 12c - over as many hours as is feasible: G is 2100-0700.
A low lines charge: G is 33.33c/day
Appliances with timers so that usage can be timed to coincide with maximum insolation
HWC switchable to use battery if charge % is high enough and/or rig is exporting to grid. I have a set-up planned and just need to solder the bits together (Pi Zero W, an automation hat for the relay, and a bit of Python scripting), then convince my sparky to hook it up without endangering his practising license. Commercial units are available but cost way too much.

As I confessed above, the economics don't look wonderful, but the rig cannot be OBR'ed away, it can easily be tuned (Solaredge runs DC-DC to the battery so little conversion loss, and can have daily profiles applied with change operation modes to suit seasons etc), and it is a solid emergency supply. Having lived through our earthquake sequences, the latter looms large in our thinking....

by fat pat | 30th Aug 19, 9:49pm 1567158568

Here's an interesting article by the founder of P2 power which recently closed down.
https://www.linkedin.com/pulse/where-from-here-nz-electricity-stuart-in…

Some highlights
....Otahuhu 3 year forward rate has increased by 58 % in 5 months.... A number of large retailers have recently announced increases in pricing for residential consumers, but these are nowhere near enough to make up for the increased wholesale price of energy....... But when we see such a significant and long term increase in the forward price, that puts pressure not only on those that aren’t hedged but also those that are, including gentailers, simply through the huge opportunity cost of selling retail at a loss to what the hedge volume could be sold for in the forward markets. As a retailer there is a choice of raising prices to reflect the cost or not raising prices to maintain market share.

by Chris Morris | 31st Aug 19, 7:19am 1567192747

The problem in the NZ power system is that there is a very steep tail on the cost of generation curve. Because thermal plant is used as "last resort" and first off when the wind blows or it rains, they have to cover all their fixed costs as well as fuel costs when they are doing short periods of generation. The fact that there is no significant gas storage and the fields cannot easily be ramped up and down exacerbates the situation. Coal is the only fuel that can be easily stored in quantities that allow weeks of generation. This is all well known by all decision makers, bar politicians.
Adding to this is the grid cannot fully transport power from where it can be generated to where it is needed. There are large constraints in the South Island at Livingstone and for the SI grid, north of Twizel (that is why the Waitaha scheme would have been beneficial). For the NI, it is south of Whakamaru. To clear these would take billions of investment.
There is also the need for Huntly to be on to give voltage control and inertia. Windfarms and solar can do neither. So replacing a unit at Huntly with big windfarms in the Wairarapa will also need hundreds of kilometres of transmission lines and we would have an unstable grid. Lots of expense for an inferior product.

by waymad | 31st Aug 19, 2:49pm 1567219787

Well put, CM. Wind is:

diffuse, so needs lotsa transmission lines to hook up the widely distributed generators, compared to a single-site gigawatt-size thermal or nuclear plant
Non-dispatchable: it cannot be ordered to open the throttle if more output is needed. It cannot, for example, be pre-contracted to supply X output to Y grid entry point on Z day. Or even Z hours away, Z being a single-digit number.
It has (as NH suppliers are discovering to their chagrin) a very limited life: bearings and blades degrade at alarming rates, and the nature of the beasts - a small machinery house 100m in the air, with componentry in the tonnes range - makes maintenance dangerous, expensive and prolonged.
Utterly dependent on an external, high-inertia source of stable grid frequency so that the power circuitry can work its magic. No black-start capability, either.
Known horrendous effects on both wildlife, ranging from insects to birds, and humans - infrasound. The Precautionary Principle should rule 'em out but everyone's a guinea-pig, it seems.

by The_4th_estate | 31st Aug 19, 4:30pm 1567225848

This underlines my belief that Shane Jones should put a billion into a nation wide natural gas network expansion project, it would be a game changer for the economy and give wind and solar tech time to mature to its full potential.

by Chris Morris | 31st Aug 19, 8:28pm 1567240088

For a good example of why the prices have gone up, right now as I write this, prices are $135/ MW - that is high for a Saturday night. The coal units are off for the weekend, so it is the GTs on gas. DC coming north is limited because of system constraints. As usually happens, there is no wind generation.

by Chris Morris | 31st Aug 19, 8:31pm 1567240298

And the situation isn't going to get better. The SO has put out this notice
"The System Operator advises that for trading period 16 (07:30) on 2 September 2019 National residual generation is less than 200 MW including spare HVDC capacity. If system conditions change for the worse, this low residual situation could escalate to a WRN or GEN situation due to insufficient offers being available to cover for the largest contingency or meet demand and maintain frequency keeping reserve.

Participants are asked to ensure energy and reserve offers and load bids are accurate for the times noted, and if not, please update accordingly. If you are aware of information that could impact system security, please advise the duty operations manager"