Looking at p13 of the Annual Results for 2017 presentation, it does appear as though Contact are able to price themselves into an electricity market sweet spot.
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1/"Contact’s hydro inflows typically peak during summer."
2/"Traditionally, wholesale and futures prices are lowest between October and February."
3/"Contact seeks to maximise the value of its renewable assets by selling all renewable generation at a fixed price."
4/ "Flexible thermal generation, limited hydro storage, gas storage and hedges allows us to “firm” the renewable variability"
"Over the past 3 years this has enabled fixed priced sales at 125% of mean renewable generation, in contrast to integrated renewable generation only peers who sell between 70-85%"
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The above comments are made about a graph of "Contact’s mean renewable energy and purchase position." The graph shows the purchase price paid by Contact dipping over summer, which is no co-incidence, because according to 1/ above: Contact will have plenty of hydro inflows to generate their own power over that time.
Point 4/ is interesting in that it seems to be a tacit admission that Contact are 'gaming' the electricity market. I am not surprised a large gentailer would game the electricity market. But I am surprised they would admit to doing so in so public a way. I will need to work through this slowly as there is quite a lot that can be gained from studying this one presentation page.
If Contact are really selling all their renewable energy at a fixed price, as per point 3, that means either:
1/ Contact are out of the spot electricty market entirely, and only sell their expected generation capacity via fixed price hedge contracts OR
2/ Contact have decided on a sell price and will not sell into the wholesale market until the wholesale market price reaches that level, no matter what else is happening.
What does “firming the renewable variability" mean? One interpretation of that comment could be that when hydro storage is low, Contact will not bring their thermal stations on line until much later than when the first increased demand signal fires up the spot market price. Thus they leave the market price to overshoot, meaning they earn more from their renewable generation before the required thermal generation finally kicks in. If you only have renewable generation, that means you are a much more of a 'price taker' as you can't use (or not use in my example) the thermal generation that you don't have to manipulate the electricity spot market.
SNOOPY