What is your solution then for NWF? And a sustainable one that will offer EPS accreditive returns to shareholders over the long term.
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At the end of this BusinessDesk article Meridian say that their planned Harapaki wind farm project would probably still be economic even if the Tiwai smelter closes because
Does anyone know where NWF's Te Rere Hau windfarm would lie in relation to those transmission constraints if they developed?Quote:
... it will be connected to Transpower’s 220-kilovolt transmission link through to Contact’s Wairakei geothermal field near Taupo.
That puts it north of transmission constraints the firm expects would develop in the lower North Island should the smelter close and more cheap South Island hydro generation is delivered north. Power prices below that constraint would generally be lower.
Borrow some money, build some more efficient turbines and spread fixed overheads over a larger number of turbines. I say this on the assumption that if other companies are doing this then it must be profitable.
Reduce dividends to build up a fund to do some of this (As in a plan which does not require further capital raises, nor share buy back / cap raise) and the major maintenance on existing turbines. Plan to replace them with new technology when they become EOL.
Not sure if these more efficient turbines are possible on the existing infrastructure that NWF have. They were talking about this at the AGM but maybe Dassets or others can confirm.
If I am wrong and that is possible then yes they could spread that out over time and replace the existing 500MW blades with other more efficient ones. I guess we will find out more in due course. Happy to be receiving my dividend at this point in time.
Rebuilding with larger turbines is certainly possible, depending on the amount of money you wish to throw at the project.
I am going back fifteen years now, when I attended the Gebbies Pass open day on the prototype turbine in the Christchurch Port Hills. But my memory is that the smaller lighter Windflow turbine's benefits amounted to a wave that swept through all aspects of the system design. The cost saving access roads were built to a standard that would withstand only the lighter loads required when hauling up a lighter turbine and tower. The crane required to erect the turbine on site did not need to be as big. Similarly there would be an equivalent downstream saving if the turbine unit was to be removed for servicing purposes. I don't know if only lighter grade wiring was required to get that power down off the hill (although it would fit with the 'lightness' paradigm). But I don't think replacing those Windflow turbines with something larger would be a simple swap out of one unit for another. I am not even sure the existing resource consent would carry over.
SNOOPY
I'm guessing that would be the cook straight cable https://en.wikipedia.org/wiki/HVDC_Inter-Island. If so yes, it is above it
If other companies can look at planning, infrastructure, Resource Management and all the other associated costs and decide it's profitable then there must be something there.
And look, even if the company does decide to dwindle, it's still probably going to produce more dividends than current share price before it goes so seems like a reasonable bet at this stage.
I think Meridian were talking about after the current HVDC upgrades are finished, when they will be able to send a lot more South Island electricity into the lower North Island. Then the HVDC link will no longer be the main bottleneck, but other constraints will come into effect that prevent all that electricity being transmitted much further north. I just don't know what counts as "lower North Island", maybe it is just Wellington and the Hutt, or maybe it includes Palmerston North or other points further north.
It might just be the way the article was worded, but it sounded as if Meridian's Harapaki wind farm wouldn't have been economic if it just connected to the local grid at Napier, but connecting it at Taupo puts it far enough north to avoid the problem. Which makes me think NWF's Te Rere Hau windfarm might fall into the low-price side of the constraints in the event that NZAS closes.
(I hold NWF, but it is only a small part of my portfolio currently, still trying to decide whether to buy more or wait to see how things pan out.)
There were some odd trades this morning, almost like some buyers didn't realise NWF went ex-div today.