Power shares

[Davexl]

Has anybody seen this? Bit of a bombshell to drop just as NZ Inc goes on holiday. Looks like the Cap has been put on Cap-in-Trade:

https://www.stuff.co.nz/national/pol...to-ets-pricing

"This means businesses will be paying at least $20 for every tonne of emissions and possibly up to $50. The fixed price at which the Government sell the credits would move from $35, up from $25 now.

Climate Change Minister James Shaw said research showed that a $40 price was around the point where businesses started seriously investing in cleaner technology.
The aim is to see net emissions peak at around 2020 levels and then begin falling from 2022, according to a draft "emissions budget" for the years 2021-2025. This budget would be superseded by the first emissions budget from the Climate Change Commission in 2022."

Seems to me this will gradually kill coal use on the Rankines, but also act to put a cap on Gas use emissions also, mostly affecting Contact and Genesis plant?

Contact is mostly Gas generation but Genesis is duel fuel with the Rankines is that correct?

Obviously favours Electric boilers eg in the Dairy industry, affecting their S. Island plants and strongly incentivising Renewables at long last.

Here's hoping Contact and particularly Genesis don't take a hit with loss of fuel flexibility eg with Coal, and Gas doesn't become too expensive and push power pricing up for the baseload generation plants and consumers long term too much.

On the flip side perhaps the economics for Genesis running their 3rd Rankine unit now stack up for baseload Gas generation, particularly if Tiwai decides to quit and we have more dry years with Climate change...

Disclosure: Own Genesis and Trustpower shares.

[Beagle]

I'm with National on this. Very poor form to drop this bombshell on business just before Christmas.

Greenies gone mad. Won't make one iota of difference to the world climate but WILL affect people's power prices, GNE have just done a round of price increases for power and gas for consumers and will need to do another one sooner rather than later if these extreme measures come in.

GNE to be most affected I would think.

[horus1]

Open your eyes. This is mild compared to what has to be done. Put your own solar in and stop being ripped of by the Electricity Industry. It is beneficial to mercury and Meridian.

[Beagle]

My eyes are wide open. The best way to make an enduring difference is to plant a whole lot of trees.

[Davexl]

My eyes are wide open. The best way to make an enduring difference is to plant a whole lot of trees.

And then not harvest them as that releases the CO2 over time. https://www.stuff.co.nz/business/far...rees-are-equal

I am hoping for a rational climate change strategy to emerge where their is a clear differentiation between oil and gas discoveries where Gas is promoted at Oils and Coals expense. With Gas CO2 emmisions at 1/2 of Coal's we have a viable strategy for a future Hydrogen generation and export economy once the Carbon Capture issue is sorted. Gas has to be available as a transition energy source for the baseload generation in Dry years. and Coal boilers have to be switched to Electric and Biomass where feasible. The only downside to Gas is the issue of methane leakage which has to monitored by satellite. Their is a global monitoring centre for Methane being set up at Massey University as we speak. https://www.japantimes.co.jp/news/20...n-new-zealand/. Methane has 25 times the impact of CO2 and can reduce the overall benefits of Gas if leaks are not tightly controlled. Legislation should also be brought in to at least burn any previously flared methane and generate power eg in Capstone turbines. IMO.

[bull....]

buying mel , mcy at the worst time after the te wai smelter news would be seeing you with sizable gains now. mel nearly back to all time highs. dow utilities just hit record high overnight too.

[dibble]

Bit of news of interest - nanowires, old discovery but recent development is these things producing (small amount) of electricity from humidity and, crucially, recharging themselves to some degree. Possibly both a threat and opportunity for the long term.

https://www.sciencemag.org/news/2020...-and-thick-air

[bull....]

wonder if falling global demand and prices for aluminium will make it even harder for rio to keep smelter open

[troyvdh]

And of course the ramifications for listed power companies..we live in interesting times eh

[percy]

And of course the ramifications for listed power companies..we live in interesting times eh

Certainly do.
Rio Tinto have the bauxite needed to make Aluminium.
Should they be able to sell their bauxite to Chinese Aluminium Smelters for a top price, there will be no reason to keep Tiwai Point Smelter operating.
I would think to keep their profitable bauxite mining going, they will keep Tiwai operating.
All depends on their transfer pricing, and Chinese demand for bauxite.
Short term demand will be weak,but the longer term demand may be strong.
I have shares in Bauxite miner Metro Mining, and they are ramping up production to meet forecast demand.