Power shares

[Snoopy]

I make home solar energy storage systems using "retired" Nissan Leaf batteries. I obtain the batteries by purchasing a cheap Nissan Leaf with a degraded battery and swap in a good battery from a collision damaged vehicle. The car gets sold with a useful second life, and I get a battery that is perfectly good for home storage for the next 10+ years. By that time I assume battery recycling will be widespread so the cells will have a significant scrap value

So I have a good understanding of the state of NZ's Nissan Leaf fleet, and their batteries

Hey xafalcon, do you know about these guys in Christchurch planning to build all new 'upgrade' batteries for the Nissan Leaf?

https://evsenhanced.com/aftermarket-battery/

Towards the end of the year, they might be able to supply you some discarded Leaf battery cells for your business.

"We are targeting a sale price of approximately a third of the cost of an equivalent new Leaf for the GREEN variant. To avoid setting unrealistic expectations in the current inflationary environment, we have chosen to wait until closer to production before announcing an exact price. The 1/3 target price is BEFORE the trade in of your original battery pack is factored in which will reduce your final cost. Because we re-use the original battery enclosure when creating a new 16 Blade pack, there will be no option to buy 16 Blade without trading in a pack in exchange. However, there will be options to keep your original modules/cells repackaged into a more convenient form factor for stationary storage applications.

https://evsenhanced.com/nissan-leaf-bess/

SNOOPY

[xafalcon]

Hey xafalcon, do you know about these guys in Christchurch planning to build all new 'upgrade' batteries for the Nissan Leaf?

https://evsenhanced.com/aftermarket-battery/

Towards the end of the year, they might be able to supply you some discarded Leaf battery cells for your business.

"We are targeting a sale price of approximately a third of the cost of an equivalent new Leaf for the GREEN variant. To avoid setting unrealistic expectations in the current inflationary environment, we have chosen to wait until closer to production before announcing an exact price. The 1/3 target price is BEFORE the trade in of your original battery pack is factored in which will reduce your final cost. Because we re-use the original battery enclosure when creating a new 16 Blade pack, there will be no option to buy 16 Blade without trading in a pack in exchange. However, there will be options to keep your original modules/cells repackaged into a more convenient form factor for stationary storage applications.

https://evsenhanced.com/nissan-leaf-bess/

SNOOPY

I have some of their equipment for doing the battery swaps in the Nissan Leafs, so yes, I'm following their work with interest

I'm located in the golden triangle, so a very long way from Chch. Freighting costs and logistics make it impractical to move bare battery cells that far

But I have a ready source of cars with partially degraded batteries in my home patch. And this way I keep another EV on the NZ roads

[LaserEyeKiwi]

Perhaps the primary vs secondary purpose is a little subjective - I was guided by the Government's investigation of Onslow being under the 'NZ battery project' explicitly looking for a solution to the dry year problem which doesn't involve fossil fuels:

https://www.mbie.govt.nz/building-an...my/nz-battery/

However, I'd assume that the main way Onslow would earn money would be through the higher frequency buffering rather than pumping water and sitting on it until a dry year arrives.

I didn't realise Contact had parked their battery plan - Meridian are still looking at batteries as of a couple of weeks ago, "currently tendering for 100 MW/200 MWhcapacity battery". Hopefully they don't reach the same conclusion.

http://nzx-prod-s7fsd7f98s.s3-websit...479/377303.pdf

The Gentailers don’t have any incentive to procure battery systems when they would go a long way to reducing peak power pricing (if used properly). The perfect profitability environment for Gentailers is for electricity supply to only just be meeting peak power demands - meaning NZ will constantly be on the brink of a power crisis every winter. Which is exactly why Gentailers absolutely hate the idea of Onslow and/or everyone having a home battery to reduce peak demand.

[xafalcon]

The Gentailers don’t have any incentive to procure battery systems when they would go a long way to reducing peak power pricing (if used properly). The perfect profitability environment for Gentailers is for electricity supply to only just be meeting peak power demands - meaning NZ will constantly be on the brink of a power crisis every winter. Which is exactly why Gentailers absolutely hate the idea of Onslow and/or everyone having a home battery to reduce peak demand.

Batteries do have a very useful place in the electrical system. They avoid the expensive and often disruptive need to increase feeder line capacity as peak demand grows above rated capacity. If a battery is included in such a situation, the battery supplies its power during the peak, keeping the feeder line below rated capacity. The battery is recharged overnight to meet the morning demand peak, and again in the middle of the day to meet the evening demand peak

[kiora]

https://vectorpowersmart.co.nz/battery-storage

[Hoop]

During economic down-turns investors seem to think Power companies as "safe" investments because everyone needs power.....
Sounds good to a layman. However...how many people (investors) actually know how an Power Energy Market functions?

I have dedicated my Sunday morning to watching Joe Blogs on You Tube. A very interesting chap who has the ability to make lesser brain powered people like me understand complex issues...so interesting I just had to share it with you all..

This link is to do with how the European Electricity Market functions and it's consequences during difficult times (Russia)... The NZ Electricity Market has hydro but it has a similar infrastructure set up . The video is 28 minutes long but some parts are skippable..and you lose no relevance by skimming through it.

Off Topic:...While you are visiting Joe Blogs video blogs have a look at the recent Russian situation studied by Yale University and others..It put a whole new perspective in direction from other Countries and length of time the Ukraine War is having on the Russian Economy. To summarise from a Global perspective Russia has both immense short and long term problems (maybe bankruptcy),

Edit: PS....I have 23 solar panels. I use about 35KW a day and atm averaging 47% self sufficiency (a lot of cloudy days/ low solar energy and high use of heat pumps.). With this cloudy weather we still managed to micro-generate 60KWH to the grid so far this month @ 12cents/KWH

[Getty]

A question/suggestion for some of the wise heads on here.

Is there any scope to use some of the abandoned coal mines, above and below ground in the Waikato, for pumped hydro batteries?

Also the Martha Hill pit in Waihi, in conjunction with OGC's plans for large above ground settling ponds.
There are some escape shafts going into the old pit which could be easily re directed.
An appeasement to the Greens as well.

Obviously not Lake Onslow, but my suggestions are close to demand, and maybe less capital demanding?

[Snoopy]

During economic down-turns investors seem to think Power companies as "safe" investments because everyone needs power.....
Sounds good to a layman. However...how many people (investors) actually know how an Power Energy Market functions?

I have dedicated my Sunday morning to watching Joe Blogs on You Tube. A very interesting chap who has the ability to make lesser brain powered people like me understand complex issues...so interesting I just had to share it with you all..

This link is to do with how the European Electricity Market functions and it's consequences during difficult times (Russia)... The NZ Electricity Market has hydro but it has a similar infrastructure set up . The video is 28 minutes long but some parts are skippable..and you lose no relevance by skimming through it.

Thanks for the link Hoop. I like the way this guy groups his comments into 'chapters'. Some comments....

1:20

"Margin calls: A company is being provided with some form of energy and has to place money on deposit with its supplier in order to cover any future movements in prices."
"(In the European energy market we have seen) A massive movement in prices means that the margin calls are increasing, placing further demand and pressure on all of these (retail) companies."
Comment: Setting the scene.

Energy Deregulation

"In many countries the national entities were broken up, they were divided into the different parts of the industry. so the producers of gas and electricity, the distributors, the networks and the billing companies were all separated into different companies."
Comment: In NZ it was a bit different. The natural monopolies, being the network companies, have price controls. The generators of energy and the retailers were not separated, which is why they are known as 'gentailers' now. There is therefore a natural hedge between the generator part of the business and the retailer part of the business that helps cushion the effect of variations in the wholesale power market. The billing companies are part of the retailers and are not separate.

"As the markets became deregulated, lots of small enterprises came into the market in order to offer more competition and better deals for consumers."
Comment: Yes the same happened in NZ with lots of small 'retail companies' starting up.

"Some of the larger more attractive groupings have been taken over by foreign entities, that make large profits causing concern for consumers."
Comment: Did not happen in NZ None of our retailers are foreign controlled, since Origin Energy gave up their Contact Energy controlling stake.

Supply Chain

"Generators are at the top of the tree, producing the electricity that everybody needs. In a truly deregulated market, the vast amount of electricity will go into the wholesale market. Retailers are smaller companies that want to offer electricity to the retail market."
Comment: No really true in NZ. The gentailers control by far the largest share of the market, I think it is around 90%. While the wholesale market does set prices at the margin, is is quite normal to have long term power contracts between gentailers and between generators and smaller retailers at prices set in a separate agreement outside of the wholesale market. There is no such thing as 'Retail Market Billing Services' (as shown on the Supply Train slide) as separate entities in The NZ market

Financial Contracts

"Retail companies are really just financial institutions, what these companies do is sign a contract to notionally take electricity supply directly from the generators, and then they sign another contract with the consumer sometimes on a fixed basis so you will have a fixed price for your electricity for a certain period of time and sometimes on a floating basis. The consumer pays the billing company which must settle all of their obligations with the generator."
Comment: Those suppliers to the NZ market on a floating basis, like Flick electric, now also offer customers pre-hedged fixed rate pricing. Due to previous wholesale market volatility, almost all retail customers have gone over to fixed pricing now. So these floating price retail power payers in the smaller consumer retail market no longer exist in NZ, to any significant extent.

"The problem that a lot of these small and medium scale enterprises have is that they don't have enough cash, they simply can't buy that fixed price deal, because it has to be paid for up front."
Comment: This obviously does not apply to the gentailers that are enormous corporations. I don't think it applies to smaller NZ retailers either. They can have 'pay as you go' deals with the gentailers or buy power on the ASX NZ Power futures market that does not require them to 'stump up the cash' in one hit. At least that is my understanding of what happens in the NZ power market.

"Companies are locking in their consumer prices and buying in the open spot market."
Comment: No I don't think smaller NZ retail companies are doing this in the NZ power market. It would be a crazy business strategy to rely on such deals!

Margin Calls

"What we have is a lot of small companies taking energy from the big boys on credit."
Comment: We don't have this in NZ. Most retailers are 'the big boys'.

Energy Types

"The two most widely used forms of energy in Europe are gas and coal."
Comment: Not true in NZ, as most energy comes from hydro and geothermal. It is however true to say that gas and coal do set energy prices 'at the margin'. And prices 'at the margin' determine the electricity price received by all generators. However, gas in NZ is a by product of oil production. There is no shipping terminal to allow gas from NZ to be traded internationally. So gas in NZ works on a purely local market that is not affected by international gas prices. Thus we have not seen the volatility in gas prices in NZ that has been seen in Europe.

Natural Gas Prices

...have not gone up by a factor of 5 as they have in Europe.

Coal Prices

...have gone up. But only Genesis Energy uses coal and word is they have enough on hand to keep burning it for a while at historical prices. Longer term the plan is to phase out thermal generation in NZ, with Genesis being 'the last man standing'. So I am not sure if international prices have gone up for restocking that coal pile, when there is no plan to restock it, makes a difference in NZ.

Impact

...on Europe, not applicable in NZ.

Quite interesting, but fortunately I am not invested in any energy companies in Europe. I don't see too many problems akin to this in the NZ market going forwards. The exception being Genesis who will eventually be forced to shut down Huntly and will not have the capital to build a renewable replacement. So Genesis will become largely a 'middle man trader' beholden to the other gentailers to supply power to their retail base via inter-gentailer contracts. Or they may have to shed customers quickly if prices on the wholesale market spike. Either way, I don't think it is looking good for Genesis in the medium term.

SNOOPY

[Hoop]

Another very informative post. After your 5 minute read I've gained more knowledge than spending hours trawling for data..

It takes a wealth of knowledge and lots of time to know a Market structure and how that Market System(s) operates, but to know the basics via a quick summary gives valuable understanding....

With investment opportunities in mind, that basic understanding provides me with better decision making whether to pursue further or leave alone..Looking longer term it also gives insight (warning/opportunity) when something [variable(s)] is altered due to market intervention such as, Competition, technical/innovative disruption, supply/demand, Government, etc.

Snoopy, thanks for your time and effort...much appreciated

[Jantar]

A question/suggestion for some of the wise heads on here.

Is there any scope to use some of the abandoned coal mines, above and below ground in the Waikato, for pumped hydro batteries?

Also the Martha Hill pit in Waihi, in conjunction with OGC's plans for large above ground settling ponds.
There are some escape shafts going into the old pit which could be easily re directed.
An appeasement to the Greens as well.

Obviously not Lake Onslow, but my suggestions are close to demand, and maybe less capital demanding?

or pumped storage to work it needs two reservoirs at different heights. The greater the height between them the greater the output. The storage depends on the volume of the storage reservoir, measured in millions of cubic meters. None of those suggestions meets either criteria. There is only one site in the north Island that approaches consideration, Ngaruroro. That site has major environmental, cultural and engineering issues. It would be around half the size of Onslow and would cost around 4 times the price to build.