Power shares

[kiora]

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?

Maybe this for old coal mines?
https://en.wikipedia.org/wiki/Compre...energy_storage

[DarkHorse]

Hi just wondering if anyone would be so kind as to share their favourite power co share atm and why? (and perhaps any to avoid as well, or even general outlook for the sector)
I'm experienced with company analyis generally, but not the world of power cos, so would appreciate any opinions you'd like to share as I look to diversify the portfolio a bit more...

[RTM]

Hi just wondering if anyone would be so kind as to share their favourite power co share atm and why? (and perhaps any to avoid as well, or even general outlook for the sector)
I'm experienced with company analyis generally, but not the world of power cos, so would appreciate any opinions you'd like to share as I look to diversify the portfolio a bit more...

I can't decide so I have some of them all. My favourite is the one who is sending the next dividend cheque soonest.

[Baa_Baa]

I can't decide so I have some of them all. My favourite is the one who is sending the next dividend cheque soonest.

Me too, I like the idea of diversifying 'within a sector', then rebalancing over time as preference emerges. Energy, Telecommunications, Infrastructure, Aged Care, Retail .. etc. Nice to have a bit of everything in the blue-chip sectors, rather than picking winners and risking excessive trading fees and tax when those choices don't work out. This assumes a long term income focus rather than capital sensitive.

[Onemootpoint]

I can't decide so I have some of them all. My favourite is the one who is sending the next dividend cheque soonest.

Much the same. Every now and them they present a good entry point, and the dividends are reasonably constant.

[GTM 3442]

Hi just wondering if anyone would be so kind as to share their favourite power co share atm and why? (and perhaps any to avoid as well, or even general outlook for the sector)
I'm experienced with company analyis generally, but not the world of power cos, so would appreciate any opinions you'd like to share as I look to diversify the portfolio a bit more...

When the government decided it would float Genesis, Mercury, and Meridian, I simply bought all the electricity market participants in proportion to their generating capacity. Customers come, customers go, but capacity is forever - sort of.

The idea was that the market as a whole would always make money, but that there would be variation in each company's profitability over time and that the inter-company transactions would balance out. So if Mercury had a dry year and had to buy from Meridian, Mercury would have a bad year but Meridian would have a correspondingly good year.

So no favourites. . . but they all pay me at the end of the day

[alokdhir]

Hi just wondering if anyone would be so kind as to share their favourite power co share atm and why? (and perhaps any to avoid as well, or even general outlook for the sector)
I'm experienced with company analyis generally, but not the world of power cos, so would appreciate any opinions you'd like to share as I look to diversify the portfolio a bit more...

Just to give u take of Craigs if u value their advise ....GNE , MCY , CEN , MEL and MNW in that order and they advise to be overweight on power sector ....Key risk being Govt regulation

GNE is their No 1 pick at the moment with latest TP of $ 3.71 !!

[Snoopy]

Just to give u take of Craigs if u value their advise ....GNE , MCY , CEN , MEL and MNW in that order and they advise to be overweight on power sector ....Key risk being Govt regulation

GNE is their No 1 pick at the moment with latest TP of $ 3.71 !!

When reading recommendations like this, I really wonder if those pointy heads at 'X' (Craigs in this case - but not wanting to single out Craigs as I think other full service brokers do the same) take the trouble to look outside of their discounted cashflow spreadsheets. I notice the 'out' line of 'a key risk being government regulation'. But guess what? 'Government regulation' - in some form - is actually a certainty. And that fact immediately renders all of those Craigs recommendations as invalid.

It is quite clear to me that the government, be in National or Labour lead, is on the path to a low carbon power generation future. Within ten years, the Huntly power station that we know today will be closed down. Technically those Rankine Boilers are at the end of their design life already. So there will either have to be:

1/ A massive technical refit, which the government as controlling shareholder is not likely to be willing to fund and/or will vote down, OR
2/ The fuel and carbon costs will mean that Huntly will be unable to compete with Onslow, or whatever renewable battery system is built in its place.

Either way, Huntly is a 'zombie asset' as I see it.

The government got stuck into both Contact Energy and Meridian Energy last year for 'gaming the power supply system' (spilling water to raise the marginal power price). In the past the gentailers have been major beneficiaries of wholesale power price spikes which devastate their insufficiently hedged stand alone power retailer competition. Furthermore Genesis has been a major beneficiary of longer lasting high wholesale power prices from 'dry years'. The government has sent a clear message that NONE OF THIS BEHAVIOUR WILL IN FUTURE BE TOLERATED! So windfall peak wholesale pricing games will be done away with, by using wholesale price caps (that is effectively what Onslow, or its equivalent 'battery' will be).

Once you accept that Huntly is a 'zombie power station' and that Huntly generated 3,736GWh of energy over FY2022, - 54% of all energy generated by Genesis in that year - , then you can see what a massive disadvantage Genesis will have when competing with the other gentailers going out into the future. All of their windfall profits from dry years will be gone. And they will be 'wholesale price takers' from other retailers as they scramble to secure supply for their retail customer base, (which in my view they will struggle to retain). Consequently the 'high yields' that have brought Genesis to the top of the brokers recommendation pile will be likely be halved (as a best guess).

Genesis is currently trading on a PE of about 14. But if you back out the value of Kupe, which on a per share basis will likely settle at somewhere between 50cps and 80cps (say 60c as a best guess), then the underlying PE of the gentailer part of Genesis will be trading at a PE of about 20 in the market today. A non growth PE should be closer to 10. So I think fair value for Genesis shares, currently trading at a market price of $3 is somewhere around:

($3.00 - $0.60)/2 +$0.60 = $1.80

That equates to a massive downside risk from where it is trading at around $3 , and makes the 'head in the sand' 'carry on as you' are spreadsheet valuation by Craigs of $3.71 look silly.

Genesis is not the only Gentailer that has profits at risk from the battery story paradigm. Here are the numbers I ran for Contact Energy.

https://www.sharetrader.co.nz/showth...l=1#post973765

Consequently I would say that any broker that produces a lofty valuation of a gentailer with the 'get out clause' 'subject to government regulation' should do a bit more work and price up what that 'government regulation' risk actually is - in dollar terms- , BEFORE advising clients to go 'overweight' in the power sector.

SNOOPY

who nevertheless holds CEN and MCY shares , but regard myself as 'slightly underweight' in the power sector.

[audiav]

Hi just wondering if anyone would be so kind as to share their favourite power co share atm and why?

Other than the stability and divies and suits my slight green tinge
MEL -because I know someone who works there who loves his job and the company culture.
CEN -KiwiSaver fund owns plenty

And own plenty of IFT which by default means MNW

[alokdhir]

When reading recommendations like this, I really wonder if those pointy heads at 'X' (Craigs in this case - but not wanting to single out Craigs as I think other full service brokers do the same) take the trouble to look outside of their discounted cashflow spreadsheets. I notice the 'out' line of 'a key risk being government regulation'. But guess what? 'Government regulation' - in some form - is actually a certainty. And that fact immediately renders all of those Craigs recommendations as invalid.

It is quite clear to me that the government, be in National or Labour lead, is on the path to a low carbon power generation future. Within ten years, the Huntly power station that we know today will be closed down. Technically those Rankine Boilers are at the end of their design life already. So there will either have to be:

1/ A massive technical refit, which the government as controlling shareholder is not likely to be willing to fund and/or will vote down, OR
2/ The fuel and carbon costs will mean that Huntly will be unable to compete with Onslow, or whatever renewable battery system is built in its place.

Either way, Huntly is a 'zombie asset' as I see it.

The government got stuck into both Contact Energy and Meridian Energy last year for 'gaming the power supply system' (spilling water to raise the marginal power price). In the past the gentailers have been major beneficiaries of wholesale power price spikes which devastate their insufficiently hedged stand alone power retailer competition. Furthermore Genesis has been a major beneficiary of longer lasting high wholesale power prices from 'dry years'. The government has sent a clear message that NONE OF THIS BEHAVIOUR WILL IN FUTURE BE TOLERATED! So windfall peak wholesale pricing games will be done away with, by using wholesale price caps (that is effectively what Onslow, or its equivalent 'battery' will be).

Once you accept that Huntly is a 'zombie power station' and that Huntly generated 3,736GWh of energy over FY2022, - 54% of all energy generated by Genesis in that year - , then you can see what a massive disadvantage Genesis will have when competing with the other gentailers going out into the future. All of their windfall profits from dry years will be gone. And they will be 'wholesale price takers' from other retailers as they scramble to secure supply for their retail customer base, (which in my view they will struggle to retain). Consequently the 'high yields' that have brought Genesis to the top of the brokers recommendation pile will be likely be halved (as a best guess).

Genesis is currently trading on a PE of about 14. But if you back out the value of Kupe, which on a per share basis will likely settle at somewhere between 50cps and 80cps (say 60c as a best guess), then the underlying PE of the gentailer part of Genesis will be trading at a PE of about 20 in the market today. A non growth PE should be closer to 10. So I think fair value for Genesis shares, currently trading at a market price of $3 is somewhere around:

($3.00 - $0.60)/2 +$0.60 = $1.80

That equates to a massive downside risk from where it is trading at around $3 , and makes the 'head in the sand' 'carry on as you' are spreadsheet valuation by Craigs of $3.71 look silly.

Genesis is not the only Gentailer that has profits at risk from the battery story paradigm. Here are the numbers I ran for Contact Energy.

https://www.sharetrader.co.nz/showth...l=1#post973765

Consequently I would say that any broker that produces a lofty valuation of a gentailer with the 'get out clause' 'subject to government regulation' should do a bit more work and price up what that 'government regulation' risk actually is - in dollar terms- , BEFORE advising clients to go 'overweight' in the power sector.

SNOOPY

who nevertheless holds CEN and MCY shares , but regard myself as 'slightly underweight' in the power sector.

I know and understand your concerns about GNE and all power sector . Also in the different time ranges both you and Craigs can be right .

GNE like others have small investors brought to market by Govt action only . So now if Govt action results in hurting those retail investors ...not easily palatable in NZ ...also GNE and others majority investor is still Crown . These companies were listed and partially privatised not just for funds but for having competition take care of NZ consumers which was not happening with ECNZ ...main reason for splitting it ...but I understand people may have different versions

Past 10 years have shown that what these companies do for making money doesn't bother Govts that much but for some noise in favour of consumers to show how much they care . Reliability of electric supply is most important ...rest all requirements will come latter . They will be provided adequate opportunities and time to change for better including going Green with generation .

NZ has almost 10,000 MW installed capacity of generation but its power grid starts coming under pressure even below 7000 MW loads ...which we have seen recently also . Building generation capacities is a long term and costly decisions ....168 MW geo thermal Contact plant costing about 868 Mil !!

I am no expert in power sector ...but I still think GNE will get time to change which its doing as they can also see the writing on the wall