Contact Energy - CEN Chart

[Snoopy]

Snoopy the trouble is that the cost of solar is a lot cheaper than present prices especially for domestics who have been ripped of for years. If you do the solar yourself the payback is low, say 5 years . Industry do not believe this but those that have solar do.

The problem with solar is that unless you are completely 'off grid', you will still have to pay the Transpower and Local Lines company line charges that makes up 2/3 of your energy bill. (You will also be offered a measly price for any surplus power you want to put back into the grid). The real issue is that you will be paying for the grid infrastructure and your own solar infrastructure (the storage battery is the biggie) which makes solar less than competitive.

The other problem is that the grid operators need to maintain their infrastructure and someone generating their own power on site won't help do that. So some lines companies charge those with solar panels a special higher charge rate for the energy that these 'solar pioneers' extract conventionally from the grid, all to make solar less economic. In summary, the entrenched power bureaucracies don't want larger scale distributed solar energy to get a foothold in NZ and will use pricing signals to discourage it.

SNOOPY

[kiwitrev]

https://a.msn.com/r/2/BB17Q3np?m=en-...rID=InAppShare

[BlackPeter]

The problem with solar is that unless you are completely 'off grid', you will still have to pay the Transpower and Local Lines company line charges that makes up 2/3 of your energy bill. (You will also be offered a measly price for any surplus power you want to put back into the grid). The real issue is that you will be paying for the grid infrastructure and your own solar infrastructure (the storage battery is the biggie) which makes solar less than competitive.

The other problem is that the grid operators need to maintain their infrastructure and someone generating their own power on site won't help do that. So some lines companies charge those with solar panels a special higher charge rate for the energy that these 'solar pioneers' extract conventionally from the grid, all to make solar less economic. In summary, the entrenched power bureaucracies don't want larger scale distributed solar energy to get a foothold in NZ and will use pricing signals to discourage it.

SNOOPY

You make this sound as if there is some evil conspiracy against decentralised solar. It is not. The cost of maintaining the network are real and it makes sense to make everybody who benefits from the network (including the solar pioneers) pay for it.

Who else in your view should pay for the network if not its beneficiaries?

[Snoopy]

Snoopy wrote
"In summary, the entrenched power bureaucracies don't want larger scale distributed solar energy to get a foothold in NZ and will use pricing signals to discourage it."

You make this sound as if there is some evil conspiracy against decentralised solar. It is not. The cost of maintaining the network are real and it makes sense to make everybody who benefits from the network (including the solar pioneers) pay for it.

Who else in your view should pay for the network if not its beneficiaries?

My answer was in the context of horus's comment on solar energy being cheaper. Sometimes it is easier to see points of argument if you consider what will happen in the extreme.

Let's say every household in Christchurch (for example) put in solar panels with an energy storage battery. In this case the power load could be spread evenly over 24 hours. As Southpower the network owner, you might find you could redesign your sub stations with switches and breakers with a brief to be around half the current loading they have now. Other components in the system might be subject to less heat stress too. The wire in power lines could be a smaller diameter. Equipment used to raise such lines into place could be smaller. There is a whole cascade of savings that could ripple through the Southpower grid if it was constructed along these lines, Except - such a change would require all consumers to get on board. And that includes cash strapped landlords having to fit out all their tenanted properties with solar panels and power storage batteries. It isn't going to happen.

The current grid was set up prior to the few solar panels that were around being anything other than off peak water heaters. If the Southpower grid was set up today from scratch, and consumers were able to benefit from a capital light grid by agreeing to pay for solar and/or micro-wind turbine fuelled battery storage packs in their houses -at very low interest rates-, then I am sure that everyone would be better off. The problem is we are stuck with a 'legacy' grid, and no obvious pathway to move to something more 2020 and beyond friendly. The conspiracy (your words) to retain the current twentieth century electricity system is because of historical factors that ensured the local power grid was constructed in a certain way to give resilience at peak demand times. It is an accident of historical circumstance that drives today's network pricing policies, not corporate malevolence.

So to answer your question, yes 'solar pioneers' should pay a higher price for power units drawn from the grid that other users if the legacy grid structure is to be maintained. But should the legacy grid structure be maintained? By charging solar battery pack users more, are you not subsidising long term network inefficiency?

SNOOPY

[horus1]

I am sorry but the line cos have to act naturally and take write offs and they should have been taking accelerated depreciation years ago. If THEY DONT MANY CUSTOMERS WILL LEAVE THE NETWORKS as is happening in AU. Have a look at BOSCH and their 10 KW stand alone fuel cell . That allows independence .

[BlackPeter]

...

Let's say every household in Christchurch (for example) put in solar panels with an energy storage battery. In this case the power load could be spread evenly over 24 hours. As Southpower the network owner, you might find you could redesign your sub stations with switches and breakers with a brief to be around half the current loading they have now. Other components in the system might be subject to less heat stress too. The wire in power lines could be a smaller diameter. Equipment used to raise such lines into place could be smaller. There is a whole cascade of savings that could ripple through the Southpower grid if it was constructed along these lines, Except - such a change would require all consumers to get on board. And that includes cash strapped landlords having to fit out all their tenanted properties with solar panels and power storage batteries. It isn't going to happen.
...

SNOOPY

Great example. Batteries might be able to buffer a day or so of typical house hold consumption if it is gray and cold ... but not more. Take your scenario above and put Christchurch into one of these bloody cold and grey winter months with sometimes weeks of little or no sunshine. Give it a day or so and the grid will need to supply 100% of peak load due to solar not supplying and batteries already flat. This is the problem with all these decentralised solar systems (well, in our region) - no matter how much you invest into them, you still need to dimension the network to be able to provide peak load without any solar supplement. Same wires, same transformer capacity, same switch load, all the same at peak, just less average use of the equipment (maybe none in summer, which adds some more problems). No savings for network providers, just less consumed units paying for the service ... i.e. network cost (per kWh) will rapidly rise thanks to solar.

...

So to answer your question, yes 'solar pioneers' should pay a higher price for power units drawn from the grid that other users if the legacy grid structure is to be maintained. But should the legacy grid structure be maintained? By charging solar battery pack users more, are you not subsidising long term network inefficiency?

SNOOPY

Good question - and probably larger than this thread. Personally do I not see any economic method to reduce in our regions the peak load on the network (s. above) - i.e. no matter what we do, the network will need to stay as it is (no savings to distribute) unless we manage e.g. to move heating over to to other forms of energy ...

I love my wood burner ;

[Snoopy]

Great example. Batteries might be able to buffer a day or so of typical house hold consumption if it is gray and cold ... but not more. Take your scenario above and put Christchurch into one of these bloody cold and grey winter months with sometimes weeks of little or no sunshine. Give it a day or so and the grid will need to supply 100% of peak load due to solar not supplying and batteries already flat. This is the problem with all these decentralised solar systems (well, in our region) - no matter how much you invest into them, you still need to dimension the network to be able to provide peak load without any solar supplement. Same wires, same transformer capacity, same switch load, all the same at peak, just less average use of the equipment (maybe none in summer, which adds some more problems). No savings for network providers, just less consumed units paying for the service ... i.e. network cost (per kWh) will rapidly rise thanks to solar.

Personally do I not see any economic method to reduce in our regions the peak load on the network (s. above) - i.e. no matter what we do, the network will need to stay as it is (no savings to distribute) unless we manage e.g. to move heating over to to other forms of energy ...

I love my wood burner ;

Heating (as in space heating) is likely the biggest component of your power bill, at least for those of us who do not have a wood burner ;-). But actually cooking in the evening is, I think, the largest immutable power peaking ingredient, at least for those of us who do not have gas cookers. Remember the old night store heaters? Pretty crude devices, basically bricks in a box, but very effective in taking off-peak energy and letting it radiate out the following day. Day after day of grey did not stop them doing their heating job every Christchurch winter's day. I am pretty sure the 'crossover' use of electric vehicles is coming. Those original Nissan Leafs had 24kWh batteries. After ten years lets say the battery in a 2010 Nissan Leaf now only holds 20kWh of energy. That would be enough to run a 2kW heater for 10 hours. OK you wouldn't heat a whole house with that. But if you used that same energy input for a heat pump, you would run a 6kW heat pump for 10 hours. I think many homes could be warm enough with that. You can buy those early Leafs for around $10k-$12k. Sure the driving range might be down to 80km or so. But 80km is OK for running around the city. As a battery with a secondary role as a shopping basket, I think a NIssan Leaf could make sense to a lot of households. Plus you could could fully charge an early Leaf up at night in around 10 hours using a conventional three pin plug. Sounds like a 'becoming more economic' option to reduce peak loads to me.

SNOOPY

[see weed]

Three bus. days left before ex div on 26/8/20. Am looking forward to nice big juicy 23c div. The 6%+ yld is much better than the banks. To get the div you have to buy in by 5pm on 25/8/20.

[Beagle]

http://nzx-prod-s7fsd7f98s.s3-websit...656/328001.pdf

Not trying to rain on anyone's parade and acknowledge there's a very juicy dividend 23 cps 65 % imputed due shortly and they will pay good level's of dividends going forward at vastly more than term deposit rates but at what level ?
Page 43 could be of significant of interest to dividends hounds. The title of the page suggests there could be a material cut to future dividends.

I am curious what shareholders expectations are in terms of the total amount of dividends per annum going forward ?
(Note average analyst forecast from market screener is 34 cents for FY21 and 33 cents for FY22 and FY23).

[BlackPeter]

...

I am curious what shareholders expectations are in terms of the total amount of dividends per annum going forward ?
(Note average analyst forecast from market screener is 34 cents for FY21 and 33 cents for FY22 and FY23).

They say it is difficult to predict things, particularly if they are in the future ;

However - if you can give us an accurate prediction of how Rio's arm wrestling (bully games?) in Southland will play out plus a correct weather forecast for the next decade (with particular focus on rain and wind events) than it will be easy to predict Contacts future dividends, won't it?

I did accumulate some Gentailers (including CEN) during the time their SP's moved below the MA400 - but not because I think I am able to predict the future dividends, but because I expected that the income coming from them is likely to be better than the income coming from bonds or similar ... which - btw is likely to support the share price as well. Nice bonus.

I have no clue how Rio's one-sided arm wrestling will end (though it might be worthwhile to look at the outcome of Rio's previous bully games ... difference now is that the current government does not like to be bullied, good on them) nor what the weather will do (though it is probably a fair assumption that strong rain events in the catchment areas as well as strong wind events for the wind farms will increase, which might be good or bad for CEN), but I expect electricity markets apart from a potential (short) Rio shock to grow.

NZ population growing faster than ever (still more than 1 million overseas Kiwis waiting to return and with fossil fuel consumption dropping electricity consumption will go up.

Just one of these things - utilities sell something people need - and it is hard for them to do bad in a growing market particularly given dropping interest rates. Not worrying about next years dividends, but pretty sure that share holder value (divvies plus capital growth) will go up over the years to come.

For what its worth: historical PE for CEN is slightly below 30, but given that they pay dividend out of the cashflow - their historic dividend yield was better (around 20 - or 5%). Forward PE seems to move closer to 40 (but I don't think the analysts know more than us), so I recon future dividend yield might drop to something like 3.5%, which would make sense it times of negative interest rates;

In my view a good time to invest some money into utilities as part of a diversified portfolio ...