MEL - Meridian Energy

[Snoopy]

xafalcon wrote: "if that extra electricity is released to market it will reduce returns of all generators and sp will follow."

Not true. Because of line constraints that extra energy cannot be transferred out of the lower South Island. So the only stations affected will be Manapouri, Roxburgh and Waipori hydro (and Clyde to a lesser extent), and White and Mahinerangi wind farms. Contact owns the Clyde and Roxburgh stations, but also has significant geothermal and thermal plant in the North Island. So overall it would only be Meridian that would be adversely affected in the short term.

Once Transpower upgrade the circuits to all more of Manapouri's generation to flow north, then that would co-incide with the scheduled progressive shutdown of genesis's remaining Huntly coal fired units, the net gain to the nation in energy by adding Tiwai's demand and subtracting Huntly's generation is only 85 MW.

Which of the other Gentailers has the most interest in picking up the remainder of the Tiwai contract, the bit that Meridian is keen to shed?

1/Is it Contact because they have the largest alternative generating capacity south of the Benmore Transpower grid node? This would be especially relevant if Transpower do not upgrade the power grid further OR
2/ Is it Genesis, because they have nominally the highest cost large generation thermal plant, for which they have no renewable energy substitute. Of course with take or pay gas, Genesis may not be able to shut down Huntly even if in a genuinely free market for energy, they should.

As an additional complicating factor, I should note that Meridian has a virtual 150MW power station within Huntly because of an energy swap contract with Genesis, already agreed to in July 2014. However as mentioned in the Genesis HY2015 report p6:

"The new four year agreement has a provision to terminate after the first two years in the event Meridian's contract with New Zealand Aluminium Smelter Limited sees a reduction in volume."

So it could be that Meridian retains most of their power supply contract with NZAS, yet still terminates this swap agreement. But if Genesis are going to lose this swap agreement if Meridian just reduces its supply agreement to NZAS, why would Genesis then step up to 'help' Meridian by making their own power supply agreement to partially supply NZAS?

SNOOPY

[PSE]

....................

"The new four year agreement has a provision to terminate after the first two years in the event Meridian's contract with New Zealand Aluminium Smelter Limited sees a reduction in volume."

So it could be that Meridian retains most of their power supply contract with NZAS, yet still terminates this swap agreement. But if Genesis are going to lose this swap agreement if Meridian just reduces its supply agreement to NZAS, why would Genesis then step up to 'help' Meridian by making their own power supply agreement to partially supply NZAS?

SNOOPY

Because taking over the 172MW is the best of two bad options for GNE, the other being a depressed wholesale electricity market.

[Baa_Baa]

Another week of uncertainty until 3 Aug when NZAS have to decide whether to terminate the agreement with Meridian.

The SP has failed twice in the past three weeks to break out and hold above the 200EMA and remains in a progressive downward price channel. Technical indicators turned over again, pointing to further price weakness in the short term.

Steel yourselves, the premium to the election breakout around $2.02 may well be re-tested and perhaps even the pre-election SP beneath that around $1.92-$1.95.

Optimistically, further price weakness short term should present accumulation or buy-in opportunity should the Tiwai decision be favourable.

[tony64peter]

If Manapouri was to supply the national grid, what percentage of its generation would be lost, in transmission[ ie heat ] to the North island?

[Traderx]

If Manapouri was to supply the national grid, what percentage of its generation would be lost, in transmission[ ie heat ] to the North island?

I don't believe that power grids actually work in that way. essentially all power flows in the whole system will adjust, effectively there will be a bit of a shuffle up the country i.e the lower SI will export more to the central SI and the Central SI will export more to the LNI via the HVDC and the LNI/CNI will export more to the UNI and a thermal plant or two will close/operate less in the UNI or CNI. Of course this is all dynamically changing.

A more correct question would be - will overall grid losses increase and by how much as a result of a Tiwai closure shuffle. I would say a bit but not massively. The "valve" of the HVDC is not actually that far from Manapouri.

But certainly spot prices will reduce relative to the rest of the country in the lower SI

Any people with actual engineering ability care to comment beyond my simple person thoughts..?

[Jantar]

If Manapouri was to supply the national grid, what percentage of its generation would be lost, in transmission[ ie heat ] to the North island?

Prior to the HVDC (Cook Strait Cable) upgrade there was an average 8% loss between the islands. Its is now around 4%. However, if Tiwai was to close fully, the lines north of Roxburgh will not allow any more power to flow over them than what they are currently carrying, so there would be no increase in losses. Just a lowering of price in the lower south island.

I don't believe that power grids actually work in that way. essentially all power flows in the whole system will adjust, effectively there will be a bit of a shuffle up the country i.e the lower SI will export more to the central SI and the Central SI will export more to the LNI via the HVDC and the LNI/CNI will export more to the UNI and a thermal plant or two will close/operate less in the UNI or CNI. Of course this is all dynamically changing.

......

If the line from Roxburgh to Livingstone to Islington was upgraded, with an additional upgrade of the line from Livingstone to Waitaki to Benmore, then Traderx has accurately described what would happen. The losses are effectively measured by the difference in nodal prices over various parts of the country.
Right now nodal prices are:
Manapouri $38.33
Benmore $ 41.82
Haywards $44.31
Wairakei $45.18
Otahuhu $47.80

It can be seen that prices climb steadily from the bottom of the South Island to the top of the North Island which reflects the overall movement of energy from South to North. the HVDC is carrying 460 MW but could handle almost 800 MW under present conditions.

Overall estimates suggest even with line upgrades to allow greater transfer from South to North, that that the effect would be quite small.

[tony64peter]

Thanks for the info

[mouse]

Thanks Jantar. Plus very useful info on the DC link being able to handle almost 800MW. From 460MW. Further, they could build a new line from Manapouri to Christchurch, Islington, and chop my electric costs down here. I am paying 18 cents a kWh at present for the line to Christchurch from Twizel. It is of course total robbery and I should not be subsidising the whole of the North Island.

[xafalcon]

Lots of pre-decision buying today

[xafalcon]

https://www.anzsecurities.co.nz/Dire...spx?id=3926267