GNE - Genesis Energy

[RGR367]

And yet another opinion on the worthiness of the Tesla's Powerwall http://www.businessspectator.com.au/...ls-it-worth-it

[tony64peter]

And yet another opinion on the worthiness of the Tesla's Powerwall http://www.businessspectator.com.au/...ls-it-worth-it

Thanks for the read. Not a good argument. Housholds using solar would have a significantly different usage curve than the 3000 Sydneysiders. Most of their usage would be during the day ie refrigeration, washing, hotwater etc when they are generating. I have solar hotwater[great] and am keen on the idea of producing my own electrical energy. Unless I'm offered more for my surplus generation or heavily subsidised in installation its a no brainer. Put $20k into a conservative market fund and the return is still better than solar.

MAC PSE I have just joined this discussion. Thanks for all the info,great reading.

[Harvey Specter]

And yet another opinion on the worthiness of the Tesla's Powerwall http://www.businessspectator.com.au/...ls-it-worth-it

THat looks like pretty good analysis. You can see why Vector is interested as it will have major peak shaving impacts if they install enough to scale which will reduce the need for them to invest as much in their network. I expect they will be as interesting in the industrial versions (installed in strategic locations to avoid/defer future investment) as much as the home packs.

For retailers, it is an interesting proposition but cant see it be negative given they just apply a margin to the cost of purchasing power.

For generators, the peak shaving impact may have an impact on peak power prices. Not so much an issue for those that are profitable supplying base load but for the plants that require high prices to start up, could see their earlier decommission. Having said that, it will be decades before there are enough batteries installed to have an impact by which time, NZ will have phased out pretty much all fossil fuel electricity.

As I ahve said before, this will have an impact on the market but more from a new pricing structures perspective rather than putting companies out of business.

[PSE]

THat looks like pretty good analysis. You can see why Vector is interested as it will have major peak shaving impacts if they install enough to scale which will reduce the need for them to invest as much in their network. I expect they will be as interesting in the industrial versions (installed in strategic locations to avoid/defer future investment) as much as the home packs.

For retailers, it is an interesting proposition but cant see it be negative given they just apply a margin to the cost of purchasing power.

For generators, the peak shaving impact may have an impact on peak power prices. Not so much an issue for those that are profitable supplying base load but for the plants that require high prices to start up, could see their earlier decommission. Having said that, it will be decades before there are enough batteries installed to have an impact by which time, NZ will have phased out pretty much all fossil fuel electricity.

As I ahve said before, this will have an impact on the market but more from a new pricing structures perspective rather than putting companies out of business.

Are these batteries of yours going to have capacity to last the winter?
If not they will help Vector not at all as peak demand is in winter and all their gear needs to be sized for this. You can install solar and reduce the load in summer but it's not very valuable if it costs 25c/kWh.
When I can install geothermal for 9c and it will run all through the summer and winter day and night.

[PSE]

Harvey a fraction of the resources spent on ripple control as pioneered by the 1960s state hydro would have much more impact than batteries. I think only Orion is still spending to keep the ripple tip top, Vector is about the most backward of all the lines companies in this regard - or at least they used to be.

[Harvey Specter]

Are these batteries of yours going to have capacity to last the winter?

Assuming peak in winter is about 3 hours from say 6-9, then why not. The home based, solar charged ones may not have much charge in them but the large commerical ones could easily store this energy from your geothermal which is producing electicity at 1am - 6am when no one is using it - my guess is you could buy at 5c and sell at 20c.

As I said, its not going to put anyone out of business but it will effect investment/pricing decisions.

[Snoopy]

The design life for e3p was 25 years, considered to be lowish by some of the engineers involved at the time.

The M701F GT can be re-bladed, however at the 25 year point, or thereabouts, dependent on cycle chemistry, the HRSG, condenser and P91 HP steam set will probably require replacement or significant overhaul.

Depreciation to a refurbishment point at 15 years is common for CCGT plant of this type. Perhaps a bit longer for e3p given it is amongst the few that has a condensate polisher and reasonable chem management.

I appreciate the extra information from someone with a more intimate knowledge of the project Mac. I will go with the 25 year design life.

$533m / 25 = $21.3m per year

After 8 years of 'normal' depreciation 8 x $21.3m = $170m of value will have been written off.

In FY2012 there was a further $96.8m written off thermal plant. If this was all taken against Unit 5 (remember Units's 1-4 and 6 were previously written off) then the book value of Unit 5 currently sits at:

$533m -$170m -$97m = $266m

Now with 17 years of life left in unit 5, this equates to a present day value per year of only

$266/17 = $15.6m

That doesn't strike me as very valuable for the largest power generator in the Genesis portfolio! But I suppose they have done their sums on projected earnings and something like this figure is correct!

SNOOPY

[Snoopy]

I understand that GEN sells its gas on the wholesale market as well, but this is often more of a loss than burning it.

Not necessarily would they shut down if they are making a loss, especially if the loss was bigger if they had to sell the gas wholesale.
They may still be making a cash profit just not covering depreciation and maintenance - in fact this is the most likely scenario.

Because Genesis are extracting the natural gas fuel from Kupe, I don't think you can say that Genesis's Unit 5 'runs at a loss'. If Genesis charges a high enough price for the fuel they could make it run at a loss for sure. OTOH they could reduce the gas price by any amount and let Unit 5 run at any level of profit they choose.

SNOOPY

[Snoopy]

Incidently 50 years for hydro plant Snoopy, LOLz.
Tuai was built in 1929, probably not the original generators and transformers or turbines (at least I hope not). Hydro Stations tend to end up like grandad's axe.

I am just reporting what the notes in the accounts say PSE. I do note that between the 2009 accounts and the 2014 accounts the maximum life of generation assets has been extended to 80 years. I wasn't aware the accounting standards had changed in that regard. Would anyone like to speculate how certain assets lives suddenly got extended? 80 years is probably more realistic I agree.

SNOOPY

[Jantar]

Snoopy, the life of generation assets depends on the type of generator and whether or not refurbishment or replacement is even possible.

Hydro dams have an almost infinite life, but the rivers that feeds them may make the structure worthless after a while. There are concrete type dams built by the romans 2000 years ago that are still in use, and there is a small concrete dam near queenstown (One Mile Dam) that was built in 1924 and was so silted up that it ceased operation in 1966. Modern dams generally have low level sluices that can be used for flushing and therefore the life of the dam is effectively forever, and it is the dam that is the most expensive part of a hydro station. The generators can be rewound, or replaced quite easily, and turbines can be weld filled, metal sprayed and re-machined for a very long life.

Thermal plant is different. It very seldom runs much past its design life. Although the alternators can be refurbished the boilers (or HRSGs in CCGT plant) are often integrated as part of the structure. Huntly's old station is virtually built around the boilers, so to replace those means replacing the station.

For Genesis to give a life of generation assets as 80 years, that would have to be hydro plant, not thermal.