Can New Zealand Electrify Industry?

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Can New Zealand Electrify Industry?

Can New Zealand Electrify Industry?

The Government has set a target for New Zealand’s economy to be net-zero emissions by 2050. Does our current approach stack up? Methanex - adding 15% to national electricity demand? In a recent submission to the Ministry of Business, Innovation and Employment (MBIE), Methanex, New Zealand’s largest single gas user suggested that should the company transition from gas-based manufacturing of methanol to electricity, this would increase New Zealand's national electricity demand by around 15% (5,800 gigawatt-hours). In other words, there would be a Rio Tinto Aluminum Smelter-sized electricity user in Taranaki. Methanex currently consumes around 88 petajoules of gas and 84 gigawatt-hours of electricity and produces about 2.4 million tonnes of methanol per year. Located away from New Zealand's main generation sources, this would place increasing pressure on the North Island generation mix. With only limited new baseload generation planned for the North Island, electrification of methanol production would require more coal and or gas being used by thermal generators. Methanex says that should conditions become nonviable to remain in New Zealand, they would relocate to China. Because of China's current generation mix and energy sources, this could increase global emissions by four to six million tonnes of carbon dioxide a year. The hydrogen solution Last year the New Zealand Government signed a memorandum of understanding with Japan to develop hydrogen production in the Taranaki region with the view to pave the way for a transition away from Natural Gas and LPG. However electronic hydrogen production will further strain the New Zealand energy system as 41.4 kWh of electricity is required to produce 1 kg of hydrogen from water. In a recent article, Centrica (owner of British Gas) warned a move to make the gas grid run on hydrogen is “unlikely to be practical”. Centrica chief executive Iain Conn said natural gas would be “crucial” in the transition to reducing carbon emissions, and that Britain and other countries would need to start using more of it before it could wean off the fossil fuel. “It is quite clear that we cannot get from A to B without using more natural gas,” he said at a speech at the Aurora Spring Forum in Oxford. “I don’t believe in the mass use of pure hydrogen, I think it highly unlikely to be practical,” Iain Conn Conn said, but said he was open to injecting around nine per cent hydrogen into the grid. “We have done a lot of decarbonising power generation, but heating and cooling will be key,” he added. Heating and Cooling in Britain The remarks come just a week after chancellor Philip Hammond announced a plan to ban fossil fuel boilers from new homes built after 2025. “We will introduce a future homes' standard mandating the end of fossil fuel heating systems in all new houses from 2025, delivering lower carbon and lower fuel bills too,” Hammond told parliament during last week’s Spring Statement. Conn said that heat pumps would eventually start taking British homes off the gas grid. He also said the world would be able to add around one gigawatt of renewable power capacity each day for the next 30 years. Heating and cooling in New Zealand Heat pumps in New Zealand have only added to electricity demand in recent years as more are installed and being used for cooling in Summer as well as heating in Winter. While more efficient than electric fan heaters, gas heaters and oil column heaters, the added cooling load has counteracted the savings in many cases as large numbers of New Zealand homes are moved away from wood burners. These concerns were echoed in New Zealand by Paul Goodeve, First Gas Chief Executive, saying that, “A key element is affordability. We need to find affordable ways to meet winter electricity peak demand and maintain the competitiveness of large industries that use gas for production. Would New Zealanders find it palatable to pay substantially more for their electricity to upgrade infrastructure which will be underutilised to cover large energy use sectors and peak winter use? These are considerations we believe policymakers need to take carefully into account when making decisions.”

New Zealand electricity prices: so high and still rising

New Zealand electricity prices: so high and still rising

When we look at New Zealand electricity prices, it is important to consider lines companies in the equation. The lines company or electricity distribution business (EDB) operates and maintains the transformers, power poles and copper wires that keep our local electricity networks running and delivering reliable electricity to the door. Examples in the EMA membership region are Northpower, Vector, Counties Power, WEL Networks and Powerco. Lines companies in your power bill Take my last home bill. The energy component, which is the part provided by my retailer, was $184.76. This part is subject to market competition and as a privileged, old white guy with a good credit history I can move freely between retailers chasing the best price. I can also take advantage of a prompt payment discount of $56.65 – nearly 30 per cent of the entire cost of the energy I purchased that month. In the detail of my bill, however, is another bit called the “Daily Line Charge” of $52.85, being 33 days at $1.60 per day charged by my local lines company. Electricity Monopolies and Regulations Unlike retailers, lines companies are monopolies, not subject to competition and they supply an essential service. As a result, they are highly regulated by the Electricity Authority and the Commerce Commission. This regulation occurs in three ways: • Limits to the percentage return on the assets deployed, • Legal requirements for the quality and price of service, and Company ownership structures. There are 27 electricity distribution businesses in New Zealand. Some are privately owned such as the North Island giant, Powerco, which is owned by overseas investors and supplying electricity and gas to about 440,000 homes in the North Island. There are public/private ownership companies such as Auckland’s Vector (supplying 331,000 households) which is 70 per cent owned by a consumer-owned trust and 30 per cent by shareholders on the stock exchange. There are also 100 per cent consumer-owned trusts such as Counties Power and there are companies owned wholly or in part by local Councils, eg, Aurora, which is owned by Dunedin City Council. Owners and investments Ownership is critical when we look at pricing and quality of service and the impact of rules, regulations and the inconsistent behaviour of the regulators. Privately-owned Powerco, for example, after years of underinvestment in lines infrastructure, last year went to the regulator asking for dispensation to increase its charges to consumers so it could remediate its increasingly dilapidated and unreliable infrastructure. Incredibly, the regulator agreed to this request without a whimper!Meanwhile, further south, the Commerce Commission is indicating it will levy fines on council-owned Aurora for quality failures on its network. These failures have been attributed to Dunedin City Council’s active decision to use Aurora’s profits to help fund a new sports stadium and other civic works, while neglecting maintenance and renewal of its electricity infrastructure. Back up north, after a one-in-100-year storm blew out the lights in Auckland last year, Vector was fined nearly $3.6 million by the Commerce Commission for failure to meet its reliability targets for the second year in a row. This, despite massive investment on Vector’s part in technology and improved services aimed specifically at improving quality. Areas of economic growth such as Auckland, the Bay of Plenty and Franklin are faced with big increases in investment to meet demand, while many EDBs in the regions face regulatory demands for increased investment in infrastructure despite their consumer bases shrinking. Ownership has a direct relationship to New Zealand's electricity prices. Whether growing or shrinking, the reality is that EDBs are in a bind, because investment in maintaining and growing reliable infrastructure means price increases are a fact of life for the consumer. In the meantime, the Electricity Authority’s price review seems to be wilfully ignoring the market-distorting behaviours being exhibited by the elephants in the room: the government-controlled generators/retailers (gentailers). We'll take a look at them in an upcoming article...

Energy Price Review - arguments against electricity pricing

In 2009 a visiting expert on commodity studies from Stanford University, Professor Frank A Wolak, opined that each year New Zealand’s electricity consumers were paying around $700 per household more than they should. This figure also applied to the tens of thousands of small businesses using small amounts of electricity. What followed was a studied silence from the industry. Government's Energy Price Review In April 2018 after years of consumer electricity prices continuing to rise at a rate far exceeding inflation, the Minister of Energy and Resources appointed Miriam R Dean QC to, among other things, conduct an energy price review. The aims included investigating whether the electricity market, as it exists at present, is delivering fair and equitable electricity pricing. There has subsequently been a great deal of debate and finger-pointing as to just who is responsible for an electricity market that delivers average monthly bills of around $300 to Kiwi households, while our Melbourne, Australia, cousins are charged roughly the same price per quarter! All this while Aussie generators are burning expensive and polluting coal, gas and oil to meet demand, and we mainly use sustainable hydro generation that has paid for itself many times over. Business Impacts As business people, we are not immune from this unresponsive market. Our staff are consumers too and their budget pressures impact wage demands. We are also just the last cab off the rank when it comes to increased electricity price charges. If you signed a new, fixed price, 24-month electricity contract last September you will now be paying around 20 per cent less for electricity than if you signed a similar contract today. Everything indicates that this trend in the commercial market will continue as the industry continues to “adjust” prices skywards. The Power Players There are several players that influence our electricity market. Let’s start with the retailers. Most of us are aware of so-called “prompt payment discounts” that offer between 10 and 20 per cent lower pricing if we pay on time. For individuals or businesses under financial pressure these discounts can often be unattainable as the need to pay staff, taxes or put food on the table trumps their ability to pay by a given date. What many of us don’t realise is that these discounts are often not discounts at all. The retailer has just loaded the “discount” onto their usual rate, leaving the late payer under even more cost pressure. To their credit Meridian announced an end to this practice last September. The price review panel chimed in last month and called for an end to this practice altogether. To Switch or Not to Switch? There are also the much advertised switching campaigns that try to persuade consumers and small businesses to switch suppliers in the hope of getting a better deal. This is a complete fallacy for small businesses and households under financial pressure. While retailers are only too happy to accept businesses or individuals with good credit records, they simply decline switch applications from distressed payers. It could be said that’s the outcome of paying bills late but in many cases credit checks will, at a time when they need to watch every dollar, exclude people or businesses from beneficial pricing. Many retailers have also, until recently, offered significant incentives to stop customers from switching. Fair enough, you might think, except that businesses that pay their bills on time and loyally stick with their preferred supplier are not offered these incentives, and so end up paying more despite being great customers. This, along with many other structural impediments, is exactly why Ms Dean QC and her team are finally taking a long, hard look at how our electricity market functions. This year's energy price review should prove interesting!

What does a risk-free cloud migration look like?

The below article was published recently in IT Brief New Zealand magazine. The -aaS consumption model is nothing new when it comes down to brass tacks - it's exactly how we've been consuming electricity ever since Edison and Tesla were squabbling. Over the last 130 or so years, electricity consumption has risen and with it, the cost. This is why Total Utilities stepped in to help businesses in New Zealand ensure that their power costs were being thoughtfully managed through analysis of quantitative and qualitative data. Now, the team at Total Utilities have brought their years of experience and the array of tools at their disposal to help enterprises transition to the cloud in the most cost-effective and outcome-focused way possible. Total Utilities strategy and transformation director David Spratt explained that as a company that specialises in the analysis of data, migration to the cloud is a no-brainer. “The intellectual battle over the cloud is done,” Spratt says. “if you haven’t heard about the multitude of advantages that public cloud can bring to any organisation, then you haven’t been listening. To be competitive from our corner of the world, you need to be using world-class technology and today, that means public cloud." Every day, more enterprises move onto the cloud. Every day, another startup is born there, ready to displace their predecessors. And every day, you have someone else tell you that if you don’t move now, you’re done for. Total Utilities is not interested in this kind of manic hyperbole. In fact, the team’s knowledge and expertise in the cloud was inspired not just by their love of the tech, but more importantly by their passion for saving money for their clients. “As a completely vendor-agnostic consultancy, we aren’t trying to convince anyone to spend more or upsell to products they don’t need,” Spratt explains. “If your company has brand new servers that are fully functional and ticking along happily, you probably aren't interested in migrating everything right now. We understand that and want to guide both IT specialists and C-level executives to make the right decisions about what should be moved, how it should be moved, and when to move it.” Total Utilities helps organisations bridge the communication gap between IT and the C-suite, speaking both languages, and suggesting clear, evidence-based options that are all about making life easy for the techies, and making money for the execs. This is not some upstart company aiming to build their experience - for the last five years, they have worked with New Zealand’s major kiwifruit exporter and agricultural giant Zespri, providing financial insights and ongoing evidence of the value that migrating to Azure has brought. “We said to Zespri, ‘Are you really in the business of owning and operating IT?’ And of course they’re not,” Spratt elaborates. “But certain key services they have to deliver. So how do you get out of the business of owning and operating tin boxes that go ping, and into the business of providing all the services that give a business strategic advantages?" Total Utilities performed assessments in every area to see what the cloud could offer. They looked at the obvious benefits like the ability to copy/paste their systems for deployment in any country, simplified disaster recovery and backup, and the ability to scale up or down based on crop yield. Scalability ended up being a key driver for Zespri as this transformation occurred at the same time as the much-publicised Psa disease that threatened to wipe out their gold kiwifruit stock. Zespri wasn’t sure if it would end up with shipping numbers dropping from 80 million to 40 million, or if a new strain of fruit would take successfully and end up yielding 140 million. Total Utilities showed them how being in the cloud would mean they were ready for any eventuality. But then they even dug deeper, looking at the cost per square metre of housing private servers, power costs, and the depreciation of hardware over time. Today, Zespri still sits on Azure and continues to work with Total Utilities to ensure that it is always in the best position to achieve its goals as one of New Zealand’s biggest organisations. Now, Total Utilities wants to help your organisation be as profitable and streamlined as it can possibly be - get in touch today to find out how.

New Branding and New Services

Intelligence without ambition is a bird without wings. Drawing is the honesty of the art. Salvador Dali Today Total Utilities announces its new branding. Over the last 18 years we have worked hard to assist companies in controlling consumption and cost. It's an exciting day for us and we are proud to share this with you. From today you'll see a change in the way we look, including our new ribbon logo. The spherical shape represents the whole as we take a 360 degree approach to understanding our clients and their utility requirements, whether it be Energy, Waste and ICT or Insights, Strategy and Solutions. What doesn't change is our desire to create a sustainable future for New Zealand businesses and how they manage their utilities by continuing to deliver ongoing value for our clients. We continue to work hard to provide new services to assist our clients such as Energy Monitoring and Targeting through wireless non-intrusive energy senors, Cloud Computing Analytics for consumption of computer services and qualitative and quantitative reporting aligned to overall financial strategy. Total Utiltities About Us Presentation We remain committed to delivering a personalised service and assisting our clients navigate a rapidly evolving commercial market place by underpinning strategic thinking. I would like to thank our existing clients for your continued loyalty and confidence in our company. To prospective clients, I hope that you will partner with us to discover real world solutions for sustainable utility consumption and cost optimisation.

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