As the southernmost commercial deep-water port in New Zealand, South Port NZ worked with Total Utilities to implement Centrica Business Solutions’ Panoramic Power™ technology – avoiding costly upgrade projects and increasing available storage capacity.
80% increase in container storage days compared to previous year
10mins to collect data from 51 revenue meters across site
$600k savings from avoided capital project expenses (USD)
Increasing capacity of available on-site storage
South Port NZ is a deep-water port on a 40-hectare Island located in Bluff, New Zealand, from where it provides a full range of marine services, cargo and container shipping, and on-site warehousing for domestic and international customers.
In 2019, South Port NZ partnered with Total Utilities to better understand the actual power demand of the site, identify opportunities to increase existing storage capacity and deliver customised solutions to meet the needs of customers on the island. An initial supervisory control and data acquisition (SCADA) solution was proposed by a 3rd party vendor to address the needs, which came with a price tag of NZD$800,000.
As a partner of Centrica Business Solutions, Total Utilities supplied and DECOM Electrical installed Panoramic Power wireless, device-level, energy monitoring sensors at the port. After a month of capturing the data and analysing it using Centrica Business Solutions’ complimentary energy management software, PowerRadar, South Port NZ deployed an additional 229 Panoramic Power sensors and over 30 communication bridges across the port with minimal interruption to operations. Within days, the on-site infrastructure team gained real-time, granular visibility into the energy consumption and operation of their critical assets across the site. The easy-to-install energy insights solution now transmits data securely via cellular connectivity – monitoring more assets than the initial proposed SCADA solution, at a fraction of the cost.
“PowerRadar provides real-time data on demand versus capacity which allows us to maximize our electrical PowerRadar provides real-time data on demand versus capacity which allows us to maximise our electrical infrastructure while minimising risk. Being a small team looking after the engineering infrastructure of a 40-hectare island, takes a lot of our time. Having something like this that provides us with real-time, easy data, provides efficiencies saving us a lot of time.”
Jason Paul, Project Engineer, South Port NZ
Prior to installing Panoramic Power, the infrastructure team had been unable to determine the maximum number of refrigeration storage units that could be brought online safely at any given time. As such, only eighty electrical plugs were available at any time – one per refrigeration storage unit – within two substations dedicated to handling refrigeration reefers for port customers. With real-time visibility of the measured load across the electrical substations in PowerRadar, the infrastructure team realised that the electrical capacity for these substations was being underutilised – adding more plugs to these substations doubled the reefer capacity to 160 without any major or costly upgrades.
Streamlining resources for managing assets
One of the hurdles of the day-to-day operations at the port was the amount of time spent in collecting data from submeters to invoice port customers. Typically, it would take one of the port’s personnel three days every six months to capture the readings from all 51 revenue meters around the port, regardless of the weather conditions. Using PowerRadar, it now takes them only 10 minutes to collect the meter information before it is passed to their finance team for invoicing customers.
With the monitoring of the sewer pump stations at the port using PowerRadar, the infrastructure team now receives real-time alerts on the status of the motors operated at those stations. This has enabled the reallocation of limited resources to other critical assets at the port. One of the benefits of such reallocation was the detection of surface water ingress at the pump stations by the infrastructure team, having compared the measured power draw of the pumps to available rain data. It is now possible for the infrastructure team to track the amount of surface water ingress at each station on days with rainfall and implement any corrective measures.
Effective planning for infrastructure projects
When trying to identify which assets at the port should be prioritised for capital upgrade projects, the infrastructure team relied on the energy consumption data in PowerRadar. This enabled the team, particularly in the design phase, to plan future expansions as well as ongoing maintenance of the existing electrical infrastructure at the port.
An energy audit was completed for one of the large electrical substations being monitored at the port. The findings resulted in the approval of a large capital project for implementing changes to the substation, and switch board running the Cold Stores and an expected payback within one year.
To ensure the reliability of the substations to handle loads within the port’s electrical network, especially during periods of storing a large number of refrigerator containers, the infrastructure team uses the real-time energy dashboard within PowerRadar to track the maximum power demand from the combined substations. If the power draw approaches 1 MW, the team can begin to consider bringing backup generators online or other ways of taking some load off the power grid at the port.
By choosing to implement Panoramic Power across the site, South Port NZ reduced their capital expenditure by US$600,000 and achieved an increase of 80% in container storage days compared to the previous year. In addition, South Port NZ is now able to report on their carbon footprint annually, provide automatic reports on monthly energy use to port users and streamline efforts in identifying areas of high energy usage for investigating ways to lower the peak demand at the port.
Total Utilities is New Zealand’s largest issuer of business-to-business energy procurement tenders, providing energy purchasing services to many household names. With around 500 tenders issued to the market every year, getting favourable terms is crucial. But negotiating energy contracts is so much more than getting a great price. It involves an understanding of the many moving parts.
The variables that influence retail energy prices are:
GEOGRAPHICAL
New Zealand’s population is dispersed over a large land area, creating its own set of challenges.
FINANCIAL
Prices are based on the changing supply and demand through the wholesale spot market.
MARKET-DRIVEN
The market is deregulated, and our national energy supply consists of generators/retailers, the national grid operator and 29 local distribution companies. Energy retailers can hedge future energy on the ASX Energy Futures market.
SOURCE OF ENERGY
New Zealand has a diverse generation fleet, including hydro, geothermal, wind, and coal.
REGULATORY
The Emissions Trading Scheme, Net Zero 2050 and shifting government policy influence generator behaviours.
TIMING
Changes to hydro storage and government policy mean windows of opportunity can be very limited in the energy market.
That’s why engaging independent energy consultants who understand the variables, the available options and when to time procurement events is so worthwhile.
Let’s look at different scenarios where our clients saved significant sums because they had Total Utilities on their side.
TIMING MATTERS Leaving a negotiation too late gives retailers an unfair advantage, as customers have limited options to choose from. A large university’s contract was due to expire, and they were concerned about going to market too soon. They usually would wait until two or three months before expiry to begin researching options. However, we encouraged them to procure their contract with eight months to go. In doing so, they avoided a 36% cost increase and saved over $2 million.
WE ARE LEVERAGING COMPETITIVE TENSION: A national food producer was given a renewal offer from their energy supplier and told that this was the most competitive option in the market.At Total Utilities, though, we understand that retailers don’t always put their best foot forward unless you give them a push. After we went through a competitive tender process, we negotiated a new renewal offer of over $500,000 less than the previous offer.
DOWNGRADING YOUR METER CAN MAKE A DRAMATIC DIFFERENCE An Auckland-based packaging customer was facing a 40% cost increase over three years. Their retailer was only giving them pricing based on their current meter configuration. This is typical in New Zealand because, unlike other countries, there isn’t a fully contestable meter supplier market. Despite being a large commercial customer, they could downgrade their meter because of their connection size. Total Utilities helped with the meter downgrade and negotiated new pricing on their behalf. As a result, they reduced their cost increase by 75% over three years and saved $200,000. The customer couldn’t believe that changing their meter would have such an impact on their new contract prices.
WE ARE ACTING QUICKLY TO HELP CLIENTS IN NEED A Christchurch-based supplier and manufacturer of commercial refrigeration equipment had been out of contract for more than two months. Struggling on their own to get offers for energy supply, they were at risk of costly spot pricing. Spot pricing changes every half hour making it a volatile and expensive route. The customer asked us for help after getting a renewal offer from their current supplier. The trouble was the offer represented a whopping 225% increase over the next 12 months.Within just five days, we presented the customer with our recommendations. We laid out several energy supply options with different retailers. The best option was 150% lower over the first 12 months than the one previous. What’s more, the new contract was backdated over two months. This meant they avoided default spot prices. Overall, the best option was 27% more cost-competitive over the term of the agreement.
The right energy procurement is crucial
Total Utilities are so much more than negotiators. We have a deep and long-term understanding of the energy market and the many factors that influence supply, price, and demand.You don’t have to settle for the first offer on the table. By engaging us, we leverage the right timing and competitive tension to get you the most favourable terms, saving you significant sums of money over the duration of your contract.
All businesses need electricity. All people in a modern society like ours need electricity. The trouble lies in finding balance between combatting climate change and generating enough electricity to sustain our population.
We all know and understand the importance of decarbonizing given the ominous challenge posed to us by climate change globally. But, New Zealand is a small, remote country which only accounts for 1/15th of 1% of the world’s population of 7.5 billion.
New Zealand’s electricity and natural gas markets are inextricably inter-linked. Electricity and gas compete as alternative energy sources, but rely on each other for production. Electricity generation is the second biggest user of natural gas after methanol production by Methanex. Gas is the second biggest source of electricity generation after hydroelectricity.
With this intricate dependence on one another, the effective management of our national energy strategy (including electricity and gas etc) is critically important to our continuing economic health and hence to the well-being of all 5 million kiwis.
What impact does prohibiting natural gas exploration have on New Zealand’s energy supply?
The outright prohibition three years ago of all new offshore oil and gas exploration, is having a profoundly negative impact on the natural gas sector and hence on the health of the electricity sector.
No matter how well intentioned this original decision was, it was not thought through properly at the time. The recent apparent softening of the Government’s stance on the role of natural gas as a transition energy source on the road to 100% renewability is, however, to be commended.
Coal-based electricity generation in 2020 was the highest for a decade.
It’s unfortunate that, as a result of these policies, coal-based electricity generation in 2020 was the highest for a decade. This coincided with the lowest gas-based electricity generation for nine years.
Given that coal emits +/- 1.9 times more CO2, on a gigajoule-for-gigajoule basis than natural gas, this is an environmental step backwards. In this regard, coal imports of +/- 1 million tonnes from Indonesia in 2020 are currently on course to triple in 2021 as we understand it.
What other factors impact New Zealand’s energy mix?
The negative impacts of the above prohibition have unfortunately been compounded by various other negative electricity supply and demand factors since then.
These factors have included:
Rebounding electricity demand following the Global Financial Crisis in 2008.
Back-to-back very dry summers in 2019/20 and 2020/21.
The retirement of thermal powers stations like Otahuhu B and Southdown.
The inability of new renewable power stations to meet the combined challenge posed by growing electricity demand and reduced thermal generation.
Gas and geothermal energy supply in New Zealand is struggling
Pohokura has been our biggest natural gas field for some years. During the past two years however, production has fallen sharply for unspecified technical reasons. This decline in gas production has reduced gas supplies available both for gas users and for electricity generation.
The prohibition of all new offshore oil and gas exploration, has also meant that there will be no offshore oil rigs available in NZ waters until 2022, at the earliest, to identify let alone resolve the ongoing production problems at Pohokura.
Other gas supply options have been constrained in the longer term by the non-renewal by the Government of existing offshore field permits for undeveloped fields, once their initial term had expired. Previously, successive Government’s lead by both major parties renewed these permits unless there was a compelling specific reason not to.
Power companies are passing costs on to businesses
Seriously damaged gas industry morale has also resulted in a combination of reduced/delayed/cancelled capex in existing gas fields.
Competition has essentially collapsed at the big end of the gas market.
The profound uncertainty surrounding the shorter term, let alone longer term, future of the natural gas industry has already resulted in Contact Energy vacating the time of use (TOU) part of the gas market as TOU agreements covering supply to larger customers expire. Two other gas retailers have also declined to quote for supply to various existing TOU customers.
We are also well aware of other very large TOU gas users (not our clients) who have to use natural gas and have been forced onto punitive spot market-related gas pricing. Major electricity-users like Whakatane Board Mills have also had a huge question-mark over their future due to huge gas-related electricity price hikes.
There is still some limited competition in the non-TOU part of the market (impacting smaller customers), albeit at much higher prices. To all intents and purposes, competition has essentially collapsed at the big end of the gas market.
What would Total Utilities recommend?
Looking to the future, New Zealand must formulate an integrated supply/demand energy strategy covering the transition period until 100% renewable energy is achieved in practice. Much like the cross-party Superannuation Accord in the 1990’s, we need a similar cross-party accord now in this vitally important area.
As such, the Government should:
Reverse its previous ill-advised decision not to extend existing gas field permits on undeveloped fields.
Greatly extend the scope of the existing EECA GIDI Fund/ETA initiatives.
Extend the separate Genesis Energy decarbonisation funding initiative to include Mercury and Meridian too.
To conclude, the appetite for future investment in the gas infrastructure is key to improving certainty in the market. Not only does it send signals to the sellers of natural gas but also to major users who are often multinational organisations. If it becomes more apparent that investment will be very limited, these organisations could very well leave NZ prematurely, obviously impacting employment, business activity and tax revenue.
Business and media enquiries can be made to Total Utilities.
See how Total Utilities helped a leading NZ retail chain achieve easy savings through intelligent energy insights from our Panoramic Power real-time energy management solution.
With 94 sensors installed across several sites on critical systems, they were able to cut costs, reduce carbon emissions, and progress toward sustainability goals.
Discover how real-time energy monitoring can lead to big savings and help your business meet sustainability goals. Check out the full case study now!
By 2050, the government has pledged to eliminate emissions of long-lived greenhouse gases, and to reduce biogenic methane emissions by between 24-47%. This means energy pricing is changing fast! While this is good news for the environment, it requires business to make some major adjustments.
Let’s look at the impact of these changes and then the solutions that are available to you.
Decline in gas production drives an increase in price
New Zealand’s main gas field has been experiencing production issues since 2018. This year, their production is already down by 42%.
This significant shortfall is having a heavy toll on electricity generation. By 2030, gas production is expected to be half of what it is now.
Gas consumption by sector in New Zealand, 2020
Natural Gas Production Down and Energy Pricing Up
Natural Gas or LPG fired boilers have lower emissions than their coal-fired counterparts. But we have seen oil and gas exploration companies already hand in their exploration permits because of New Zealand’s policy changes.
Because of this, access to gas is becoming far more restricted. When production declines but the demand is still high, prices inevitably rise.
Forecast Gas Production as Reported to MBIE 2020
This has led to an increase in using coal as a substitute. In the South Island, for example, where there is no natural gas, many boilers remain coal fired. Having said that, some are attached to reticulated LPG networks in Christchurch, Queenstown and Dunedin.
But by 2022, a ban on new low and medium temperature coal-fired boilers will also be enforced, with a proposal to phase out any remaining coal boilers by 2037.
This will severely undercut the feasibility of these coal-fired burners in the near future.
How can industries respond to changing energy pricing?
52% of sustainable businesses have an energy strategy
You need two action plans:
Short-term plan: optimise what you have to get the best bang for your buck now.
Long-term plan: understand your options, decide which route you’ll take, and plan how to get there.
The good news is Total Utilities can help you now and well into the future. Plus, we’ll regularly review and track your progress.
Short term energy pricing plan: optimise what you have
For our large commercial and industrial gas customers, we are now seeing an increase of around 180% in cost as they come off contracts signed three years ago. Despite the increase, gas is still a cheaper source of fuel than electricity. But it is fast catching up. As gas supplies further decline, gas prices will only continue to increase.
The chart below shows the upward trend in total costs from raw gas pricing and the ETS scheme over the last three years:
Total Utilities Retail Price Index of gas plus ETS costs – 2018-2021
We are helping clients by tracking the trends of retail gas prices and negotiating cost-effective gas contracts. We also help you save money by optimising what you have for the remaining lifespan of your current heating systems.
Long term energy pricing plan: switch to sustainability
Working closely with the specialists at New Zealand Energy Systems, we help you decarbonise and eventually replace your boiler. We do this by understanding the energy source, the technical options for replacement, and what triggers price changes.
Moving from fossil fuels to electricity, or to another renewable energy source will reduce emissions and help New Zealand achieve its goal of being Net Zero by 2050. In some cases, existing coal-fired boilers with decades of life remaining can be converted to burning biomass instead of coal.
However, in some regions, such as Canterbury, the supply of woody biomass residues falls short of the energy demand for process heat. Total Utilities considers these variables and complexities in your long-term plan.
With increased energy pricing on the cards, now’s the time that you get significantly more bang for your buck when you invest in energy and carbon reduction projects.
Here for you now and into the future
The team at Total Utilities can help you achieve energy efficiencies for the remaining lifespan of your current systems. We do this by conducting a low-cost study into your energy consumption and identify ways you can save money.
Over the long-term, a switch to carbon reduction energy sources makes sense for the environment and your bottom line. That’s why, when you’re ready, the team at Total Utilities can guide you through the switch to solar and other renewable energy sources.
Contact us today to turn cost-effective, environmentally friendly strategies into action.
New Zealand Aluminium Smelters has struck a new deal with Meridian Energy which means the smelter will remain open until at least Decemeber 2024. We don’t yet know the prices that Rio Tinto has agreed with Meridian, but Forsyth Barr estimates that Rio will be paying a contract price of 3.5c/kWh. Compare that with large energy users across the country, who are paying over 11c/kWh.
Last week, the news pushed already elevated ASX energy futures higher. Customers leaving contracts on or around a raw energy price of 8.5c/kWh struck 3 years ago are now facing, on average, raw contract pricing of 13-14c/kWh — an increase of 65% or more.
Is pricing sustainable for large users?
ASX Energy Futures climb higher and higher
In July 2020, when the market was expecting a full exit from Tiwai by the end of 2021, pricing fell significantly. South Island consumers were especially fortunate — Total Utilities helped customers negotiate raw energy pricing around 6c/kWh. North Island pricing also fell from around 12c/kWh to 9c/kWh.
New Zealand’s large commercial businesses are paying a premium for the smelters continued electricity supply in the current electricity market. And it’s not just electricity pricing that has increased, but gas too, with prices moving from around $5.50/GJ to over $9/GJ in the last three years.
Transmission pricing hasn’t changed. Yet. But it is almost certain that Tiwai will see transmission costs reduce, while the rest of the country is left to pick up the upgrade bill when Manapouri gets connected to the Clutha Upper Waitaki network.
Additional energy and gas costs cannot just be absorbed by consumers, particularly in the primary and food production/storage sectors where energy-intensive operations exist. The cost of living will continue to inflate, while income increases will struggle to keep up.
Overcapacity of generation must be built between now and 2030, while an increase in gas-fired peaking plants is needed to ensure a secure supply.
Future path requires significant investment in new wind and solar generation
In the current market, there is no incentive for an oversupply of energy production. Instead, due to basic supply and demand principles, constrained generation allows producers to make tremendous profits.
In large part, the Government has ignored the 2019 report and instead focused on the proposed pumped hydro scheme at Lake Onslow. This multi-billion-dollar project won’t be commissioned in the short-term and is located well away from high energy demand areas. The government would gain faster traction if they subsidised microgeneration and battery storage.
Gas production is still a major and immediate concern, with New Zealand’s largest gas more or less 35% down on expected volumes. Remedial work and new drilling projects are unlikely to start until early 2022, so it’ll be some time before gas supplies return to “normal” levels.
Generators have various projects to increase renewables-based generation. These will not likely come into service until after 2024, though. A lack of clear market strategy means timing and development have been poorly managed. The “just” transition to renewables is underway, but who exactly is it “just” for?
A window into the future
On 31st January, 2021 He Pou a Rangi/Climate Change Commission released a 2021 draft advice for consultation report. This report delivers more focused advice that the government would be wise to follow to stand a chance of reaching our country’s zero emissions target.
The energy prices that businesses are paying now is a result of uncertainty and not having enough renewables-based generation to meet dry year demand when gas supplies are constrained. This is not sustainable.
From page 81 of the report: “Future electricity prices are uncertain due to a range of factors, such as the weather, gas availability, future infrastructure requirements and pricing structures.”
The report clearly shows that we need more energy generation, that we should accelerate and incentivise the move to electric vehicles, that we need to make the transition affordable and attractive to businesses and families, and that natural gas plays a role in helping us get there. And it asks if we should do what we can to retain and retrain the incredible talent that exists in the natural gas sector instead of losing them to offshore contracts.
Building more wind and solar generators is money and time well spent, as this will increase energy supply, and translate to lower energy prices. That’s why new renewables-based generation needs to be built and fast, otherwise energy pricing will only remain high and increase further as we decarbonise the economy.
As page 112 of the report so clearly puts it, “For consumers and industry to invest and convert to electrification, they need to have confidence that electricity will be available, affordable and reliable.”
What can you do?
The harsh reality is that the cost of energy is going up. Without significant new generation being commissioned and the ongoing gas supply issues, costs are unlikely to fall again in the next four years.
That’s why we recommend you review your pricing and go to market early, as prices are front end loaded. You could potentially get a better price well in advance of your contract end date and lock it in. Alternatively, having a second round is always an option closer to contract-end.
We’ve given a considered view of where pricing is heading in this blog, but it could be conservative. In any case, budget for a serious increase in costs.
If you want to mitigate rising costs, the best thing you can do is reduce the amount of energy you consume from the grid. You can achieve this by understanding what you consume and optimising your consumption and generating your energy onsite (through solar panels or similar renewable sources).
With increased energy pricing on the cards, now’s the time that you get significantly more bang for your buck when you invest in energy and carbon reduction projects. That’s why the team at Total Utilities are here to help you achieve energy efficiencies and, when you’re ready, guide you through the switch to solar and other renewable sources.
