After over 20 years leading us, Richard Gardiner is handing over the reins to Jonathan Gardiner on 31st March 2021.
Today we want to formally thank Richard, look back on how far Total Utilities has come under his watch, and welcome Jonathan as our new MD.
Richard Gardiner, Founder of Total Utilities
The story starts in 1983 when Richard was transferred by GEC Turbine Generators from Rugby in England to Johannesburg. He worked in South Africa for a decade, initially at GEC before moving to the BOC Gases Group. He studied for his MBA at the School of Business Leadership at The University of South Africa prior to emigrating to New Zealand in 1993.
Before forming Total Utilities, Richard was Managing Director of Renold NZ and Ajax Fasteners. But by 1999 he was ‘over’ the corporate world.
“Deep down I had always wanted to row my own boat,” Richard says of his decision to step out on his own. And so began Total Utilities.
Total Utilities started as a specialist energy procurement business where Richard negotiated competitive energy contracts for commercial clients. In 2001, Richard’s wife, Linda came on board followed by their son Jonathan in 2004. Total Utilities was truly a family business from the get-go.
“What I like doing is building something new,” Richard says. Thanks to his international sales, power generation equipment and gas industry experience, he brought a new approach to utility procurement for New Zealand businesses. This coincided with the deregulation of the electricity industry following the Max Bradford reforms.
Our very first client was Maxwell Dry Cleaning in October 1999. Richard looks back on our humble beginnings with fond memories. In 2019 we celebrated our 20th birthday.
Total Utilities grew slowly but surely in the early years. In 2007, Chris Hargreaves joined us, a school friend of Jonathan’s!
Now, Total Utilities has a team of thirteen, six of whom have been here for over a decade and nine for over five years. Richard is particularly proud of holding on to his talented staff and the strong team culture that he’s helped build. Over the years our skillset has expanded and continues to do so. We’re not only gas and electricity industry experts but renewable energy, cloud computing and carbon reduction specialists too. Richard says that although we’re not the biggest players in the market, like New Zealand as a whole, we consistently punch above our weight. As such, our large client base in the public and private sectors nationally, includes both major corporates and much smaller businesses.
The world has changed a lot since 1999, not least with the rapid growth of new technologies, including cloud computing. Richard is proud that Total Utilities has always embraced new technologies and ways of thinking about energy. “Cloud computing made a hell of a difference during Covid which meant that successive lockdowns haven’t impacted us that much in the overall scheme of things. The world has changed and the decision to go tech future-proofed us.”
Jonathan Gardiner, Managing Director of Total Utilities since March 2021
But don’t worry, Richard isn’t about to retire. He will continue to work in a business development and sales role at Total Utilities, and he remains a director and shareholder. This means he can still do what he loves. You get business continuity, and we don’t lose out on his valuable expertise.
Stepping back will give Richard more time to focus on his hobbies which include genealogy, reading, and supporting his beloved Ipswich football team and the NZ Warriors. He is a keen environmentalist too, and regularly volunteers at nature reserves in the Far North to do his bit to protect our environment from harmful invasive species.
Richard is excited to give: “Jonathan elbow room to put his stamp on things.” Richard says Jonathan and the talented group in their late thirties are the engine room of Total Utilities and the time feels right to pass the decision-making to the next generation.
Jonathan is looking forward to taking on the Managing Director role from 1st April 2021 onwards. He is particularly excited about ensuring Total Utilities is technology-led and expanding our skillset and offerings.
What will this look like in practice? Well, you can take it from us that we won’t be sitting on our hands!
Total Utilities is committed to sustainability; taking advantage of the latest technology to drive energy efficiencies and better visibility of consumption; advocating for reliable, affordable energy pricing for businesses across sectors; while helping New Zealand reduce our collective carbon footprint and make the switch to renewable energy.
We are delighted to announce that as of February 2021 we are Toitū carbonzero certified. This means our commitment to taking positive action on climate change has been officially recognised.
We walk the sustainability talk by managing and reducing our greenhouse gas emissions, wherever we can, and neutralising our unavoidable emissions.
Who is Toitū and what is Toitū Envirocare Carbonzero?
Enviro-Mark Solutions is now Toitū Envirocare. Toitū means “to sustain continually”. It asks us to work together continuously to care for our planet, people and communities. Toitū connects actions with outcomes and asks us to hold fast to the land, to our pride and to all living things.
Toitū carbonzero certifications “meet and exceed the requirements of ISO standards and ensure consistent and comprehensive reporting, benchmarking and management under international best practice”.
Total Utilities’ Carbonzero facts and targets
Our company emissions are quite small at 20.57 tCO2e, but we know we can do better.
That’s why we have set an ambitious, yet achievable, annual target of reducing our baseline emissions of 10% per year over the next three (financial) years.
Most of our emissions come from land transport – 80% is petrol and diesel use – and the remaining is domestic air travel and electricity (see graph below). The obvious next step is to be smarter around our travel choices, yet still deliver excellent service and competitive pricing.
Total Utilities’ Carbon Reduction Goals
Total Utilities will do the following to reduce our emissions.
Prioritising online meetings over travelling to meetings – where possible and practical.
Grouping client visits where possible if travelling a distance, this includes national travel and domestic flights.
Using recycled packaging and choosing courier services that have sustainability programmes in place.
Caring for people and the planet
Rather than buying carbon offsets, we have decided to support renewables-based projects that benefit at-risk communities. This means that along with contributing to renewable energy initiatives, we are also doing our bit to create jobs and improve the overall health and wellbeing of these communities.
We all benefit from sustainable action
We are thrilled that we can join a growing collective of hundreds of organisations who are leading the way to a low carbon future.
But it doesn’t stop there. At Total Utilities we have the skills and the experience to support more New Zealand businesses to measure, manage and reduce their carbon emissions and energy consumption. When you switch to renewable energy sources and manage your energy consumption, you not only reduce your transport and power bills, but you can limit your environmental impact too.
Our hope is that in being open about our sustainability targets and our progress, we will inspire you to make positive changes to the way you use and consume energy for a thriving Aotearoa.
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.
Back in the 1950’s when I was born, the global population was 2.75 billion and it had taken roughly 2 million years to reach this figure. During my lifetime, the world’s population has nearly tripled to 7.5 billion.
This population explosion has helped to ruin pristine wilderness areas from the Amazon rain forest to Africa and Asia and triggered growing competition for resources, including water, to sustain our ever-growing numbers!
Human beings and the animals we eat now dominate the planet’s landscape to an unprecedented degree.
NZ may only have five million people, but we are not immune to environmental degradation. Our environment has also suffered from air and water pollution, not to mention the introduction of invasive species since our country was first settled.
As with the rest of the world, we have been hard hit by the Covid-19 pandemic.
So far, our Government has done a good job in my view in handling the health aspects of the crisis.
The economy though has already been bashed in 2020 and whoever wins the forthcoming General Election is going to be faced by the worst economic pandemic since the Great Depression of the early 1930’s.
This will pose a massive challenge to us all.
In the long haul, climate change is the more important issue.
In the shorter term though, common-sense dictates that all Governments internationally need to focus on avoiding any repetition of the massive long-term unemployment of the 1930’s which triggered the ‘beggar my neighbour’ economic policies followed by many Governments and hence helped pave the way for the Second World War.
So, what does this mean for sustainability issues?
Should they be put on the back burner for the next few years while we focus on the economy or should we continue to press ahead and take action?
When all is said and done, sustainability should be about protecting the environment both nationally and globally.
Ultimately, we will sink or swim together on this planet of ours. As such, the environment includes the air we breathe and the water we drink. That includes the rivers, lakes, seas, oceans and forests that we take for granted.
Like most of you, I have enjoyed watching David Attenborough’s wildlife documentaries. In my case since the early 1960’s. His documentaries have done more to publicise the growing plight of wildlife and the natural environment as a whole, than anyone else.
https://www.youtube.com/watch?v=T5bAeqX9PCI
Sadly, they tell an increasingly gloomy tale of habitat destruction, pollution and species extinctions.
So, what does this mean for NZ? What should our Government do to reverse the tide of environmental degradation. Available options include:
Manufactured goods – where humanly possible they should be made from 100% renewable materials.
Packaging – suppliers (not customers) should be made 100% responsible for disposing of packaging material, including polystyrene!
Glass bottles – reintroduce refundable bottle deposits on all glass bottles nationally and replace plastic bottles with glass bottles.
Plastics – waste recyclers to have uniform standards nationally regarding what plastics are recycled and what go to landfill. If some types of plastic can’t be recycled in NZ, their use should either be banned outright or a new national facility should be set up to process them. There are currently big regional differences regarding what plastics can and can’t be recycled.
Coal vs natural gas – given that the rate of carbon emissions associated with coal is nearly twice as high as they are for natural gas, recognition should be given (as it is internationally) of the important role that natural gas/LPG will play for the next 20 years as a transition energy source on the road to 100% renewability and carbon zero.
Transportation – the idealogues on the ‘left’ and the ‘right’ of politics are both right and wrong when it comes to transport policy. The left is correct in believing that we need much better integrated public transport networks (road/light rail/car parking) in the main centres. The right is correct that whether we like it or not, Kiwis like the freedom that comes from having your own vehicle. Hence, we need to sort out and future proof the road network in the major centres and also upgrade the roads in long neglected areas like the Far North. Clearly it makes good sense to transition to electric vehicles, especially given that the carbon emissions from petrol and diesel vehicles are far higher that carbon emissions from electricity generation.
Local manufacture vs imports – again within reasonable bounds, I am a strong believer inbuying NZ manufactured goods versus importing from the usual source. By doing this, we are using suppliers who are likely to have a greater environmental conscience. Also, the carbon footprint associated with shipping the goods to NZ is avoided. We also provide work for our fellow citizens and keep their income circulating in our local economy. Similar arguments apply to our choice of holiday destination, even when Covid-19 international travel restrictions are finally lifted!
Housing – make it mandatory for all new houses nationally to have both solar power units and water tanks installed from day one. Also, the All of Government (AOG) procurement process could be utilised to encourage local manufacture in both areas and financing options for both.
We are facing unprecedented challenges on a number of fronts and our Government needs to act accordingly in a politically bi-partisan way!
The deployment of grid‐connected photovoltaic (solar PV) systems continues to grow at an impressive rate. In 2018, there was a 30% increase in systems implemented and it continues to move forward.
Most of this growth involves residential systems, which have an 80% share of the connected capacity in NZ.
Where’s the growth in commercial solar pv systems? Why are the industrial and commercial sectors lagging behind?
The following article was written by Perry Hutchinson, who holds a Master of Engineering Studies in Renewable Energy Systems and has 30+ years of experience designing and implementing industrial electrical systems.
One benefit drives decisions about solar PV for industrial/commercial use…
Commercial Solar Power System Cost
The New Zealand Smart Grid Forum identified that although residential consumers consider a range of potential benefits ‐ such as energy independence, environmental impact and a desire to participate in the technology ‐ sound economics is what drives industrial and commercial consumers.
So the challenge in photovoltaic design is to present solar as a viable business investment in New Zealand, even though we lack the government subsidies and generous feed‐in tariffs enjoyed in many other countries.
What is a feed‐in tariff?
Feed‐in tariffs (FIT) offer you a defined payment for the energy you feed into the grid from your solar PV system. In New Zealand, this can be as low as $0.04/kWh.
When generous feed‐in tariffs are available, the key constraint to system size is essentially the available space for the PV array; for viable projects, the bigger you build it, the greater the return.
However, having low feed‐in tariffs changes the whole approach to system design. There is a tipping point where increased size (and increased investment) actually results in diminishing returns.
Forget feed‐in tariffs. Focus on offsetting electricity costs
The viability of a PV system (photovoltaic system) with low feed‐in tariffs depends on offsetting electricity cost. And offsetting electricity cost depends on discovering the optimal level of self‐consumption.
There is a tipping point for self‐consumption with on‐grid PV systems. This is the maximum size of the system where we still achieve 100% self‐consumption. Building the system larger than this results in some of the PV generation being fed back to the grid and therefore, self‐consumption starts to fall.
Generation Profile for commercial solar power systems
But with the generation profile changing ‐ not only seasonally, but also daily and hourly ‐ what is this optimal level of self‐consumption? A system size maximised for 100% self‐ consumption in summer will fall short of that in winter. Conversely, a system size maximised for winter will over‐generate in the summer (and lower self‐consumption as surplus is fed back to the grid).
Load Profile for commercial solar power systems
In addition to this, load profile must also be considered. What if the load is biased towards the morning or biased towards the afternoon? This could impact the optimal direction you orient the array (the azimuth). For example, a more westerly orientation may be better for load profiles with an afternoon bias.
Tariff Structures for commercial solar power systems
Tariff structures could have a similar effect. We have worked with clients with quite complex tariff structures that could influence array configuration. For example, high morning tariffs could mean a more easterly orientation is better.
Obviously, each situation is unique and requires something more than an “out of the box” solution due to the complex interplay between these constantly changing variables – the solar resource, load profile and tariff structure.
Our approach to getting Solar Power right
Traditionally, a project’s net present value (NPV) is used to evaluate and prioritise projects. NPV takes into account the time value of net cashflows over the life of a project by applying a discount rate.
But rather than treating this as an “endpoint” calculation, at Pacific Energy we use NPV to optimise the PV design.
We model a system on an hourly basis over a year using NIWA weather data, the tariff structure and load profile from the time‐of‐use meter as the key inputs. The model then finds the optimal combination of size, tilt and azimuth that maximises the NPV of the project over its 25‐year life.
The maximised NPV reflects the optimal level of self‐consumption for the system which in our experience can be anywhere between 85 – 95% on an annual basis. This provides the starting point for more detailed design to be undertaken.
For solar projects, Total Utilities partners with Pacific Energy whose focus is on bringing sustainable energy projects to life.
By combining sharp economic analysis with a deep understanding of industrial power systems, they design and specify viable and pragmatic solutions that optimise energy use and reduce carbon footprint. They are experts in system analysis and provide unbiased, independent advice for investment decisions.
The retail price of energy for large commercial customers in New Zealand will remain elevated in 2020-21. So what are you going to do about it?
New Zealand’s large commercial market for electricity and natural gas has been on a roller coaster ride for the last 2 years, the likes of which have not been seen before.
There are numerous drivers that influence market movements. Fundamentally though it comes down to the balance between availability of supply and user demand.
Oil, gas, thermal and hydro
The Government’s decision to ban future offshore oil and gas drilling put an end date on New Zealand being able to meet all of its natural gas requirements. The closer we get to the end of current supply the higher the price will climb.
Supply issues with our largest field, Pohokura during 2018/19 and reduced gas production overall has more than doubled gas spot pricing from 2016/17.
In dry years, the electricity system relies on natural gas and coal to provide security of supply. This is for both base load and peaking generation.
With little to no new renewable base load generation planned in the immediate future, the market price is largely driven by the use of thermal based generation.
As consumers of electricity and natural gas, we have no control over the market. However here are a few prudent measures that can be taken to mitigate cost increases in a rising market.
Strike while the iron is hot
Electricity and Gas procurement should not be a once in a 2- or 3-year event. Leaving purchasing decisions to the last minute can have significant negative consequences.
You may only have limited options, having to accept what the market is offering or move to expensive default rates. If there are short term constraints in the market, then pricing may have been more cost effective 3-6 months ago.
Aligning your procurement strategy with a specialist energy consultant provides independent advice and a view of wider market considerations. This is particularly important when setting budgets for the following year.
Have I got a deal for you?
Incumbent retailers will at times be proactive in offering “deals”. However, this is usually from their view of the world and can be part of a defence strategy to sidestep customers reviewing the wider market.
In a rising market, we typically see a significant accordion effect. This is where the difference in prices offered can range more than 20%, even among the large generator retailers.
Without context, pre-emptive renewal offers can at times be viewed with suspicion. A specialist energy consultant can vet such offers quickly.
Understanding the market means pricing is checked against offers they are currently seeing. Advice can then be provided whether to accept the offer or go to market.
The mystic art of Power Factor
Often missed on large commercial invoices are power factor related penalty charges. These are billed by the electricity retailer on behalf of the local network distribution company.
Not all networks charge large commercial customers for poor power factor, but when they do the related charges can be avoided with correction equipment. (See: what is a power factor correction unit?)
There are a multitude of off the shelf solutions out there, however employing a specialist power factor company that designs solutions specific to requirements ensures you get the best bang for buck on your investment.
If correction equipment is already installed, make sure that this is added to your maintenance plan. If well looked after, correction units should last 10 years or more. They are susceptible to heat degradation. A quick check to make sure that air extraction fans on the units are work correctly and filters are kept clean can extend the life of the unit.
Rectifying power factor related issues can also help reduce peak KVA demand and associated costs if these are being billed by the local network company.
The secret life of kilowatts
Do you know how much energy your business uses when you are not there?
Energy monitoring combined with energy data analytics will help you identify energy wastage. Monitoring electricity use with real time energy analytics can also alert you to potential issues during operational hours.
This will allow you to act immediately rather than just seeing the impact on the monthly invoice the following month. With the rapid evolution of the internet of things, energy monitoring as a service is more cost effective than ever.
Are the good times over?
Unless there are structural changes in the market, Total Utilities does not see the retail price of energy for large commercial customers doing anything but remaining elevated (+/- 25% higher for electricity and +/- 45% for natural gas) compared to the 2013-2018 period.
A combination of dry weather, growth in the New Zealand population, general growth in usage and Government policy have put this in place.
Having an Energy Strategy that aligns with your business strategy and planning ahead, being proactive in minimising wastage and understanding where savings can be made will minimise the impact of rising prices.
