by Jonathan Gardiner | Feb 22, 2016 | Waste
Businesses need to get the best possible pricing and contract terms for utilities such as water, power and rubbish collection.
But once costs are minimised, improved utilisation becomes critical to extracting greater value. A formal, independent audit process is the best way of identifying quick wins.
Why perform an audit now?
In the past two years the waste services marketplace has experienced aggressive price-cutting by major suppliers. Now they are differentiating themselves with srvice offerings, and their customers need to understand how.
In recent months two vertically integrated suppliers have signalled their intention to emphasise value-added recycling and waste minimisation processes over price-cutting, going forward. Other suppliers of waste services that don’t possess their own landfills are using waste audit services as a point of difference, to avoid getting dragged into a price-cutting battle they will struggle to win.
The most efficient money-savers
Business customers will save more money by sending less waste to the rubbish dump (landfill) than they will from a reduction in the price of waste services.
From a supplier’s standpoint, waste audits are costly, requiring staff time and data analysis, with capital outlays often the consequence of the resulting recommendations. Waste audits are also self-defeating for those in the business of collecting and burying rubbish.
As we have been working with businesses to reduce their waste quantities and bin movements, as well as negotiate new commercial contracts on their behalf, we have observed the following potential pitfalls:
Staff training: New waste-handling process may require either specialised staff training or socialising of new ideas. This entails additional cost, and the purported benefits may be predicated on unrealistic assumptions.
Staff buy-in: Change needs to be adopted from the top down, however, if staff aren’t on board with a new process, you could be charged for specialist one-off disposal of spoiled recyclables should waste not be accurately sorted. It is thus important to ascertain the time pressures on your staff before a new initiative is accepted.
Hospitality customers are a happy hunting ground for waste diversion suggestions given that their raw materials often come in recyclable packaging, and food waste streams result. However, this industry is fundamentally deadline-focussed, and staff are less likely to worry about what goes in a particular bin when there are orders backing up. A suggestion to save money on waste may thus end up costing you more in staff time.
Spread the message and keep it current: Ensure you spread the waste diversion message beyond a small number of staff. This has cropped up in the education sector where a particular year/age group might push hard for an improved process, but the next year is more apathetic. A few years later a similar set of failed initiatives will be suggested by an enthusiastic set of newcomers, unaware of what was previously attempted.
Audit waste expenditure
Challenge current processes and the underpinning assumptions with an audit review process. The terms and conditions of certain supply agreements prohibit your engaging competing waste service suppliers for such reviews. This serves the interests of your incumbent supplier, whilst limiting the breadth of ideas and potential technologies available.
The Commerce Commission moved in 2015 to limit unfair contract terms, which cause an imbalance in parties’ rights in consumer contracts. Although the intention is to focus on the non-commercial sector, energy retailers have begun rolling out more end-user friendly terms to business customers.
It is our hope that the relevant waste industry participants will adopt a similar position to allow for a greater spread of waste minimisation ideas.
Waste diversion reduces cost
Other than the obvious desire to limit landfill refuse, to extend the life of these expensive assets and minimise resource wastage, there are currently obvious financial pay offs in diverting waste. These are likely to grow in future, either with a change of Government, or with a change in Government focus.
A waste levy of $10 per tonne is already in place to help reduce the amount of waste New Zealanders generate, but the levy is set at a level 10 times below that of some of New Zealand’s regular trading partners. In addition, the Emissions Trading Scheme covers methane emitted from landfills, but only for every second tonne at present.
Energy-savings initiatives by business are hampered by relatively low energy-pricing, and the same sort of thinking will undoubtedly apply with regard to waste services. However, given the current level of these charges vis-à-vis our international trading partners, we recommend business remediates as much as possible now rather than face higher costs in the future.
With the components of your waste services charges unlikely to fall any lower, diverting waste from landfill such as with increased recycling, is the best way to unlock additional savings and insulate your business from potential cost blowouts in future.
Jonathan Gardiner is a Director of Total Utilities.
by RichardGardiner | Sep 1, 2015 | Energy
Article extract from the September issue of Business Plus Magazine published by the EMA.
The Changing Face of Electricity Supply Worldwide: Can NZ Compete?
By Richard Gardiner and Hans Buwalda
New Zealand is advanced on a global scale in generating most of its electricity from renewable sources rather than the less clean, non-renewables such as coal and other fossil fuels.
But in committing to do better, there is an economic price to pay.
New Zealand is a small, advanced but geographically remote First World economy. Renewable electricity generation based on the use of hydro-electricity, geothermal energy and wind power, etc, typically accounts for about 85 per cent of New Zealand’s total electricity generation.
The proportion of renewable sources has been growing steadily in recent years, with the commissioning of new geothermal and wind power stations and the progressive retirement of aging coal and gas-based generation. This trend now includes the planned closure of Contact Energy’s gas-fuelled Otahuhu B Power Station.
With such a high existing renewables component, it is much harder for us to achieve significant reductions in our electricity-related CO2 emissions/kWh than it is for larger, less remote trading partners overseas.
World catching up
Governments are committed to creating a new international climate agreement at the United Nations in Paris this coming December. In preparation, governments have agreed to publicly outline what climate actions they intend to take post-2020. These are their Intended Nationally Determined Contributions (INDCs), which will largely determine whether the world achieves an ambitious 2015 agreement and is put on a path towards a low-carbon, climate-resilient future.
In its INDC, New Zealand has committed to reduce GHG emissions to 30 per cent below 2005 levels, in the next 15 years by 2030. The likely cost to the New Zealand economy of meeting the 2030 target in terms of GDP is greater than that implied by other governments’ targets. This is due to a number of factors, such as already achieving a high (+/- 85 per cent) level of renewable electricity generation, plus the fact that almost half of New Zealand’s emissions originate from agriculture.
The emission reduction pathways on which other countries’ targets are based differ from the pathways possible for New Zealand.
A significant part of both the US and the EU commitments is based on opportunities for reducing the carbon-intensity of electricity generation. The current proportion of electricity generated from renewable sources in the US is 13 per cent, and in the EU is 25 per cent. Clearly there is significant scope for CO2 emission reductions in both those major economies through further increases in renewable electricity generation, particularly as much of that will substitute for electricity currently generated from coal.
Already, the mix of renewables and non-renewables used in electricity generation is changing globally.
Back in May, BloombergBusiness in the US reported that, “The race for renewable generation has just passed a turning point. The world is now adding more capacity for renewable power each year than coal, natural gas and oil combined”.
It also advised that, “solar power makes up less than 1 per cent of the electricity market today but could be the world’s biggest energy source by 2050 according to the International Energy Agency. The question is not if the world will transition to cleaner energy, but how long it will take.”
The New Zealand emissions trading scheme (ETS) is due to be reviewed this year. Achievement of our INDC highlights the need to address our domestic policies. It is clear the current ETS will not, on its own, ensure New Zealand’s progression to a sustainable, low-carbon economy.
Supporting sector-specific policies and measures are also required. It may be that some sectors should be included in a different way in the ETS.
Tips for NZ businesses
New Zealand business customers of electricity and gas need to focus on:
• Price minimisation – by checking the market systematically via a professional procurement process and bulk purchasing power.
• Usage optimisation – by monitoring usage in detail, highlighting potential kWh reductions and then taking effective action utilising energy specialists.
• Wider environmental considerations (for large organisations at least).
Large organisations, whether public or privately-owned, need to consider their environmental impact on the wider community, and especially their contribution to lowering greenhouse gas emissions (GHG), particularly CO2.
Richard Gardiner is managing director of Total Utilities Management Group Ltd, email [email protected]
Hans Buwalda is managing director of Environment Health & Safety Consult, email [email protected]
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by chris | Aug 25, 2015 | Energy
The New Zealand energy market is shifting sands once more with recent announcements concerning the future of energy generation.
Following the new deal for the Tiwai Point aluminium smelter with Meridian, Contact and Genesis, a series of announcements have been made regarding our thermal baseload generation.
Contact has been quite vocal about the recent announcements with chief executive Dennis Barnes saying “The role of thermal plant in New Zealand’s electricity future is to support renewable generation and the growth of new technologies. This is best met by fast-start, gas-fired peaking power stations rather than large base-load plants.”
Genesis announced the intended 2018 closure of the remaining coal turbines at Huntly. More recently Contact has announced that Otahuhu B will be closed next month. Last week’s set of announcements were concluded by Genesis announcing the cancellation of their Solid Energy contract for the supply of coal, coming on the back of Solid Energy being placed into administration.
The big change was the decision to close and or reduce thermal generation stemmed from the energy market as opposed to government legislative intervention. (more…)
by chris | Aug 3, 2015 | Energy
The news announced this morning ends the worst kept secret of the electricity industry in New Zealand. Months of speculation has been concluded with this morning’s announcement that NZAS will continue to operate Tiwai Point with extra hedge contracts being provided by Contact Energy and Genesis Energy. The deal will provide NZAS with greater certainty if Meridain’s hydro lake storage drops to low levels during summer periods in the future. This will no doubt have a flow on effect to the commercial market as there is now certainty regarding the future of Manpouri and the ongoing viability of thermal plants such as Contact’s Otahuhu B and Genesis’ Huntly power stations.
Energy News has posted the following:
New Zealand Aluminium Smelters has opted to retain its contracted supply cover with Meridian Energy.
A variation to the agreement between the two companies commits Meridian to cover the full 572 MW currently used at the smelter from January 1, 2017. The new deal will see that cover provided at more competitive rates for the smelter than would have applied if NZAS chose to rely on the previous arrangement.
“This variation will give the smelter the flexibility to operate at current production levels for the full contract period should it want to and provide Meridian with an improved overall price for its electricity,” chief executive Mark Binns says.
The Tiwai Point smelter at Bluff is the country’s biggest electricity consumer. The site can use up to 630 MW of power but has been running only three of its four pot lines since early 2012 when record-low South Island hydro storage sent wholesale prices soaring.
Tiwai is currently using about 572 MW annually, fully-hedged under a new lower-priced deal it agreed with Meridian in August 2013.
But that deal, signed in the lead-up to Meridian’s listing, required the smelter to reduce its cover to 400 MW from January 2017 or have its entire supply return to the higher electricity prices set in a new contract settled in 2007.
Contact
Under the deal announced today, the price on that supply will increase. Meridian describes it as a “blend” of the agreed post-2017 price on 400 MW of load and a more market-related price for the balance. Prices also increase if the New Zealand dollar value of global aluminium prices rise above certain levels.
Today’s deal will also see Contact Energy provide Meridian with a financial contract for 80 MW of supply to help guarantee its hedged position.
The Contact deal will apply for at least four years and a maximum of 14 years commencing from January 2017. It also includes provision of associated risk management from Meridian to Contact under certain limited circumstances.
Genesis Energy has also agreed to provide Meridian with 50 MW of financial cover from Huntly for two years starting in 2017.
Meridian is committed to cover Tiwai Point’s electricity usage at current production levels through to 2030, but NZAS retains all its termination rights from the 2013 round of negotiations, which includes a 12-month notice of termination that can be given any time from January 1, 2017.
New Zealand Aluminium Smelters has said it wants to keep operating here and has been sounding out other generators about providing a hedge over the other 172 MW of supply. It previously negotiated an additional summer supply from Meridian but was unable to utilise that due to the impact on the smelter’s transmission bill.
Predictions
More than 60 per cent of participants in an Energy News poll had expected the smelter to keep operating at 572 MW. Just 13 per cent thought the smelter would close in 2017; 25 per cent thought NZAS would drop its load to 400 MW.
Twenty-two per cent of participants thought a deal would be announced with Contact and Genesis – the two companies most exposed to lower wholesale prices if the smelter was to reduce its demand.
On the plus side for the smelter, the weaker New Zealand dollar is offsetting much of the recent price weakness. Longer term, changes to transmission pricing proposed by the Electricity Authority should also deliver big savings for the site.
(more…)
by DavidSpratt | Jul 14, 2015 | ICT
This is the fourth and final part of this blog series on cloud service management.
We’ve written in the past about cloud service management but, in this final installment of our cloud management series, we’re talking about a strategy to ensure you are getting the most value from your providers’ service management activities, whilst simultaneously retaining a tight focus on your business’ own needs and the needs of your client – all while staying under budget, of course.
Sounds like magic, right? Well, so did the cloud a decade ago!
So how do we work this magic? How do we manage a cloud-based infrastructure environment (IaaS) in a way that allows us to benefit from the simplicity, scalability and quality of these services without cost and consumption blowouts?
First off, in order to achieve our multi-faceted goal, we need to go into battle. To win this battle, we need to understand who our enemies are. In this case, they are fourfold: Complexity, Transparency, Proliferation and Vested Interest. Let’s divide and conquer: (more…)
by Jonathan Gardiner | Jun 2, 2015 | Energy
The Gas Industry Co has issued the latest update of The New Zealand Gas Story – the State and Performance of the New Zealand Gas Industry. The third edition of this publication can be found here.
Notable elements of the update are:
• The Report updates current statistics and other information from a variety of published sources. Due to the staggered nature of formal disclosures the Distribution section will be updated when all latest Distribution Network disclosures are to hand at the end of April.
• The Gas Pricing section incorporates extended discussion of the wholesale gas market with additional information flowing from the operation of the wholesale trading platform.
• A variety of recent reports have fed into extended discussion of gas supply and demand scenarios, and the opportunities and challenges they may present.
Overall, the Report notes that the gas industry continues to be in good health, although it faces some headwinds:
• The total market has grown on the back of a return to full three-train methanol production at Methanex.
• Increased petrochemical demand is offset by a continuing trend towards a gas ‘peaking’ role in electricity generation, with a resulting further reduction in gas use for baseload generation. At the same time broader retail market demand is relatively flat.
• Fall in international oil prices is inevitably affecting New Zealand upstream investment, especially because New Zealand exploration is targeted mainly at oil. Smaller explorers and producers are particularly affected. Oil prices will continue to change within the longer horizons of the New Zealand gas story, however, and new and large investors continue to be attracted to New Zealand through the block offers regime.
• An intensive exploration effort in the last few years has to date not yielded the significant new discoveries that many hoped for. But the domestic gas markets have seen a lift in reported reserves levels in the past year from further development of existing fields, and new figures on ‘contingent’ reserves from those fields signal significant further potential.
• Downstream, gas consumers continue to be well-served and customer numbers are growing. Consumers have a good and expanding choice of retailers with recent new entrants strengthening an already competitive market. And the emsTradepoint wholesale market is gaining traction, with increasing market participants and volumes traded.
• Existing gas infrastructure is expected to carry the industry forward in the foreseeable future, pending any future step change in the form of a major new discovery or a substantial new demand source.
For more information about the Gas Industry Co please click here.
