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.
PowerRadar™ helps reduce capital expenditures and increases storage capacity at a 40-hectare commercial water port
As the southernmost commercial deep-water port in New Zealand, South Port NZ worked with Total Utilities to implement Centrica Business Solutions’ Panoramic PowerTM technology – avoiding costly upgrade projects and increasing available storage capacity.
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 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.
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)
“PowerRadar provides real-time data on demand versus capacity which allows us to maximize our electrical infrastructure while minimizing risk. Being just a team of three looking after a 40-hectare island and the engineering infrastructure, it takes a lot of our time. So, having something like this that provides us real-time data, easy data, saves 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 at any given time. As such, only eighty electrical plugs were available at any time – 1 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 bill the port customers. Typically, it would take one of the port 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 accounting department 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.
Coupled with cameras installed in the pipes at the pump stations, 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, with a projected increase of up to 350 reefers in total on the port 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 large 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 expenditures 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.
Discover how Total Utilities helped New Zealand schools harness real-time energy insights to identify energy waste, explore solar power viability, and drive significant reductions in carbon emissions.
With over 1,500 Panoramic Power sensors installed across 50+ schools, we identified energy wastage and demonstrated the cost-saving potential of solar power. Schools are now making smarter, data-driven decisions to cut costs and reduce emissions.
Learn more about how energy efficiency and solar can drive sustainability in our full case study!
Total Utilities has assisted many clients in making long term immediate savings by identifying power factor issues and providing turnkey services to rectify the problem.
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.
