Tuesday 22nd January 2019
|Text too small?|
Coal-fired generation from Genesis Energy’s Huntly operations was the highest in more than five years in the December quarter, as a combination of low hydro storage and plant outages were compounded by tight natural gas supplies.
The company, which also runs three hydro schemes and a wind farm, delivered 601 gigawatt-hours of electricity from its dual-fuel Rankine units at Huntly during the three months. That was almost twice the contribution they made in the same period a year earlier and 512 GWh of that - 85 percent – was fuelled with coal. That was the company’s biggest coal-burn since mid-2013.
Genesis says conditions in the market were “unprecedented” given the unusually low lake inflows for that time of the year and reduced production from the Pohokura gas field. Planned maintenance at the Kupe gas production station and at the company’s 400 MW gas-fired unit at Huntly also tightened supplies.
“Genesis’ generation portfolio responded well to a fuel constrained wholesale market demonstrating the importance and value of fuel diversity coupled with a flexible supply chain during volatile market conditions” said Tracey Hickman, executive general manager of the firm’s generation and wholesale business.
Genesis shares fell 2 cents to $2.65. The stock is up almost 7 percent the past year and closed at a record high of $2.71 on Thursday.
New Zealand relies on the flexibility Genesis has to run the aging Rankine units when required – such as during dry periods or when other plants are unavailable. It fuels them on either gas or coal, depending on what is available and cheapest at the time.
But with gas supplies tight late last year, Genesis ran the two Rankine units on coal for much of October and November. The company also ordered 120,000 tonnes of Indonesian coal for delivery in December and January to maintain supplies.
Those tight conditions, and the higher cost of imported coal, saw the company receive an average $213/MWh for its generation in the period, up from $95 a year earlier and $86 in the September quarter.
While hydro storage is now closer to average levels and gas supplies from Pohokura have been restored, wholesale power prices remain high.
Energy Link managing director Greg Sise says the biggest driver of the current prices is the on-going maintenance shutdown at Contact Energy’s 400 MW gas-fired power station at Stratford. That plant is due back early next month.
Sise said the higher cost of imported coal and the “bleak” outlook for longer-term gas supplies – given the government’s offshore exploration ban – have also contributed.
Peak demand has also been about 100 MW higher than last year, reflecting the 50 MW increase in demand from the Tiwai Point smelter late last year and increasing irrigation demand on the South Island’s east coast, Sise said.
Genesis said the reduced access it had to gas in the December quarter saw its gas-fired production halve to 394 GWh, and total generation fall 8 percent to 1,622 GWh.
Total retail power volume sold increased almost 5 percent to 1,415 GWh, mostly due to increased sales to heavy industry.
Average selling prices were up for all categories and the company said it increased its netback – operating earnings before corporate costs – on electricity and LPG. Its netback on gas fell due to the timing of price increases, it said.
No comments yet
MARKET CLOSE: NZ shares fall: A2 downgraded on eve of earnings, Heartland misses expectations
NZ dollar falls after second fruit fly discovered
Wrightson warns weak wool demand, slow spring listings weigh on earnings
OMV eyes Asia's growing gas demand
Heartland's 1H profit dampened by restructuring, accounting changes
Hallenstein seeks new CEO; shares fall
Tower affirms earnings guidance, notes increased digital upgrade cost
NZME targets positive earnings from paywall in 2 years; profit falls
Precinct raising $150M from an underwritten placement and retail offer
NZ dollar dips from 13-day high as US holiday keeps markets quiet