The cold snap has caused an earthquake in wholesale electricity prices Wednesday morning.
Take a look at the the recent and long term wholesale electricity prices.
And now look at prices at 8am this morning.
That is more than 20 times 'normal'.
This is the sort of change that will rock large industrial electricity consumers.
It won't have an immediate impact on retail prices - unless this is indicative of where future trends are heading.
You can track up-to-date pricing here. (By 10:30am prices had reverted to more normal ranges.)
88 Comments
NZ has a lot to thank Max Bradford for.
Maybe more than you think. Take another look at the long-term chart. Prices have been basically stable since 2008, with only a few spikes. Inflation has not wrought pain in this market. Yes today's leap is spectacular, but the long term view is that this is a market that functions remarkably well for electricity consumers, and has done so for 15+years now.
Pardon my ignorance but why exactly has it spiked so much? Not too much of a "cold snap", or no worse than normal for this time of year.
Sorry everyone, I plugged in my EV and added 0.0000001% to demand
Looks like we used about 2-3% more power this morning than yesterday morning, and wind is not blowing particularly strongly. Those two things combined are enough to knock us out of balance and requires the really expensive generation to kick in.
https://www.transpower.co.nz/system-operator/live-system-and-market-dat…
As posted by another commenter below, this is exactly when Onslow would have kicked in to smooth prices, but that would be terrible for the generators who had a small windfall this morning selling their normal hydro generation at a vast premium (at least, the generators who produce more than they use themselves).
I did contribute to the problem - first time I've had the heat pump on in the morning this year.
Still far better running the heatpump than electric heaters by about 300%.
The only thing better all round would be wood burners. As wood is Carbon neutral. Only downside is the air quality effects in your locality.
Even when I arrived in Chch a decade ago we had pretty nasty smog in winter due to wood burners - it's not really a solution for cities. The stats on deaths from poor air quality are very sobering. Perhaps the ultra-low emission fires are better, but I doubt they're good enough to allow 200,000 of them in use in close proximity without some nasty side-effects.
Yep had my ULEB fire on last night, burned maybe 4-5 pieces across the evening and had the house toasty all night, with the chill still off in the morning. Pays to invest in a decent ULEB that has cast iron parts and tiles to store some of the heat and release long after it goes out, all while burning less wood, harvesting more heat from each piece added, and keeping the power bill down.
Not all ULEB fireplaces are created equal. Is there a standard used before a manufacturer can claim their fireplace is ULEB? (Haven't been back to this since I did an economic study on wood pellet burning fireplaces.)
I used to sell fireplaces in Christchurch when the clean air stuff started becoming a big thing.
I don't recall the exact measurement or test method, but it's something to do with percentage of heat output to the front of the fire. It's why for a while you'd struggle to find a clean air approved fire with a wetback, because that would divert heat away resulting in a fail.
From a quick google search:
"ULEBs must meet an emissions and efficiency standard of 38 milligrams per megajoule of useful energy and have a thermal efficiency of 65% or greater"
Comes from the ECAN CM1 standard which appears to be universal around the country.
From my experience with my own fire, it gets hot like an oven then lets air in from holes at the side and back to create flame in the upper half of the chamber, and will slowly charcoal the wood in the lower thus slowing the rate of carbon consumption from it. Never wished for a ULEB but had to due to council airshed regulations, but I've been converted. Less wood = less effort needed. Looking forwards to getting some chunky buts of red gum on this winter and seeing how it lasts.
There is a standard for the fireplace on efficiency but they cannot accurately control the emissions as most people will burn anything include items that release toxic thick black smoke around their neighborhood. Even over 10 houses away it still has enough pollution to cause severe asthma and respiratory distress and in older & younger victims it can easily kill them. In many valleys the smoke can spread further & not disperse enough. More then one household in the same space increases the harm and if it only takes 1 household burning unsuitable wood, & items then it highly likely there will be harm and productivity lost with an increase in installs (as anyone who had to go to A&E or hospital ER for the night can tell you).
I suggest you write to your local council on their air quality standards then if you wish to effect change. Until then, spare a thought for those in polluted cities in China, India and the like who have horrific air quality. In comparison, a few wood fires are perfectly fine by me.
Better still to burn dem pallets
Barf
Pallets or pellets? They both burn but there’s a big difference! Pellets have a similar calorific value to coal with negligible smoke or ash so the perfect fuel. Pallets on the other hand are best for storing bags of cement on…
It is far far from carbon neutral as the logistics and processing uses far more fuel then heating with an electric (even in an area that does not use mostly renewable power). That is the irony if the wood was left and the households heated with electric instead less fossil fuels are used (even less in countries with more renewable power generation).
It would only be carbon neutral if it was a tree in your backyard and the air pollution you release can still kill your neighbours. Buying wood involves far more carbon released into the atmosphere then any other method of heating (in some cases it triples the fuel use & logistics e.g. fuel traveling to grow location, fuel from cutting, fuel from traveling to processing plant, fuel in processing operation, fuel to distributor, fuel to retailer, fuel from retailer to residential home etc).
Buying wood involves far more carbon released into the atmosphere then any other method of heating
I guess you've never heard of coal, peat, electric heaters etc? What then do you propose to be a widespread, acceptable and socially palatable solution with all of your vast wisdom?
Onslow kicking in? -or they could just use the ripple control that all houses use to have installed
They already do, in Christchurch at least. My hot water heats up overnight in an 8(?) hour time slot selected by Orion to best fit their supply.
Burning Fossil fuel to generate electricity is not cheap when we need to do it the price goes up. Fitting homes and business with flow batteries and solar would take away peak demand for the grid.
Why don’t we invest in more local storage and generation? Control and profit spring to mind.
You meant reduce peak demand, right? While peak demand lasts for longer periods?
Imagine the possibility for micro -wind generation on homes in Wellington. The main downside I can see is if the wind is too much, and they need to be able to safely lock from spinning to prevent damage or overload.
Micro-wind isn't that efficient. Longer blades are needed to generate better torque. (Different story with tidal.)
Stable prices mean nothing, David.
That just means that we print debt at the same rate we degrade energy; a temporary arrangement.
The reality is that the Grid is unmaintainable ex fossil energy, and that fossil energy is leaving us. Readying ourselves for either a 2.5x Grid (the GND version of GROWTH) or for something maintainable ex fossil input and ex-GROWTH, requires some form of build well beyond current (:) funding. Indeed, orders of magnitude beyond. So it won't happen.
That is the Bradford failure - indeed the neoliberal failure, indeed the failure of economics - and those who peddle it. Inability to anticipate; pandering to the immediate. Every day, we go deeper into the hole.
Stable prices means we have a fit-for-purpose electricity supply system.
No, they do not.
Period.
They tell you that one short-sighted, selfish generation has set things up for itself.
Just might have to use man-o-pour-ee
David. if wholesale prices have been mostly stable since 2008, why do my electricity prices as a consumer keep going up?
I think a mistake has ben made by allowing the generators to become retailers - I think they have effectively distorted the market by supplying their own customers rather than supplying a range of retailers
That is why so much other OECD countries had rules that generators never could become retailers.
Wholesale prices haven't been remotely stable since 2008. They have increased 100-200%. That's before you account for Transpower/lines charges.
Get some solar panels on your roof and make your own. And every time retail price goes up the savings increase
It's now 9:10am and wholesale prices are down to around 30c/kWh so the peak was short.
The peak happens when all supply is used up and is a price signal to bring more generation online.
Solutions exist - there are trials in the US and Australia where Tesla Powerwall owners can supply electricity to the grid at peak times like this and they make good money doing this. This is a market response to the problem but is treating the symptoms. It would be better to address the cause by having additional capacity or large storage available (i.e. Lake Onslow - recently cancelled by our rollback government).
I think SolarZero do the same thing here in NZ for their customers with Solar+Battery.
Lake Onslow only works if there is substantial unused power mainly at night - Trawsfyynd in Wales is same system but has a handy Nuclear power plant next door that is efficient because it runs at 100% so excess power availbale to pump water uphill - yes build a Nuclear station at Lake Onslow and you solve the probem of excess energy but then you don't need Onslow just like the incompetent Horse that suggested it.
"Lake Onslow only works if there is substantial unused power mainly at night"
So it works every night then? That's what your saying, right?
Remember 80% of NZ's energy generation is from renewables - unlike Trawsfyynd in Wales (which is a ridiculous comparison to Lake Onslow on just about every measure!) - and our electricity generation is sized for PEAK LOADs - at night the renewables continue to generate even when greenhouse gas producing stations that handle the remaining 20% at PEAK LOAD have been turned down to idle / standby settings.
Further, once the Lake has been filled - using many past nights - and periods of heavy rainfall - and windy days (and nights!) - the potential energy just sits there, ready to be used, for months on end.
And long sunny summer days.
Solar power is fast becoming the lowest cost generator. The problem though is it generates only during the day and more in summer than winter. So it will not work unless there is a 12 hour storage option, which lithium batteries in EVs, power walls etc can provide. And Solar will work much better in NZ if there is a seasonal storage option, such as pumped hydro, which Onslow would have provided.
"So it will not work unless there is a 12 hour storage option"
Last time I looked gravity worked 24 hours a day, 7 days a week, 365 days a year and seems to work fine in leap years too. I also understand gravity is environmentally more friendly than the storage types you mention too - might be wrong though. ;-)
Why do you assume we can only fill it at night? We have a big trough in power use in the middle of the day when solar and often wind and blowing strong, peak use is in the morning and evening.
Nuclear doesn't work for NZ just yet, we'd need something SMR-sized to fit our grid. A standard 1GW nuclear power plant would be hugely inefficient as we need to keep the same capacity on standby to stop frequent blackouts for every glitch or maintenance period on the nuclear plant, or the lines it supplies. One day, possibly soon, there'll be well tested ~200-400MW plants that would do nicely.
Apparently we cant afford a few billion for a pumped hydo system what makes you think we can afford a fission reactor? If we could why build it so far away from its consumers?
There are other places, albeit smaller, where gravity batteries like Lake Onslow could be built.
Perhaps the Rollback Government could get those moving?
Oh well I live in hope. (Apparently the RONS are far more important. Would love to see a leak of the business cases for them.)
New proposal: pumped hydro storage with a state highway over the top. That has a chance of being funded.
So long as there is no option to walk or cycle around the new lake, could be a goer.
Nekk minnit
The weather forecast is for a -4C overnight low on Thursday in CHCH. Let's see if it happens twice in a week..
Really makes the case for EV to grid technology to get some investment. Retailers and EV owners could stand to do quite well out of this while being paid for grid balancing.
The only case it makes for that solution is if you're in the business of making and selling EV batteries so they wear out faster and need to be replaced far earlier.
Should a technology like this become established, it would get used more and more because electricity suppliers (looking at their own private profits) would control how much 'grid balancing' used other people's batteries.
(When the EV batteries can be efficiently recycled I may change that view.)
If you keep the voltage down on the cells (equivalent to around 20-70% charge) then you can cycle NMC batteries hugely with negligible degradation (equivalent of driving over 1 million km) and LFP batteries about 2 million km
Most Li-ions charge to 4.20V/cell, and every reduction in peak charge voltage of 0.10V/cell is said to double the cycle life. For example, a lithium-ion cell charged to 4.20V/cell typically delivers 300–500 cycles. If charged to only 4.10V/cell, the life can be prolonged to 600–1,000 cycles; 4.0V/cell should deliver 1,200–2,000 and 3.90V/cell should provide 2,400–4,000 cycles
BU-808: How to Prolong Lithium-based Batteries - Battery University
Silly question time: So why doesn't the software responsible for reporting the level of charge just say 100% when in fact the battery is only charged 80%?
Legality and liability I'd say
My guess is that it's a range thing with every manufacturer wanting to claim the highest range possible (and environment be damned).
This kind of thing prevents consumers from trying to help the situation by going on spot price based tariff plans.
I'd like to do that , but the wife and kids throwing on the dryer and aircon this morning would have probably sent us bankrupt. yet retailers not covered by agreements would have had to wear that cost.
demand side pricing to help cut demand in peaks would work , but not when pricing like this popup .
It could massively benefit people with arrangements for selling back to the grid if they have some kind of capacity like people with V2G EV charging systems.
Yep, my in-laws invested in a couple of batteries after getting solar to add to their hot water cylinder heating and feed back tot he grid for the excess. Now they run mainly off of the batteries and hardly ever draw form the grid, while getting a half decent price selling the generation back to the grid. Seems like a good retirement investment to minimise outputs when your inputs are much lower.
Over half of my electricity bill is for the daily fixed connection fee with actual use making up the smaller remainder.
Reducing consumption is not rewarding enough to be considered.
Same here for gas... When I owned my house I did the maths and got quotes to install a cylinder (the daily gas fees outweighting the extra kilowatts): $10k... 🤷♀️🤦♂️
I am a big fan of NZ Inc finding a solution to these wholesale electricity price spikes.
The NZ battery project generally and Onslow specifically was a solution.
Black pellets could be another long solution. Check out.
https://www.beca.com/ignite-your-thinking/ignite-your-thinking/october-…
https://www.nzherald.co.nz/rotorua-daily-post/news/kawerau-plant-plans-…
To help you: www.Foresta.nz
Torrefied pellets are not that far away.
It is yet to be seen if they are viable. Still no consents or finance. The promoter was also the main player in failed ventures in Taupo and Western Australia.
Oji looked at torrified pellets from their wood waste. They could not make the numbers work. EROEI is never kind.
It is increasingly obvious that most of the commentators here, especially the more prolific ones have no understanding of either how the grid works nor power station economics. Repeating your prejudices, almost as a mantra, is not a substitute for knowledge.
The high prices this morning (and almost certainly for the evening peak) is because wind generation has collapsed <100MW from very high values overnight on 6th 7th. They were about 400MW short. Ripple Control was on. There were several units OOS because of planned maintenance getting ready for winter.
The generation stack is very steep. Not many MW between <$30 and >$500. That is the reason for price volatility. Too much in uncontrolled or must run - that will collapse the price at low demand. There is a difference between spot prices and most trading contractual prices. Generally, less than 10%, effectively the surplus from gentailers, is on the spot market.
There is a difference between energy and power that some don't seem to realise. Hydros also have to be staged and many have minimum flow constraints. They have backed off Benmore and Clyde since the peak to save water for tonight, but DC is still coming hard North.
There is no "spare" or wasted renewable generation. Almost all hydro spill is because rivers are in flood and dams can't generate any more. On the Clutha, this happens at about 800cumec and floods over 1000 are not uncommon. Manapouri (currents running 6 units flat out) has to spill regularly because too little storage for the river flood flows. What other rivers spill significant power?
Pumped storage works on arbitrage. If it can't buy cheap, its power is too expensive. Numbers I did on the proposed costs showed they would have to make $1M a day profit on trading just to pay off interest on construction loans. Plus you need to build all these expensive plants that are willing to sell cheap power. Plus you need to get the extra power to Whakamaru. And those pumped storage plants always come in way over budget. It was almost as stupid project as Auckland's trams.
You must be working for Transpower! Norske Skog, before it was closed, had a CFD with Mercury for $80/MWh in the last year of operation. On top of that Norske Skog controlled a certain amount of local generation. Total electricity consumption was between 80 and 90 MWh. At certain opportunities like this morning, we would shut down pulp production and collect the CFD money. Manufacturing newsprint was protected by the internal generation but if prices were high enough we could also decide to stop that and onsell that part of the electricity consumption or the pulp storage ran empty.
Astute - he used to work in geothermal. Somewhat biased towards techno-optimism, a wee bit of self-confidence too.
Could be useful in the future, which will not (cannot) be what he thinks...
Bless. PDK, failed peak oil tragic, in a single comment predicts the future and criticises other commenter for being a wee bit too self confident!
And you would also know Peter that the EA changed the rules to stop Norske Skog doing that. Now with them gone, there is no one else giving the equivalent to those six 15MW chippers.
The only rule what changed was the obligation to give 2 hours notice. Otherwise there were multiple occasions the EA took us off within 10 minutes because of under frequency.
Was it EA took you off or System Operator?
System Operator
Re ... " Numbers I did on the proposed costs showed they would have to make $1M a day profit on trading just to pay off interest on construction loans. Plus you need to build all these expensive plants that are willing to sell cheap power."
Any chance those numbers are published anywhere? A link would be helpful. If they're on the back of fag packet, then please do post them. I'm fascinated in understanding what future metrics you used to prove what you said. Thanks.
I wrote too quickly and forgot to proof read. It was supposed to say Interest and capital repayment. Sorry about that. I think I posted the calcs in a previous Interest.co.nz comments section. However, basically 10 year construction and $16B. Work out that over a 40 year term at say 6%. I allowed nothing for Grid charges (which would be massive and O&M costs.
The correction was wrong. I rechecked my numbers and it was only supposed to be just Interest. Even at ridiculous interest rate of say 3%, that is about a $500M a year interest. And even as day trading, you can never get more than about 40% output factor - 10 hours a day. Even if you get the power for free, that will give you the arbitrage charges needed.
Ten fatal flaws with the Lake Onslow concept (when the budget was only $4 billion)
https://www.energywatch.org.nz/issues/EW85_7-2022.pdf
and a summary from a previous edition:
Summary
• The scale of the original Lake Onslow scheme is 10 times larger than is needed to address the so-called “dry-year” problem.
• The scope of the project has changed: -
o Level reduced from 800 m to 760 m.
o Tunnel increased from 15 km to 24 km
o Soil removal from 27 km2 added
• The Teviot Valley dam would be 1.5 km long making it the second [longest] hydro dam in the world after the Three Gorges dam in China.
• The increased water losses due to seepage and evaporation would require permanent pumping to maintain the Lake Onslow level.
• The round-trip efficiency would be <60%
• The cost of electricity to fill Lake Onslow would exceed the revenue from electricity sales in a low-hydro year. So, there is no economic rationale to proceed.
• Filling Lake Onslow would create an electricity shortage in New Zealand of greater magnitude than the “dry-year” problem.
• The NZ Battery Project should abandon the Lake Onslow concept forthwith without the need to proceed with re-estimating the capital cost of the ~$4 billion project.
"• The cost of electricity to fill Lake Onslow would exceed the revenue from electricity sales in a low-hydro year. So, there is no economic rationale to proceed."
Electricity is not the dam's only purpose. It's funny how often that critical bit of information is left out of analysis provided by the incumbent players.
Meanwhile in a country that still explores for oil and gas...
"May 7 (Reuters) - U.S. spot power and natural gas prices turned negative in Texas, California and Arizona for Tuesday as pipeline maintenance trapped gas in the Permian Shale in West Texas amid low demand for energy and ample hydropower in the West"
My non-expert understanding is that gas is essentially a waste product of US oil production, and it has become politically untenable to let it vent. This means they are well over-supplied with gas and don't have enough export terminals (or enough import terminals elsewhere) to fully equalise the price with more expensive markets.
Your non-expert knowledge is exactly that. Most of those southern gas wells are fracced into the tight gas formations.
Spot price is very small part of the market - effective just the froth. Look at the Henry Hub prices for real prices.
https://markets.businessinsider.com/commodities/natural-gas-price
Can you expand on what I was wrong about? You're saying there's a large amount of pure gas generation, presumably profitable at current prices?
Looks like the Henry Hub prices are about 20% of the European gas price currently. Even before the Ukraine war they were about half the European price. Maybe the word 'oversupplied' is a little strong but they certainly seem to have good access to cheap gas.
I don't find that particularly useful. Here's what I'm talking about:
https://www.appienergy.com/appi-energy-explainer-natural-gas-as-a-bypro…
"When we discuss natural gas production, we might not necessarily associate the process with oil rigs. They are, after all, separate commodities. However, the two are incredibly intertwined, especially in the United States"
"At the time of writing, natural gas rig count has declined by about 88.4% from its peak in 2008. However, over that same period, natural gas production rose 52% and has continued to set records throughout 2018"
This gives some more colour:
https://www.reuters.com/business/energy/us-permian-natgas-flaring-could…
"Natural gas flaring in the top U.S. shale basin is poised to increase next year, a report released on Tuesday projected, as the region's output exceeds available pipeline capacity."
"Companies need to move that gas to market (or burn or reinject it) to sustain oil production.
"In an ideal world, (gas pipeline) infrastructure would stay ahead of supply growth, but for both commercial and regulatory reasons, production-limiting constraints can occur," said Justin Carlson, chief commercial officer at energy consulting firm East Daley Analytics."
"pipeline takeaway capacity will fall short of gas production by an average of 200 million cubic feet per day (mmcfd) in 2023 and the first half of 2024, before rising to about 500 mmcfd in May 2024."
This is a good site for the nitty gritty.
https://rbnenergy.com/natural-gas
dem regulatory reasons
https://www.economist.com/business/2024/02/01/joe-bidens-limits-on-lng-…
Didn't know about the latter, that's interesting. Presumably more export terminals reduces the price differential, so blocking them supports local industry at the cost of local fossil fuel producers. Good for the on-shoring, reindustrialising goals with a handy environmental excuse.
Forest Lodge made a cheeky $100 this morning during the power price spike.
Interesting guys these, running an all electric Cherry Orchard.
https://www.linkedin.com/posts/mikesimoncasey_forest-lodge-orchard-made…
This is clearly a failure in our peak generation sources - coal and gas. They were built to manage situations like this but they can’t cope anymore - mothballed coal units and unreliable gas supplies.
The wider system has also failed by allowing generators to sit on their hands and enjoy higher prices whilst failing to invest in new (and existing) generation infrastructure.
If there are some cheap electricity storage options options (smaller Onslows?). Perhaps using newer fast track consenting. Then it could pay for some of the wind or solar generating companies to invest in storage so they can profit from these high wholesale price opportunities.
Especially if they can be coupled with a river or stream that is not quite viable for hydro generation on its own.Though the storage would probably have to be off river.
Wind currently generating 35MW of 1259 MW capacity. Cosy.
https://www.transpower.co.nz/system-operator/live-system-and-market-dat…
We got through the peak at only $3500/MWh
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