This Electricity Price Spike the legacy of National
How high wholesale power prices could push up the cost of food
Foodstuffs says it is a challenge to keep prices steady at the moment, with increasing costs for things such as power.
Wholesale power prices have made news in recent weeks because they have increased rapidly.
Since September 2021, wholesale prices have risen from about $100 per megawatt hour (MWh) to an average of about $700 per MWh this week.
Electric Kiwi last month stopped taking new customers because of the high prices.
Some major users of power, such as supermarket chains, are also exposed to the wholesale market via contracts for their electricity supply, which will reset higher as they come up for renewal.
Winstone Pulp International (WPI) paused work for 14 days at its two operational sites, Tangiwai Sawmill and Karioi Pulpmill, because of the pressure.
Outraged at your electricity bill?
Direct your fury where it deserves to go.
John Key sold 49% of our Hydro Assets to create a $400million irrigation slush fund that was used to intensify dairy farming while polluting our water and generating climate changing gasses!
It also had the perverse impact of stopping investment into renewables as Russell Norman points out…
…the manner in which we are being scammed by the big power players and being failed by our Political leaders has manifested in our broken electricity market…
Shane Jones accuses big power companies of profiteering
…shut up Shane.
Bernard Hickey has the insight…
Energy crisis erupts after investment failure
Factories close & bosses plead for intervention as power prices explode
Wholesale electricity prices have spiked to more than eight times their long-run-average prices in the last week as a perfect storm of a dry winter, gas shortages and a decade-long failure by the big four gentailers to invest in renewable electricity generation converged to slam industrial power users. Manufacturers are now describing the prices and gas shortages as an ‘energy crisis’ and have called on the Government to intervene.
Waste paper and cardboard recycler Oji closed its Penrose plant yesterday at a cost of 75 jobs, while Winstone announced on Monday it would shut its pulp and paper mill at Ohakune, putting 300 out of work.
The New Zealand Manufacturing Alliance wrote to Energy Minister Simeon Brown last week to ask for a meeting this week to discuss intervention, Oliver Lewis reported this morning for BusinessDesk-$$$.
NZ wholesale electricity price (7-day moving average)
…and how did this all come about you ask dear reader?
Rather than ramping up renewable investment, especially of increasingly cheap solar and batteries, Energy & Transport Minister Simeon Brown says the Government is moving urgently to import more gas and build more gas-fired electricity generation. He blamed Labour for banning new exploration offshore for gas for the shortages, although there was $2 billion spent on offshore and onshore exploration using existing permits that didn’t increase gas supplies. The state-controlled gentailers, Meridian, Genesis and Mercury, also skimped on investing in new generation through already-consented wind farms and through grid-scale solar and batteries. That was to maximise dividends to Governments of both flavours over the last decade.
The Government is now scrambling to import Liquefied Natural Gas (LNG) supplies, which would require massive investment in port infrastructure to liquefy and transport the gas. Brown spoke in the General Debate in Parliament yesterday about the crisis and called for a bipartisan approach with Labour, after accusing Labour of causing the crisis.
Brown made no mention of ramping up solar and battery investments, which would be much faster and cheaper to install, and would improve the resilience of the rest of the electricity sector, especially of volatile wind and hydro generation.
Oh. And by the way. It wouldn’t produce higher emissions. Brown made no mention of the climate or emissions in his comments yesterday.
…surprise, surprise. National’s donor class are the polluters and they don’t want any investment in renewables.
Quote of the day does have to go to Mark Ross, the chief executive of the Wood Processors and Manufacturers Association of NZ who is begging us to bail them out because they didn’t plan ahead to invest in renewables.
Unfuckingbelievable!
Meanwhile, this is the planet right now
The Truth, as Greenpeace spell out, is that we don’t need gas!
Good News! New fossil gas NOT needed for energy security according to Govt report
Do we need more gas? No.
They’ve been lying to you about needing new fossil gas to “keep the lights on”. There is no shortage of gas.
In one of the most unreported good news stories of the year, the New Zealand Government Ministry of Business, Innovation and Employment (MBIE) recently released their updated report on Electricity Demand and Generation Scenarios looking out to 2050.
And the report confirmed that there is no need for new fossil fuels to keep the lights on. Wind and solar are the cheapest sources of new electricity generation.
The report concludes that while there will be a need for some peak electricity generators, to meet peak load on winter nights, these could be ‘green peakers’ such as utility scale batteries, green hydrogen generators, or forestry waste burnt in the Huntly thermal plant.
And this is a pretty conservative report from a pretty conservative Government Ministry – we can actually do a lot better than this if we have better policies.
Hence the energy security scare campaign being run by the current Government, to justify more fossil fuel exploration, is built on nonsense.
There is no shortage of fossil gas, there is a shortage of brains in the Beehive.
We need urgent investment into Electrification, not extending our addiction to gas and oil!
Fitch Ratings analysts warned NZ last month that the next 10 years of economic growth was dangerously stunted.
This matters because it is ratings analysts like Fitch who warn the market if we are good for all the money we borrowed.
They base that on future projections of our economic cycle and their analysis is terrible.
Fitch have made clear to us that Dairy, Tourism and exports to China have waned and can not grow beyond the manner in which we have already grown them…
He told BusinessDesk that Fitch sees the drivers of growth in the decade before Covid as having “run their course”.
In other words dairy, tourism and China export growth – while continuing to be large and core components of New Zealand’s economy – can’t possibly continue on the same dramatic growth curve they did before.
…John Key’s, ‘All our cows in one Beijing paddock’ has not only been geopolitically dangerous, it’s also run its economic course.
So what now?
This Government seem to think mining, gas and oil exploration alongside weakening regulations for donors will unlock NZs next economic cycle but it can’t and won’t…
The idea that we’ll mine our way to prosperity is one of those. It may well be an industry worth promoting, but betting the house (or more specifically our clean green reputation) on it being transformational is just silly.
We mined the big accessible gold deposits in 19th and 20th centuries. The odds of finding valuable rare metals like lithium are very low. It would be great if we did but if that’s this Government’s strategy, they might as well buy Lotto tickets.
Striking oil is also a long shot and the time frames involved to find it and get it out of the ground take us well past 2030 – the date by which the International Energy Agency has forecast the world will face a “staggering” glut.
If Kiwis ever wanted to be a rich oil-producing nation (and a large percentage don’t) we’ve missed that boat.
…if we are to play to our advantages, we need to play to the one that will provide the most impact to all of us.
Cheap, 100% renewable electricity!
This needs to be our focus and if Sam Stubbs recent ideas can generate this outcome they are worth looking at…
When we look at what gave New Zealand a competitive advantage in the 20th, cheap electric power is near the top of the list.
The dairy industry was built on the ability to turn liquid milk into powder more efficiently than our competitors.
The next wave of global economic growth will involve electricity and lots of it.
Artificial intelligence is incredibly power-hungry. One Chat-GPT search uses 10 times the power of a Google search.
Throw electrical vehicles on top of that and it becomes obvious – only countries with access to a cheap, stable power supply will have a competitive advantage in the years ahead.
There has been plenty of talk about the potential for New Zealand to be a world leader in data centres. To do that we’ll need more and ideally cheaper power.
Collectively, data centres will consume about 200 megawatts (MW) of electricity at peak usage – roughly the amount required to power some 200,000 homes. The average demand in Auckland is about 1700MW. That has been forecast to rise to 500MW of consumption over the next five years based on current plans.
…solar panels on every public building.
Local wind turbine generation.
Windfarms.
Electric public transport.
More Hydro.
Tidal generation investment.
This needs to be our way forward. Not more Dairy and more cheap basic exports to China and Tourism.
Cheap sustainable electricity is our competitive edge, we need to urgently focus on that now!
Shane is in the pocket of Mining, he is gaining Fast Track Power for his donors, not for NZ.
We need better ideas than the ones currently being pushed and our electricity market needs urgent reform at a time when a Government that only knows how to destroy is in power.
yep lets privatize power generation and close the country down .The government needs to look past making money for the few and enable the masses to have their own generation ,wether that be on the roof in a small creek on their property or a small wind turbine at home on the hill .Massive savings can be had as the grid would be able to handle the lower demand .The government could set up a buying agency to buy panels or tubines and battery at bulk prices .Much the same that is needed for all infrastructure projects such as water and sewage moving foward .
Some good points here Gordon.
I would go further and Nationalism the electricity system.
Pay the existing shareholders what they paid in 2016. As the system is buggered this would be a pretty generous offer and they’ve had super dividends over the last 8 years.
Because John Key used his huge gift of the gab to make the sales to mum and dad investors his rich mates shouldn’t be affected.
Just think what last years S2.7b profit could be spent on. Maybe a few wind farms, some hydro, some geothermal and maybe pay some doctors and nurses.
It shouldn’t take too long to push the legislation through after all they’ve had plenty of experience at ramming changes through under urgency while ignoring advice.
This emerging energy crisis is a classic example of “you reap what you sow”. The fact is that all Governments post-Muldoon have kicked the can down the road. No one wants to face reality that the entire energy sector has been largely neglected by all governments regardless of colour, instead reverting to constant finger pointing “it’s their fault!” but still doing nothing themselves. TDB should be better than this political gerrymandering. Labour (and especially the Greens) are just as (if not more) guilty, especially wrt to blocking resource consent wrt to new hydro, geothermal, and wind farms.
The irony of the supermarket s complaining.