GNE - Genesis Energy

[Fiordland Moose]

Not a fan of Onslow but was at least heartened by the time...4 years to even pick up the shovel, up to 9 years to build (if I've got that right, not sure if the 9 is inclusive/exclusive of the further study and investment decision). So I suppose divvies unimpacted by onslow for quite a long time and it does draw me more towards GNE for my generator exposure given the high yields and residual kupe assets. I like and hold contact but sorta want my yields to be higher to compensate for whatever happens in 10 years.

I dont think anyone believes in the costs or timetable. I also worry that a lot of new renewable infrastructure wont get built if it looks likely to proceed and that might have a lot of unintended consequences, something the Gov specialises in.

Good gig for the consultants tho

[Raven]

With Onslow now costed at $15.7b, and "Officials have estimated the total construction costs of the alternative plan would be a bit cheaper, at about $13.5b, but would have "significantly higher ongoing operating costs"."
I kind of feel things are being set up for Onslow to go ahead. Still, all so far in the future, new technologies, advances in biomass, etc.... I guess they have to keep going with the project studies. Doing nothing not really an option.

[Plata]

You could argue that continuing on this path of Onslow as an option will stifle investment in baseload renewables, as these will be most disadvantaged by Onslow being built. Could create a very lucrative market for GNE in the next decade if baseload supply growth stagnates and both baseload and peak demand increase. Lets face it no one builds hydro anymore, all baseload renewables of the modern age have been geothermal. Geothermal has no off button, no storage nothing. The more solar we build, the worse the business case for geothermal gets as the day time prices become more and more depressed. But thats good for keeping huntley profitable right? Can we get a few more solar farms pretty please GNE?

[Shareguy]

Good article in business desk this morning. "Onslow is dead"

If all the hurdles were crossed, it would take seven to nine years to build.

In other words, there will be two more elections before a final decision is made. The National party has reiterated its opposition to Onslow, calling it a waste of money.

Onslow is dead

Opponents of the scheme have always said it was too risky, spending too much money on one hydro scheme that was too far away from electricity demand, and it was chilling other investment.

While Woods was clearly keeping the option open, critics said the timeline, cost and risks outlined in the announcement were effectively a death sentence.

"We are delighted it is dead," said Paul Ridley-Smith, the chair of Manawa Energy.

He said no "sensible" government would put so much money into what was a risky project that might not work to deal with the dry-year issue.

[xafalcon]

Good article in business desk this morning. "Onslow is dead"

If all the hurdles were crossed, it would take seven to nine years to build.

In other words, there will be two more elections before a final decision is made. The National party has reiterated its opposition to Onslow, calling it a waste of money.

Onslow is dead

Opponents of the scheme have always said it was too risky, spending too much money on one hydro scheme that was too far away from electricity demand, and it was chilling other investment.

While Woods was clearly keeping the option open, critics said the timeline, cost and risks outlined in the announcement were effectively a death sentence.

"We are delighted it is dead," said Paul Ridley-Smith, the chair of Manawa Energy.

He said no "sensible" government would put so much money into what was a risky project that might not work to deal with the dry-year issue.

A few comments

There will be 2 more elections (plus this years) before it is built. The decision to build would be made 2024/25

On a time-corrected basis, more money was spent on the Clyde dam, which is also a similar distance from demand. Today, nobody claims this was a bad investment

Lake Onslow is primarily intended to remove wholesale price spikes, assist grid stability and allow for massive expansion of intermittent renewable generation (Solar, wind). The dry-year function is a secondary benefit, a kind of added bonus if you like

Be careful reading too much into what "critics" and "opponents" have to say. A critic/oponent is against the project, so will amplify any problems and gloss over any advantages

All the generators except Genesis have been critical of Lake Onslow, as it will trim their super-profits. It doesn't take a genius to see this is the real reason for their comments

With a large majority of the public (73%) seemingly in favour of Lake Onslow proceeding, I would not write it off regardless of who wins this year's election

[Shareguy]

Yes I agree it still could go ahead, nothing surprises me much these days.  Labour would need to win the next 3 elections or National changes it's view. Was $4b now close to $16b so what's the real cost in 10 or 15 years time if it started...$20b.

From memory Contacts last geothermal project cost $800m and generates power and is close to biggest markets.

I think most people will look at this as a dead duck and only going to the next stage to save face.

Not sure we're the 73 percent of people in favour of this project came from and if they really understand the cost to NZ and to them and their children to achieve this.  NZ is already one of the highest sustainable suppliers of electricity in the OECD.

Analysis shows that commitments by those in the sector to build more renewables will lift the level of renewable electricity generation to 96% -98% by 2030.

But, as we also know, the country's supply is at risk when the
wind doesn't blow, the rain doesn't fall, and the sun doesn't shine.

We also are seeing other countries developing coal fired power stations at a great rate.

It seems ridiculous that we are attempting to spend so much money to be able to claim 100%. Australia alone exported 178 million tonnes of coal last year.

Would love to see the odds at the TAB of this project going ahead.

I'm picking that holders will continue to enjoy one of the highest dividends on the NZX for a very long time indeed.

[Shareguy]

https://www.nzherald.co.nz/business/steven-joyce-governments-16-billion-lake-onslow-folly-shouldve-gone-to-the-policy-bonfire/ASIUHGX5JJAGPECRQPNOFUT4IQ/

[Basil]

What intrigues me as a bean counter with the number crunching of cost estimations like this is how they make these cost estimates and always seem to get them so wildly wrong?  How does $4 Billion become four times that amount at $16 Billion?

If they're not making a final decision until 2026 and the scheme has a 7–9-year construction timeframe, (let's just call it 10 years and be done with it because time overruns seem almost as common as cost overruns), what we're talking about here is most of the construction phase being done in the 2030's and some of it not until 2036.

Sure, you could estimate the cost of materials and earthmoving now and add some sort of estimate of how the prices might move over the next 13 years based on inflation cost estimates in the construction sector but why didn't that sort of estimation process happen in the first place with the $4 Billion estimate?

Given the estimated cost has already quadrupled how can we even have the slightest confidence that $16 Billion will even be remotely in the ballpark?

It is possible the final cost could quadruple again to $64 Billion and load vast amounts of debt onto our nation's balance sheet and nobody is held accountable?

I think its time to kick this wildly expensive Greenie ideology to the kerb and focus on the basics of getting our roads, mental health facilities and hospitals up to scratch....oh,... and some more police walking the streets wouldn't go amiss with the rampant increase in violent crime. 
Lets get real here, we're already doing our bit as a Nation and have one of the highest renewable generation percentages in the OECD and maybe everyone's forgotten about the 1 Billion new trees campaign https://www.awslegal.co.nz/one-billion-trees-programme-what-does-it-mean-for-you/
One ultra expensive "battery" is not going to make one jot of difference while China continues to thumb their nose at the rest of the world with its emissions.

Enough is enough, let's look at more affordable options.

[Shareguy]

What intrigues me as a bean counter with the number crunching of cost estimations like this is how they make these cost estimates and always seem to get them so wildly wrong?  How does $4 Billion become four times that amount at $16 Billion?

If they're not making a final decision until 2026 and the scheme has a 7–9-year construction timeframe, (let's just call it 10 years and be done with it because time overruns seem almost as common as cost overruns), what we're talking about here is most of the construction phase being done in the 2030's and some of it not until 2036.

Sure, you could estimate the cost of materials and earthmoving now and add some sort of estimate of how the prices might move over the next 13 years based on inflation cost estimates in the construction sector but why didn't that sort of estimation process happen in the first place with the $4 Billion estimate?

Given the estimated cost has already quadrupled how can we even have the slightest confidence that $16 Billion will even be remotely in the ballpark?

It is possible the final cost could quadruple again to $64 Billion and load vast amounts of debt onto our nation's balance sheet and nobody is held accountable?

I think its time to kick this wildly expensive Greenie ideology to the kerb and focus on the basics of getting our roads, mental health facilities and hospitals up to scratch....oh,... and some more police walking the streets wouldn't go amiss with the rampant increase in violent crime. 
Lets get real here, we're already doing our bit as a Nation and have one of the highest renewable generation percentages in the OECD and maybe everyone's forgotten about the 1 Billion new trees campaign https://www.awslegal.co.nz/one-billion-trees-programme-what-does-it-mean-for-you/
One ultra expensive "battery" is not going to make one jot of difference while China continues to thumb their nose at the rest of the world with its emissions.

Enough is enough, let's look at more affordable options.

Agree 100 percent. We need to get this lot out. What have they achieved?

Because of this ridiculous project the generators are not going to commit and spend money on new projects. The whole thing is an expensive joke at the taxpayers expense. Woods is out of her depth.

And the new police minister . Oh dear.

[Plata]

1/6th of the remaining Kupe reserves were consumed 2022H1 to 2023H1. It contributed around 10% of the EBITDA of the latest half. Won't be long now before it is all gone. Anyone know what the cost to decommission the field might be? Could they use it as a storage facility?

[Basil]

Shareholders who elected to receive shares in lieu of dividend have done well with new shares to be issued at $2.6077 on 6 April v a closing market price today of $2.80.  In addition, as this dividend is fully imputed there's more grunt to the net dividend allocated to buy shares.  Very nice.
Must admit this pretty decent ~ 7.4% discount to today's closing market price had this hound scrambling to make sure I had set myself up for shares in lieu of divvy...phew, thankfully I have.

Pretty sure the Kupe field has a long tail and there's going to be another well drilled to extend its life.

[Shareguy]

Shareholders who elected to receive shares in lieu of dividend have done well with new shares to be issued at $2.6077 on 6 April v a closing market price today of $2.80.  In addition, as this dividend is fully imputed there's more grunt to the net dividend allocated to buy shares.  Very nice.
Must admit this pretty decent ~ 7.4% discount to today's closing market price had this hound scrambling to make sure I had set myself up for shares in lieu of divvy...phew, thankfully I have.

Pretty sure the Kupe field has a long tail and there's going to be another well drilled to extend its life.

Talking of Kupe.  Great news yesterday that Beach got consent to drill.  Explains the share price increase.

[Basil]

Talking of Kupe.  Great news yesterday that Beach got consent to drill.  Explains the share price increase.

Well spotted mate.  Didn't seem to make the mainstream media.  Consent given for up to two development wells at Kupe.
https://business.scoop.co.nz/2023/03/29/beach-energy-given-go-ahead-to-drill-development-wells/

[Shareguy]

Another positive article for Onslow

https://www.stuff.co.nz/opinion/300843117/josie-pagani-is-there-a-cheaper-power-project-option-rather-than-writing-a--157b-iou

[Basil]

Another positive article for Onslow

https://www.stuff.co.nz/opinion/300843117/josie-pagani-is-there-a-cheaper-power-project-option-rather-than-writing-a--157b-iou

Very smart lady but she's no wily old cynical grey haired bean counter that's for sure.
This could never be built on time or on budget.  More likely somewhere in the early - mid 2040's and $40 - $60 Billion would be my best guess.