GNE - Genesis Energy

[BlackPeter]

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

I assume you are ironic? Article worthwhile reading and provides excellent points of why not to continue with it ...

[xafalcon]

I assume you are ironic? Article worthwhile reading and provides excellent points of why not to continue with it ...

Unfortunately the author of the article has no idea what she is talking about. The article is not worth the paper its written on. Josie should stick to her areas of knowledge

The NZ public do appear to want this project to proceed. And it will be needed to support Nationals renewable energy announcement today

[BlackPeter]

Unfortunately the author of the article has no idea what she is talking about. The article is not worth the paper its written on. Josie should stick to her areas of knowledge

The NZ public do appear to want this project to proceed. And it will be needed to support Nationals renewable energy announcement today

Well, she still raises a number of worthwhile points why not to continue with this project. Are you sure you read the article?

[xafalcon]

Well, she still raises a number of worthwhile points while not to continue with this project. Are you sure you read the article?

Yes, I read it.....

Kindly list the worthwhile points, I must have missed them

I did read a lot of rubbish in her article

[Basil]

See post #338.  Have you got any idea what the final cost is really going to be or the completion date?  (Obviously that's a rhetorical question, nobody knows that).  Why should we indulge the Greenies Utopian ideology when our mental health system, hospitals and roads are arguably in the worst state they've been in decades?  Shall we just keep loading tens and tens of billions more debt on the nation's balance sheet without consideration for a real cost benefit analysis?  How can we do that analysis when nobody has a real handle on the true final cost?
 

[Shareguy]

It's only another $69m for consultants to scope out some more info. As the author points out where is the $16b going to come from.

National says no and suggests the private sector may build it, if it stacks up.   right.


https://www.newsroom.co.nz/lake-onslow-battery-losing-its-charge

[xafalcon]

See post #338.  Have you got any idea what the final cost is really going to be or the completion date?  (Obviously that's a rhetorical question, nobody knows that).  Why should we indulge the Greenies Utopian ideology when our mental health system, hospitals and roads are arguably in the worst state they've been in decades?  Shall we just keep loading tens and tens of billions more debt on the nation's balance sheet without consideration for a real cost benefit analysis?  How can we do that analysis when nobody has a real handle on the true final cost?
 

Lake Onslow is not a "greeies Utopian ideology". It is an enabler of renewable energy generation expansion. Without significant energy storage, NZ will quickly reach the maximum limit of intermittent renewable energy generation. This is due to grid instability. Australia and California are prime examples of this limit being reached. A big battery acts as a sink for excess generation and releases it during periods of shortage

Renewable wind and solar energy is now the cheapest source of energy. NZ is ideally placed in the roaring 40's and has some of the highest wind efficiency in the world. Solar has many suitable farm locations, especially when combined with sheep. If NZ wants to attract more foreign businesses, we need cheap electricity (electricity is the worlds new black gold)

Your comment about not knowing final cost is applicable to any project. How much will Dunedin's new hospital cost? How much will Auckland's new harbour crossing cost? How much will NZTA's next Road cost? Best estimates are what we use, and this has been refined to $16B.

NZ has very low government debt when compared with other 1st world economies. World interest rates are still comparatively low against historical levels. Construction costs will never be cheaper than now. It is time for central government to embark on am infrastructure catch-up, funded by debt. Future inflation will reduce the debt

The positive for GNE, is that it should be able to negotiate a buy-out of Huntly in exchange for keeping it available during construction and filling of Lake Onslow. And the high electricity returns will therefore continue for the next decade

[Swala]

Lake Onslow is not a "greeies Utopian ideology". It is an enabler of renewable energy generation expansion. Without significant energy storage, NZ will quickly reach the maximum limit of intermittent renewable energy generation. This is due to grid instability. Australia and California are prime examples of this limit being reached. A big battery acts as a sink for excess generation and releases it during periods of shortage

Renewable wind and solar energy is now the cheapest source of energy. NZ is ideally placed in the roaring 40's and has some of the highest wind efficiency in the world. Solar has many suitable farm locations, especially
when combined with sheep. If NZ wants to attract more foreign businesses, we need cheap electricity (electricity is the worlds new black gold)

Your comment about not knowing final cost is applicable to any project. How much will Dunedin's new hospital cost? How much will Auckland's new harbour crossing cost? How much will NZTA's next Road cost? Best estimates are what we use, and this has been refined to $16B.

NZ has very low government debt when compared with other 1st world economies. World interest rates are still comparatively low against historical levels. Construction costs will never be cheaper than now. It is time for central government to embark on am infrastructure catch-up, funded by debt. Future inflation will reduce the debt

The positive for GNE, is that it should be able to negotiate a buy-out of Huntly in exchange for keeping it available during construction and filling of Lake Onslow. And the high electricity returns will therefore continue for the next decade

Excellent summary - thank you.

[Basil]

A few comments

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

I understand there's far more to it than just the construction cost of the dam, buying out people's land under the public works act is obviously another huge cost as well as all the earth works and stabilization of hillsides which must have been massive.

That said, this article clearly states the construction cost was tendered out and came in at $102.6m, in 1982
https://mightyclutha.blogspot.com/2009/03/clyde-dam-shocking-facts.html
I put that figure into RBNZ's inflation calculator and that's worth $460.75m in today's dollars.
That's just 2.8% of the $16 Billion of the guesstimate (which I assert is little more than a wildly speculative guess and has already quadrupled from earlier guesses and there is no way to be sure it won't quadruple again).

Have you got any evidence to back your claim up that Clyde is more expensive in today's dollars?

As to whether anyone says today it was a bad investment or not I quote you from the article I linked

2009, May 2. Clyde high dam: "The single most monstrous environmental sin over the last 30 years." - Michael Cullen, Radio NZ, speaking of his biggest regrets after retiring from the Labour Party. Labour inherited the dam fiasco from the Muldoon government in a snap election in July 1984, called by Muldoon after he had lost the confidence of parliament and New Zealanders. Unfortunately, Labour persevered with the ever-more problematic Clyde dam, and after National became the government in 1990, the 'monstrous environmental sin' was completed.

I was pleased to catch up on the news last night that the National Party are proposing as their energy policy to concentrate on fast tracking resource consents for wind, solar and geothermal.  One wind powered site took 8 years to gain consents and only 2 years to build.  I am all for not riding roughshod over people's rights but surely a 12-24 month consenting time should allow all affected parties to have their say including rights of appeal?

I recently read we were 96% renewable energy this summer with the good hydrology.   I like National's approach.

P.S. I assert that we have been propping up the smelter at Bluff, owned by offshore interests with Rio Tinto with absolute bargain basement priced electricity from Manapouri for decades.  They use between 12-13% of the nation's generation capability and its obviously all renewable.
Why are we cow-towing to offshore interests and selling them electricity at screaming bargain rock bottom rates and proposing to support them further by building a hideously expensive "battery"?

I reckon, just complete the integration of the high voltage lines from Manapouri into Transpower's national grid if it hasn't been done yet, (yes I understand there are transmission losses), then tell Rio Tinto to "go forth and multiply somewhere else" and build some more solar, wind and geothermal. Then for back up dry year generation capacity, spend a tiny fraction of what Lake Onslow would cost on a new wood pellet production facility that will power up Genesis's Rankine units in an environmentally friendly way through to 2040.

There's more than one way to skin a cat and my contention is we can't afford a "Rolls Royce" solution now our nation's balance sheet is stretched by the tens of billions in Covid support recently borrowed.  Hospitals and roads have to be built, hideously expensive battery storage systems don't when there are completely acceptable and vastly cheaper alternatives.  I assert it's as simple as that.

[BlackPeter]

Yes, I read it.....

Kindly list the worthwhile points, I must have missed them

I did read a lot of rubbish in her article

You clearly missed the point of the article, but maybe her writing style (and humour) is just too difficult for some people to understand.

She makes fun out of the ridiculously high price, makes clear that it will (as any think big project) take much longer to complete than planned, she identifies huge risks and points to the lack of any plan B (if these risks eventuate) ... 

Show us only one point where you think she said Lake Onslow is a good idea.

[Plata]

Solar and wind are intermittent over a period of hours and days. Sure there is seasonal variation but so what. Much smaller and cheaper batteries (Eg storage AT the generation sites) that can store a day or twos worth of output are more than enough to smooth out the intermittency. And for the small % of the time where it is not enough, Huntley can roar to life. We are on track for 85%+ renewable energy without this intervention, there are better ways to spend the money even when you only care about reducing co2 emissions.

I still think that 16 billion would be much better spent getting EV Vehicle-to-Grid tech set up and subsidising EVs. Main benefits include adding grid energy storage AT THE LOAD, allowing grid load management (reducing need to upgrade infrastructure), reducing CO2 emissions. Onslow is an ok solution to a small part of the problems we face, there are better ones.

[Shareguy]

Craig's latest note has GNE as number one pick. Again. Has also been added to their bakers dozen.

GNE – [Overweight, TP $3.45]. Offers an attractive cash dividend yield and will play an important role in New Zealand's electrification and decarbonisation.

FY23 EBITDA guidance raised to c.$515m in Feb-23 (prev. c.$500m), with the earnings uplift expected to be used to pay down debt rather than distributed, however dividends are currently 100% imputed (prev. 80%).
Solar capex is expected to commence in FY24 along with necessary well drilling at Kupe ($75m total, $15m FY23, $60m FY24) that will underpin production through to FY28.
Swaption contracts expired in Dec-22, with back-up generation held in the portfolio or as designated dry-year risk cover through to the end of the decade (Figure 7). PPA's are expected to grow from c.455GWh FY23 to c.1,755GWh by FY30 (inc Tauhara).

[Basil]

Relying on water inflow levels going back to 1932....Ya think the climate has changed "a bit" since then!...what a joke.
https://www.interest.co.nz/business/120699/susan-harris-worries-lake-onslow-20-project-will-become-casualty-climate-change-it

[Shareguy]

Relying on water inflow levels going back to 1932....Ya think the climate has changed "a bit" since then!...what a joke.
https://www.interest.co.nz/business/120699/susan-harris-worries-lake-onslow-20-project-will-become-casualty-climate-change-it

Well worth a read. Thanks for posting. Unbelievable but why am I not surprised.

[Shareguy]

Forbar say Kupe is worthless in latest note

Genesis Energy's (GNE) 46% ownership of the Kupe oil & gas field is increasingly hard to justify and we have formed the view that selling it for nothing is a better outcome than retaining ownership. The strategic rationale for owning Kupe no longer exists and the arguments for not owning it continue to grow, including sustainability and attractiveness to investors, single asset risk, and decommissioning risk. If GNE was able to sell Kupe (which is not straight forward), we estimate it would benefit from a ~+5% value uplift. GNE has shown interest in selling Kupe, but price has been the sticking point. Whilst a Kupe sale would be a positive catalyst, timing is uncertain and the commitment to sell is also uncertain. NEUTRAL.