Energy crisis: The financial impact revealed

[@MarketsWithMadison]

This is my third episode in a month on the energy supply squeeze - so much is happening every week. Let me know if you have any more questions on the topic below.

[@blakemcalevey-scurr1454]

Unrelated, but next time you talk to Peter Beck, you should ask him about the geopolitical implications of Rocket Lab for NZ. They're increasingly becoming a top defence prime in the US, which may make their Mahia and Auckland locations strategically important, even if the military payloads are handled in the US. It's hard to imagine a US rival being totally convinced that the two parts of the business are totally decoupled, to the point where NZ has no strategic relevance. I think NZ's geopolitical independence is likely to become a hotter issue, with possible increasing tensions in Taiwan, and the major split between the old order of Brash and Clark, vs the new US aligned order of Ardern and Luxon. I appreciate these questions might get vetoed, but it seems like they became much less cagey about saying they were directly competing with SpaceX after you pushed him in one of your interviews, so I reckon you'll find a way to ask tough questions!

[@k1m625]

Heres a question....wind only works 40% of the time....solar even less.....so why the hell do we keep building intermittent energy sources?......all its doing is driving costs up....and making it more expensive to the consumer......if we continue down this path we will not have any manufacturing in NZ.....this is where ideology meets physics and reality ......ideologies only break after lots of pain.....I guess more pain is required

[@bierstick]

It would be good to bring offshore wind into better focus as a critically important piece in NZ’s renewables puzzle. Thank you for your coverage and reporting!

[@Goodkiwibloke]

Hi Madison. Ideas for other presentations to help educate us 1. The need for backing of intermittent generation (mainly thermal in winter) 2. The missed opportunity (for NZ inc) of Lake Onslow project in the current context and future context where electricity demand grows 3-4% pa compounding 3. Genesis Energy pivot

[@David-yo5ws]

I am getting Solar Panels and a 6kW battery bank installed tomorrow. Solar was mentioned in the discussion, but it wasn't an 'embraced' topic. It was sort of 'palmed off' that other startups were doing this. So the big power companies must realise it is not a big enough 'Plant Generator' for a viable profit return. But are they looking at it the wrong way? (Most people I talk to say that Solar will not pay for itself. So they do not see it as a good investment. I digress here, but when their lights go out (and mine stay on), like it did for 5 days in Cyclone Gabrielle, where's the value in NOT having it? ) Back to the Solar. Where it falls over, is the cost of the batteries. But if power companies can invest in solar panels only, on properties that give the best sun facing roof, and offer an incentive for house owners, by giving them a small power discount and maybe after 10 years an opportunity to buy, then the reduction of hydro power during the day would slowly add up to higher water levels, especially in the summer season. But again, maybe they have looked at that and again, maybe they see that as not profitable enough? The other 'Big Power' generator that has been talked about for years, is a water turbine in the Cook Strait. It seems like no one has come up with an effective design to make it work. Would they re-visit that with the advancement in carbon fiber, 3D printing and metal laser in powder construction? And what about tapping into our 'hot volcanoes' like they have in Iceland. They pump water deep underground through pipes and it gets turned into steam which drives turbine blades to turn generators, then the steam condenses back to water and they re-cycle it through again, in a closed loop system. Either the division of the 'current electricity production' share of the pie, does not allow a single power company to make enough profit to afford such an investment, or after the 'Think Big' era, the best spots were taken and now it's barely viable, because of the choking costs to even get 1 new dam consented? And it's always 'in the next 25 years' for a fusion reactor. Maybe the Space Industry will provide a 'sun reflector' to shine light on Large Dedicated Solar Farms on the night side of Earth, to make it produce power up to 22 hours a day and make it viable? All the governments of the world knew the day would come, when power demand would outstrip supply. We are fortunate New Zealand has a 60/40 split power wise, where as Australia has about a 40/60 power split. They are burning non-renewable resources so much, it makes ours look like a candle next to a bonfire! There really needs to be some serious focus on this. It's no use just saying "It will rain eventually." We need to get another "Think Big" scheme going now.

[@mikerutland8683]

So, the 4% or so of electricity sold on the spot market gets all the publicity and creates all the anxiety, whilst the 95% or more sold on fixed price contracts is 'invisible'. Those buying at spot prices usually benefit from prices lower than contract prices, but have been caught out by one of the infrequent shortages, and expect to be bailed out when a known risk of their strategy occurs. Meanwhile, nobody is interested in the fact that contract electricity prices have been rising slower than inflation -- good news is no news?

[@RaglansElectricBaboon]

I enjoyed this, thanks. 17:00 he explained very well that if you have a fixed price power contract its the power co. who owns the risk. If you're on the spot market you're gambling. These companies running away from NZ went to the casino and are now sad that they lost their money.

[@Jer20.9]

Madison dared suggest he pray for rain! He started to splutter, funny.

[@bierstick]

As someone who has to front up to hard nosed investors, he can’t afford to lapse into prayer! 😂

[@mohammadfaisalmalik9501]

Really good series of interviews, which has given viewers and investors insight into NZs energy sector.

[@kylebeetham3679]

One of the best podcasts I’ve watched

[@bierstick]

Fascinating interview.

[@marsspacex6065]

12 years where the electricity companies had plenty of projects approved and didn't build anything. Had they a built like 2GW of solar none of this would be a problem. The management should all be fired.

[@Goodkiwibloke]

NO!! Look at NZAS, and their "leaving NZ" games they played for a decade And look at governments of the time for letting NZAS get away with this blackmail No company is going to invest billions when the biggest electricity user is saying they are closing down

[@stephengale1715]

Uncertainty on the aluminium smelter, will thet stay, wont the stay. Had they left new zealand there would hsve been massive surplus of power potential production. Impact of this uncertainty on decision to build, who will build a stranded asset?

[@timkeane3800]

Another great one Madison, pumping them out like hot cakes, market volatility is making for some intesting times atm, You must have Manuwa energy lined up for the next interview right? Would love to hear their take regards the last few challenging years and the current "energy crisis" situation we are now facing.

[@dwayneandrews9002]

socializing the costs and privatizing the profits.

[@stephengale1715]

Thats capitalism

[@Stipiggy]

Option 1, cheap power to households, charge data centres full price plus extra to help out households. Option 2, raise power costs to households because of shortages caused by data centres and become friends with data centres. When I was In Tasmania I worked for a Austrian company called Andritz, they make and install stators for the hydro stations and travel the world doing so, he said if NZ upgraded there size of stators and refined there hydro, they would almost have free energy.

[@MarketsWithMadison]

Data centre episode here if you're interested! kzbin.info/www/bejne/oZPNqmyeeMiJppY

[@davidfentonhancock6646]

Such good information. Thank you, thank you, thank you. This real news.

[@leumas1320]

Thank u sm madison for the work u do! Recently found this since I began investing and a lot of the stuff u cover helps point me in the right direction and in general provides a lot of insight! Keep up the great work, will be following for a good long while.

[@MarketsWithMadison]

Love to hear this!

[@tradetech7889]

Ive just put half our house onto off grid PV. Was easy because I already had the portable equipment from our previous address. Just had not bothered to implement until now. Problem solved for us! ;-)

[@perryanderson9103]

Power companies have been creaming it for years

[@marsspacex6065]

Not building any new capacity for more than a decade.

[@gpsfinancial6988]

@@marsspacex6065 Not true. Contact alone is increasing out capacity almost 50%.

[@stephengale1715]

New windfarms, new geothermals, but not large scale because of the aluminium smelter uncertainty

[@kaymish6178]

I just found your channel, so I put down a like and subscribe because it was a very interesting video.

[@MarketsWithMadison]

Legend, thank you!

[@tonyharvey9916]

I have had an 8kW grid connected solar PV array since 2014. I that time we have been connected to Contact, Genesis, Octopus. All have increased my import charge without increasing the feed rate in that I give them. In fact Octopus this year even put the feed in rate down and import rate up. I guess they're all in the business of making money. and my little array is not worth catering for.

[@Homegrownmusic591]

your really smart Madison cool questioning.

[@rocketsciencedesign]

A gas squeeze that no-one could have predicted? tbh, that's a lazy argument. If the head of a large power company doesn't have the foresight to realise this was a very real possibility ... well, it says one of 3 things; no-one has much idea what's happening in the energy sector, or their analysts are not doing their job very well, or they understood the risks but chose to hope it would somehow work out. Oil and gas exploration takes years to find and deliver a result, with no guarantee of success, so you can't tell me a "gas squeeze" was completely unforeseeable. NZ seems to be lacking bold leadership in this area, esp with a govt hellbent placing all their bets on more fossil fuel investment. Do any of these people have any understanding of the huge risks heading our way from climate change??? It's very disconcerting watching this country squander opportunities for energy resilience.

[@stephengale1715]

On the one hand you rail against lack of investment in fossil fuel prospecting and on the other rail about the impact of climate change. Cant have it both ways.

[@rocketsciencedesign]

I was not actually calling for more fossil fuel investment. What I meant was nz needs better leadership in sustainable energy. Think you're reading more into my comment than was said.

[@Seawithinyou]

Amazon also got refused their lasted Data Base building by the Auckland city council Thank God I think this was going to be like the size of a street Block So would have added a huge challenge on Aucklands already strained residential power supplies

[@alancooper9941]

Sorry to so you go. Awesome to see someone upfront.

[@Seawithinyou]

These wind turbines and solar panels once past their use by date are not recycled Which is becoming a huge global Waste 🧐

[@Seawithinyou]

Data Bases which also adds a Huge power drain on our old power grids too with AI and Cloud Which in turn never higher Electricity demand hence Sustainable Water resources 🌏

[@davidk6264]

I believe the saying 'you make your own luck' We shouldn't be this exposed to energy volatility.

[@stephengale1715]

Well if you are on a hedged contract you arent exposed. However if you are on the wholesale spot pricing, taking advantage of the times where that is a cheaper option, then you have accepted the risk and have to take the rough with the smooth. Now wholesale prices are high those that have accepted the risk for the benefits of cheap prices, are trying to socialise the downside of their risk profile.

[@Billabong42]

What about that spill energy used to generate hydrogen and covert to a synthetic LPG gas for safer storage?

[@infradig8]

I thought energy stocks were supposed to be 'safe' stocks with reliable dividends. Has the worm turned?

[@valerieewing3306]

Buy back comment is interesting…at current prices he said! Nonsense, they should buy back at a premium much like Octopus, minimum 40c/kWh during peak times…that would change the situation.

Oh good. More intermittent energy sources to "increase" energy security. That's worked well in other countries.

[@marsspacex6065]

New Zealand has huge amounts of hydro to work as a battery and geothermal. Solar would have saved us because it would have allowed us to save hydro resources during the day.

@@marsspacex6065 If we're dry in winter and get crap weather in winter you might get 12% of stated solar output so no, it would do nothing but cost a lot, put power prices up and prevent us from having real on demand or base load power like gas or coal. Solar is not a solution to anything except an off the grid house. Sell backs don't work because in large quantities they distort the grid.

[@stephengale1715]

​@@marsspacex6065dont talk sense to the climate doubters

[@richardvanderjagt207]

Great interview

[@Homegrownmusic591]

pity he's leaving as he's pretty good at this

[@Seawithinyou]

Those cheap nasty Invasive Chinese wind turbines some are only lasting a few years let alone getting destroyed by 😊Extreme weather events Keep our Farmlands for sustainable Local Food supplies in Aotearoa New Zealand 🐝🌸🌱🌳🌏😇

[@Seawithinyou]

Blackrock will be unhappy They are milking our country as they do with the poorer countries

[@paulvanbrakel992]

Disappointing. Why? Well, where was the question at the nub of the issue about the justification of the upper tranche bids into the price stack which sets the price for all the others? All else is chaff.

[@PowerboatTraining]

Rats leaving a sinking ship?

[@tradetech7889]

There would be absolutely no energy shortage IF we just used our own quality coal when the lakes are down. Secondly, and most importantly, the Southern Lakes are 'snow fed', not ......rain fed and snowfall has been lighter so far this year but is growing fast which is typical for time of year with later huge dumps being the new normal so summertime won't be an issue for energy.

[@stephengale1715]

Used our coal where? Local suppliers couldnt meet Huntly needs and Huntly is designed for soft local coals, not high quality south island stuff.

[@Thecabbagedog]

He failed at Mercury, now people are losing jobs, they blame gas PROSPECTING, and the weather 😂

[@wrtii2101]

If we were smart. We'd all be putting solar on our roof. The Gov should be helping...but they won't. Why don't they want joe average installing panels? Well for the power companies....it's bad for their business model. And gov....well the gov likes the amount tax they collect off our power bills.

[@ricky_bobby_downunder]

All talk about spending more money for more renewables, waste of bloody time, as shown by recent weather where theres a massive High over the deep south, combined with low hydro lake levels and depleted natural gas. The options are either : Drill for gas in Taranaki Offshore with a 2-3 year drilling campaign, and drill for coal seam gas in the King Country and Waikato OR Close Tiwai Point and upgrade the cable across cook straight. Anything else is just dog whistles of Gentailers, who basically got our state owned assets for sweet F A .

[@stephengale1715]

Blah blah. Do we know there is gas yo be discovered? Not been found to date.

[@grahamcook9289]

Maddy, why do you keep interviewing all these old geysers. Only Peter Beck was of a younger generation, and where are all the female CEOs and senior executives. Surely all the women can't still just be receptionists or in Human Remains?

[@MarketsWithMadison]

Very aware of this! I always go to the top for interviews (as they're the real decision makers) and this is the demographic that typically sits there. No discrimination from me against the geezers, I get along with them all! I have interviews planned with a younger female CEO and a chairwoman soon, looking forward to those.

[@grahamcook9289]

This guy is clearly an engineer who by becoming a CEO has been promoted to his level of incompetence. He should have retired years ago.

[@stephengale1715]

Based on what exactly. Other commenters appreciated his candour and explanations.

[@RobertOliver-x8b]

I'm favoured $130k every 4 weeks! I now have a good house and can afford anything and also support my family