The December quarter report for Genesis Energy Ltd (NZX & ASX: GNE) showed the importance in that period of the company’s coal and gas-fired Huntly power station
The New Zealand Herald reported that Huntly’s usage in the quarter was the highest for five years, as a swaption back-up for several established producers as a result of low hydro storage and lack of wind for renewable energy.
Genesis indicated that the low renewable power capacity was compounded by tight natural gas supplies that saw greater use of coal at Huntly.
Genesis was able to deliver for the quarter 601 gigawatt-hours of electricity from the dual-fuel Rankine units at Huntly. That, a report by BusinessDesk said, was almost twice the contribution made in the same period a year earlier and 512 GWh of that – 85% – was fuelled with coal.
Genesis said conditions in the market were “unprecedented” given the unusually low lake inflows for that time of the year and reduced production from the Pohokura gas field. Planned maintenance at the Kupe gas production station and at the company's 400 MW gas-fired unit at Huntly also tightened supplies.
The Herald said New Zealand relies on the flexibility Genesis has to run the aging Rankine units when required – such as during dry periods or when other plants are unavailable. It fuels them on either gas or coal, depending on what is available and cheapest at the time.
But with gas supplies tight late last year, Genesis ran the two Rankine units on coal for much of October and November. The company also ordered 120,000 tonnes of Indonesian coal for delivery in December and January to maintain supplies.
Those tight conditions, and the higher cost of imported coal, saw the company receive an average $213/MWh for its generation in the period, up from $95 a year earlier and $86 in the September quarter.
While hydro storage is now closer to average levels and gas supplies from Pohokura have been restored, wholesale power prices remain high.
A Genesis spokesman said the higher cost of imported coal and the “bleak” outlook for longer-term gas supplies – given the Government's offshore exploration ban – contributed to the quarter costs.
Peak demand was about 100 MW higher than last year, reflecting the 50 MW increase in demand from the Tiwai Point smelter late last year and increasing irrigation demand on the South Island's east coast.
Genesis’s report said it continued to invest in loyalty, customer service and product innovation with Brand NPS up 6 percentage points to 8% versus the same time last year, while churn was down to 17% and dual fuel customer numbers were steadily increasing.
The company said scheduled statutory maintenance at the Kupe offshore gasfield coincided with the Huntly U5 outage, and this reduced production at Kupe for the quarter with gas production down 12% versus the same time last year. LPG yields were up 2.5% while oil yield was down due to the natural decline in the field.
Oil sales were down 47% versus the prior comparable period due to the timing of shipments and reduced field production.