Transcript Document

FMANZ gratefully acknowledges the support of our Gold Sponsors
NZ Electricity Market - Where to Next?
Mike Roan
Wholesale Markets Manager
Meridian Energy
13 September 2012
The information provided in this presentation is provided for education and
informational purposes only. The information is not intended to be and does not
constitute financial advice. It is general in nature and is not specific to you, your
business or anyone else. You should not make any decision based on this
information (financial or otherwise) without undertaking independent due
diligence or seeking your own independent financial or other professional
advice.
3
Recap – Other Seminars
•
At previous seminars we combined messages:
–
prices have risen by ~5 per cent since 2000
–
prices will continue to rise (and can be volatile)
–
we can control the way we use electricity in order to manage cost
–
we can also contract out of exposure to price volatility
Take Out: Controlling electricity consumption while contracting
out of price volatility will become increasingly valuable to you
4
This Time
•
This time:
–
what is going on in the electricity sector that might be of interest
–
how may this impact you and decisions you make?
5
NZ Wholesale Electricity Price Forecast
MED electricity price forecasts remain the same – prices are likely to rise
Wholesale Electricity Price ($/MWh, including Carbon, Real 2010)
120
Projection
100
80
$/MWh
60
40
20
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
•
Reference
6
Source: MED Energy Outlook - www.med.govt.nz/sectors-industries/energy/energy-modelling/modelling/new-zealands-energy-outlook
Cross Winds
• However, there are some cross winds to be aware of:
–
the global economy is weak
–
NZ electric demand is weak
–
reasonable levels of supply (absent hydro shortage)
7
Cross Winds – NZ Electric Demand
• Since 2007, NZ electric demand has been reasonably static
Static Demand
Source: Meridian
• The drivers of flat demand are well documented
–
low inflows in 2008 (where consumers were asked to conserve), the global financial crisis,
NZAS transformer failure, the Christchurch earthquake and improved energy intensity by
consumers
8
Cross Winds – NZ Electric Demand
• Looking forward, much of the above uncertainty continues to exist
• ongoing global economic instability and more local impacts are expected to remain
• NZAS & Norske Skog announcements are indicators of difficulty that is possibly widespread
Forecast demand growth
• This graph includes ~2,000GWh of new supply being added over the next three years
9
Source: Meridian
2000-01
2011-2012
2006-07
1975-1976
800
1946-1947
2005-06
1999-2000
1961-1962
2000-2001
1987-1988
1959-1960
2002-2003
1972-1973
2004-2005
1971-1972
1964-1965
1937-1938
1985-1986
1945-1946
1934-1935
1965-1966
1984-1985
1956-1957
1989-1990
2010-2011
2009-2010
1995-1996
1982-1983
1944-1945
1957-1958
Dec - mid-May Waitaki+Waiau average inflow (cumecs)
Offsets - Issues to be Aware of
• Offsetting all of the above is hydro fuel availability (inflow volatility)
1600
1400
1200
1000
1970-71
2011-12
1991-92
2007-08
600
400
200
0
• NZ electricity prices largely a function of hydro storage (unlike other countries)
10
Recent Events – NZEM
• NZ wholesale electricity prices reflect hydro storage capacity
SI Prices
600 $/MWh
500
400
SI Daily Prices 2012
SI Daily Prices 2011
SI Daily Prices 2008
300
200
100
1/
06
/2
01
1
1/
07
/2
01
1
31
/0
7/
20
11
30
/0
8/
20
11
29
/0
9/
20
11
29
/1
0/
20
11
28
/1
1/
20
11
28
/1
2/
20
11
27
/0
1/
20
12
26
/0
2/
20
12
27
/0
3/
20
12
26
/0
4/
20
12
26
/0
5/
20
12
0
Source: Meridian
11
Offsets - Issues to be Aware of
• Some of our competitors will have big decisions to make
–
Genesis has said it will shut two Huntly units – one in 2012 and one in 2014
–
Contact is considering repowering its Otahuhu station
• And there are some very specific challenges to overcome
–
Transpower is completing a number of large transmission upgrades in the near term
–
Genesis is relining the Tekapo canal
–
NZAS request to renegotiate contractual terms (approx 12% of NZ demand)
12
Source: Meridian
Major Projects and Timelines
Reinforce Auckland consumption
- November 2012
Taupo Grid Strengthening
- Late 2014
Lower NI Upgrading
- 5+ years away
1000MW HVDC Upgrade
- February 2013
Tekapo Canal Relining
- Jan through April 2013
Lower SI Renewable Upgrade
- Stage 1: November 2012
- Stage 2: March 2014
• My role is to manage these issues for Meridian
• More importantly, what do they mean for you?
14
What Does it Mean for You?
•
there are some cross currents for electricity prices
–
•
they are still likely to increase
some of the specific risks in the near term may result in some volatility
–
–
the next 6 months include major transmission upgrade works
contracts provide relief from volatility – both specific risk and hydrology
•
contract duration should match your business risk profile
•
continue hunting down waste regardless
15
Managing Electricity in Your Business
The Essentials
16
First things first – Site Type?
•
Two types of site in the electricity world
Non-Half Hourly
Jan
Feb
Mar
Apr
Time of Use
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Small* Commercial/Residential sites
e.g. your house, small-mid size retail
Large* Commercial / Industrial
e.g. manufacturing, hotels, supermarkets
Meters read periodically (frequency depends)
Consumption recorded every half hour
“Anytime” is just one price
Price varies (time of day + month)
Network charges may be ‘bundled’ into rate
Network charges are separated
* Threshold varies by Network
Dec
17
What charges are included in a bill?
There are two major cost components:
Energy (Wholesale purchase + Retailer)
Network (Network company e.g. Vector)
Your Pricing Options – Non Half Hourly
• Variable Pricing
– Energy component subject to change (30 days notice)
– Network charges change when those companies change their rates
– No price certainty. This is the default or ‘Do Nothing’ option
• Fixed Energy Plan
– The Energy component of your rate is fixed – typically for 2-3 yrs
– As above, Network charges change
– Gives you significant (but not quite complete) price certainty
• Select a specific tariff for your needs
– Options are determined by metering configuration
– Metering changes can enable savings
– Options differ by network
– Examples include
• Day/Night/Weekend tariffs
• ‘Controlled’ rates
• Seasonality in some networks
Main Message: Talk to an expert
19
Your Pricing Options – Time of Use
• Fixed Price (with Variable Volume)
– Meridian calls this “Easiplan” – it is the most common contract
– Provides price certainty and insulates you from spot market fluctuations
– Pricing is ‘shaped’ so that different rates apply at different times
• Spot Pricing
– This is 100% exposure to the wholesale market (incl. Admin fee)
– Expect significant variability in the price you pay each month
• Proportional Pricing
– Mixture of Fixed Price and Spot
– Select % you want fixed
e.g. 80% fixed price, 20% on spot market
• More complex options
– Spot supply with Contracts for Differences (CFDs or Hedges)
Main Message: Talk to an expert
20
Managing Your Electricity Budget
Two primary ways to manage your budget
1. Enter into a Supply Agreement
– Define what you are looking for in a supplier and ask Retailers to respond
– Use competition to get the best outcome for you
– Choose a supplier that will add value (we of course think there is only one)
2. Take Control of your electricity consumption
– Request data from your retailer or use their on-line tools (Business On Line)
– Eliminate waste! Consider undertaking an energy audit
– Take advantage of pricing
differentials
e.g. night vs. day rates
– Meridian customers,
talk to one of our
Account Managers.
We are here to help
21
Supply Agreements: Key Questions for You
– How much do you spend on electricity per annum and how material is it to you?
– What is your business’s appetite for price risk?
– How well do you understand the electricity market – do you need help?
– Do suppliers values align with yours?
e.g. sustainability
– Are you aware of what Retailers offer beyond of price?
(On Line, Electronic Invoicing, payment terms,
reporting, account management)
– If you are considering participating in a
supply group, are the group’s requirements
aligned with yours?
In the success game – Value always beats Price
22
Take Outs
•
controlling consumption will become increasingly valuable
•
wholesale price volatility reflects the place we live
–
•
this volatility is not a new feature
if you enter into contracts, define what success looks like before you
begin
–
use trusted partners to get there and ask for advice on how to structure
along the way
23
29 August 2012
Getting on the Energy
Management Cycle
Improve your energy wasteline
Energy Management Cycle
Westpac followed all elements of this cycle
• Quarterly M&T
Report & Meeting
Get commitment
Control, monitor
& report
Implement
• Manage through
Action Plan
• Monthly Reporting
• e-Smart
Understand
• Annual
Implementation
Plan & organise
plan
• 6 weekly
meetings
Energy Management is about reducing waste
Reduce energy use and costs
AND not adversely impact the operation of the site.
Performance improvements need to be measured in
KPI’s.
• Westpac A/C
Focus on making good business decisions – any green
benefits are the icing on the cake.
You Need to Measure to Manage
Energy management needs commitment
Customers should expect a return on investment.
Westpac recovers more than $2 for every $1 they have spent on EM.
Energy needs to be actively managed
Benchmarking and targets identify issues, drive
improvement
Regular reporting is required - add intelligence to
information
Action plan implementing cost effective solutions
Don’t be scared to spend money on Advice!
Understand Your
Site/Portfolio
How Much
Energy do I use?
How much is it
costing me?
How does this site compare?
What is a
common unit of
measure? kWh?
FTE’s? Output?
What is the
trend?
How does it
compare to
similar sites?
How can I as an FM make energy savings?
Minimise the energy costs
Review the operational requirements of the current
tenant
Compare against your building plant operating hours
Invest in cost-effective improvements
Use life-cycle costing
Start a structured programme with regular reviews
Reduce energy costs to your site(s)
Energy Supply Cost
Key information
How much has it cost me last year? and
What will it cost me next year?
Tender for the supply of energy
gain best price
Always avoid default rates.
Our experience: two out of three tenders lead to a
change in supplier based usually on price
Myth of Security of Supply
Reduce energy costs to your site(s) – Part 2
Network and line costs
Network costs are NOT fixed and NOT only Daily charge
Network Optimisation:
Review nominated capacity charges (HV)
Ensure that you are in the best network load group
Check every couple of years!
Examples:
Food: In Christchurch changed load group on 3 sites with annual
savings over $160,000 p.a.
School: Increase capacity & change load group, savings $10,000
p.a.
Power factor - penalty charges introduced by Vector
2012
Reduce energy costs to your site(s) – Part 3
Impact
Having gained the best possible delivered
energy price for your site or sites:
Any investment decisions can be made
based on a solid foundation.
Where does energy normally get consumed
in an office building?
73/20 RULE
Review site operating requirements and
current control settings
Establish current building system operating
requirements
What is plant controlling?
time clock, security system, BMS
What is the time on the controlling system? When is
plant set to turn on and off?
Review regularly as site operations change.
Do not be surprised is time of the time clock or other
controls are wrong!
“Lazy running” - Daylight savings often see plant running
an hour longer than required every day
• Reset public Holidays annually
• Change for daylight savings 2x p.a.
Programme
for 5 years
GOOD
INVESTMENT?
Controller Maintenance in Action
Westpac established a set operating schedule for a
branch and installed many smart relays to lock this in.
Westpac monitors operating times using smart meter
energy profile information
After Hours baseload
Weekend load/profile
Public Holiday load/profile
Smart meter energy profile information
Waste A/C 108 hours/week
Approx $5,000 p.a.

Exceptionally high baseload (expected 1-2kWh); Result of Plant Load (A/C on 24/7).
Check controls on Plant Load – Time clock settings, functioning of time clock, temp
set points.
Smart meter energy profile information
16/3 – 20/3 (Friday; Saturday; Sunday; Monday; Tuesday; Wednesday; Thursday)
16/3 – 20/3 (Friday; Saturday; Sunday; Monday; Tuesday; Wednesday; Thursday)
Saving Energy is about Reducing Waste
Actively manage control systems
Building walk through - outside normal operating hours!
Identify controllable loads
Identify control options that are cost effective
Sensor; time switch; Use existing control system or install new
control systems?
Use Life Cycle costing to establish benefit
Life cycle costing (LCC) looks at the maintained life of a
system over a period of time to provide a more accurate
view of the financial benefits of each option. LCC factors in
the:
• Purchase cost; and
• Energy cost; and
• Maintenance costs of the system.
There are very few energy related opportunities that can be
justified on energy reduction alone.
Cost Benefit from change from 7 day time clock
Smart Relay (2 channel)
Install & Programme
Energy Savings Public Holidays
Plant Maintenance Saving
Adjust for Daylight saving
Energy Savings Daylight Saving
Plant Maintenance Saving
Total
Simple Payback
NPV 10%
365 day time clock (2 channel)
Install & Programme
Energy Savings Public Holidays
Plant Maintenance Saving
Adjust for Daylight saving
Energy Savings Daylight Saving
Plant Maintenance Saving
Purchase price
-$
500
-$
600
-$
3 Months
$22,874.93
Purchase price
-$
500
-$
500
-$
Simple Payback
NPV 10%
1,100
10 Year Annual
Costs/Savings Total
0 -$ 500
-200 -$ 800
9000 $ 9,000
2160 $ 2,160
0 $
18750 $18,750
3750 $ 3,750
33460 $32,360
1,000
3 Months
$21,706.51
10 Year Annual
Costs/Savings Total
0 -$ 500
-1000 -$ 1,500
9000 $ 9,000
2160 $ 2,160
-1000 -$ 1,000
18750 $18,750
3750 $ 3,750
31660 $30,660
What is not working well in terms of Energy
Management
A large number of sophisticated control systems are
failing to deliver the benefits for the end users
REASON: No-one is actively managing these systems.
This is a LOSE-LOSE: High OPEX costs increases costs
to tenants and reduces value of building.
Unless these systems are managed in a continuous and
proactive manner there is no financial benefit derived
from having them installed.
A $100,000 BMS is (often) just an expensive time clock
SOLUTION
Use a third party to manage control systems!
Removes risk of knowledge being lost when an
employee moves on.
These “management costs” should form part of the
OPEX for the building and be passed through to
Tenant(s) in all lease agreements.
Financial Benefits will exceed Management costs,
reducing OPEX
Creates a WIN-WIN
Key areas to focus for low cost benefits
Ensure the technology you already have is actively
managed
Use metering information.
Saving 1 kW baseload saves more that 6,000 kWh pa ~ $900
Consider professional help - it will be cost effective!
You need to measure to manage.
Monitor and report operational savings (energy and
other system savings).
Use action plans and targets (with regular meetings).
The old adage is true - a team works better than an
individual
More Information or Assistance
If you want further information on this presentation, or
assistance with the energy management on your site,
please contact:
Peter McKeown
[email protected]
Smart Metering – what it means
for businesses
Thursday 13 September, 2012
Hamish McEwen, Business Marketing Manager
Meridian Energy
September 2012
A meter is a meter is a meter, unless it’s a
smart meter
• Records half-hourly
consumption data.
• Regularly transmits
consumption data.
• Remotely receives
meter configuration
data.
• What they are not…
– A check meter
– A control device
The benefits of awareness
•
Knowing what, how, and
when, power is being used
provides for the opportunity
to make changes.
–
–
Consumption across a week
Performance monitoring
Budgeting
WEEK
Consumption during the day
DAY
Combining and comparing data
• Benchmarking
• Industry trends and behaviours
Single site consumption
compared to city average
Day time consumption patterns
across industries
Smart meters enable the development of new
pricing structures
DAY
• Measuring
consumption in 30 min
intervals allows for
pricing at 30 min
intervals.
• Electricity pricing in the
New Zealand market
follows supply and
demand triggers, on a
daily, weekly and
yearly basis.
WEEK
Sunday
Saturday
YEAR
Summer
Winter
Summer
Time-of-use or not time-of-use
Sculptured
Market pricing
Schools
Pubs and
taverns
Grocery and
supermarkets
Cafes and
restaurants
Retail
00:00
24:00
Access and deployment
• Smart meter deployment is continuing across NZ.
• Access to data is becoming available to customers.
• Retailers are developing systems that will
incorporate data from different meters providers.
• Smart meters can be installed outside of roll-out
programmes… but may incur a cost.
Smart meter takeaways
• Awareness and monitoring can save
money
• Pricing plans that better fit industry
consumption are coming
• Smart meters can be installed at
customer request – if interested talk to
one us.
Smart metering
Why?
• To better understand electricity usage across multiple sites
• Identify opportunities to reduce emissions
• Lower consumption costs
• Provide real-time feedback on variances and potential issues
• Eliminate need for meter reading and bill estimates
How?
• National deployment
• Data analysis and reporting
• Corrective actions
• Performance monitoring
National Deployment- Site Analysis
Photographic review of existing installation
Deployment - Site Analysis
At times, getting the right photo was a childrens game of “hot and cold”…….
Warm….
Warmer….
Really warm….
Deployment - Site Analysis
At times, getting the right photo was a childrens game of “hot and cold”…….
Cold!
National Deployment - Site
Preparation
The (simplified) installation
process……
–
–
–
–
Arc Innovation set up steps
Westpac engagement to allow for installation
Westpac to IT server management
Meter installation
Installation challenges
– Contractor failure
– IT hardware failure
– Insufficient space for installation
– Unusual cross-tenancy metering
– Embedded networking (under contract)
National Deployment - Data Analysis
and Reporting
The smart meter interval
data allows you to
understand more about your
sites
Analysing the data allows you
to identify peak/off-peak
consumption, developing an
energy index, sites with
issues, etc…
National Deployment - Data Analysis
and Reporting
What the data won’t tell you:
•The root cause of excessive consumption
•Whether consumption behaviour is human or controlled
National Deployment - Data Analysis
and Reporting
While Meridian are developing a web
based portal for reporting and data
analytics, Westpac were keen to realise the
benefits of smart meter data. The
reporting tool is based on a scoring system
which rates the performance of each site
on performance criteria:
•Energy Index (benchmarked and scaled)
•Peak average (benchmarked and scaled)
•Off peak average (benchmarked and
scaled)
•Consumption on weekends/public holidays
National Deployment
Data Analysis and Reporting
Benchmarking figures:
• Energy Index – 161
• Peak average – 9 kwh
• Off peak average – 3 kwh
These benchmarking figures are derived from the smart meter
data. Poor performing sites were removed from this calculation.
Case Study Kilbirnie
Corrective Action
Post corrective action
performance
•The off-peak average load for this
site was reported as 6.1kwhr
(compared to the Westpac branch
portfolio average of 3.04kwhr).
•Work commenced at Kilbirnie
branch on 26th July, to install the
data loggers and carry out an
evaluation of the site HVAC control
system.
Savings as a result of the works
undertaken
Summary Kilbirnie
Average weekly energy use per hour prior Smart meters :
11.15 KW Per hour
New average weekly energy use per hour :
5.83KW per hour
Estimated savings $6500.00 PA
Return on investment 2 months.
What’s Next?
Meridian to advise on web tool and escalation plan
•BAU – ongoing performance monitoring
• Westpac to review audit templates and audit protocols for
service contractors – reduce cost of “fix”
•Westpac to review PPM task list for service contractors
• Ongoing re-commissioning is essential
• “Smart building controls” – “Smart Buildings” – “Smart Savings”
• Focus on asset management & performance
•“Green Design”
• Sustainability focus
•Cost Savings – Bottom Line
FMANZ gratefully acknowledges the support of our Gold Sponsors