Genesis in talks with BT Mining on Huntly supply
Genesis Energy is working to secure new coal supplies from BT Mining.
The company runs its two Rankine units at Huntly on a mix of coal and gas. It pre-emptively imported Indonesian coal earlier this year to ensure it had sufficient supplies for a dry winter.
Chief executive Marc England told investors yesterday that the firm’s preference is to deal with BT Mining and it has been waiting until the venture took over the Waikato mines formerly run by Solid Energy.
“We have had discussions with them and once that is in place we will be in a good position.”
BT Mining – owned by Bathurst Resources and Talley’s Group – agreed to buy Solid Energy’s Stockton, Maramarua and Rotowaro mines last year. Their purchase was approved by the Overseas Investment Office last month and settlement is expected at the end of August.
Genesis, the country’s biggest thermal generator, has been reworking its fuel mix to lower its costs while also providing the optimal flexibility between burning coal and gas, reducing its overall emissions and getting the best value from its wholesale gas sales.
It owns 46 per cent of the Kupe gas field and buys all the natural gas from it.
The four 250 MW Rankine units were commissioned between 1982 and 1985. One unit was decommissioned in late 2014 and a third unit remains in long-term storage. In December Genesis was consented to replace the Rankines with gas-fired units any time through to the end of 2037.
Genesis terminated its coal contract with Solid Energy in August 2015 when the state-owned miner was placed in administration. At that stage it was planning to permanently retire the two operating Rankine units in 2018.
But in April last year Genesis deferred the Rankine retirement until 2022 after securing new swaptions with Meridian Energy and Contact Energy, which rely on spare North Island capacity when their South Island hydro lakes are low.
Genesis ramped up the Rankine units in May as dwindling South Island hydro storage pushed up wholesale power prices and prompted Transpower to start daily monitoring. The units ran hard in June and July and have since been backed off as rising temperatures and lake levels have reduced prices and demand for them.
At the end of June the company had about 350,000 tonnes of coal stockpiled, little changed due to the coal imported from April through July.
England told investors yesterday that bringing the third Rankine unit out of storage remains the country’s cheapest option for its next generation plant.
Discussions have been held with other participants on that “periodically” but there has been no real change in the firm’s position. Any decision ultimately will depend on the demand and supply outlook, he says.