Title: FMANZ gratefully acknowledges the support of our Gold Sponsors
1FMANZ gratefully acknowledges the support of our
Gold Sponsors
2NZ Electricity Market - Where to Next?
- Mike RoanWholesale Markets ManagerMeridian
Energy
13 September 2012
3The 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
4Recap 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
5This 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
6NZ Wholesale Electricity Price Forecast
- MED electricity price forecasts remain the same
prices are likely to rise
6
Source MED Energy Outlook - www.med.govt.nz/secto
rs-industries/energy/energy-modelling/modelling/ne
w-zealands-energy-outlook
7Cross 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
8Cross Winds NZ Electric Demand
- Since 2007, NZ electric demand has been
reasonably static - The drivers of flat demand are well documented
Static Demand
Source Meridian
8
9Cross 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 - This graph includes 2,000GWh of new supply being
added over the next three years
Forecast demand growth
9
10Offsets - Issues to be Aware of
- Offsetting all of the above is hydro fuel
availability (inflow volatility) - NZ electricity prices largely a function of hydro
storage (unlike other countries)
10
Source Meridian
11Recent Events NZEM
- NZ wholesale electricity prices reflect hydro
storage capacity
11
Source Meridian
12Offsets - 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
13Major 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
14- My role is to manage these issues for Meridian
- More importantly, what do they mean for you?
14
15What 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
16Managing Electricity in Your BusinessThe
Essentials
16
17First things first Site Type?
- Two types of site in the electricity world
Non-Half Hourly
Time of Use
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
17
Threshold varies by Network
18What charges are included in a bill?
- There are two major cost components
Energy (Wholesale purchase Retailer)
- Network (Network company e.g. Vector)
19Your 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
20Your 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 fixede.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
21Managing Your Electricity Budget
- Two primary ways to manage your budget
- 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 pricingdifferentialse.g.
night vs. day rates - Meridian customers, talk to one of ourAccount
Managers.
We are here to help
21
22Supply Agreements Key Questions for You
- How much do you spend on electricity per annum
and how material is it to you? - What is your businesss 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 asupply
group, are the groups requirementsaligned with
yours?
In the success game Value always beats Price
22
23Take 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
24Getting on the Energy Management CycleImprove
your energy wasteline
29 August 2012
25Energy Management Cycle Westpac followed all
elements of this cycle
- Quarterly MT Report Meeting
- Monthly Reporting
- e-Smart
- Annual Implementation plan
- 6 weekly meetings
- Manage through Action Plan
26Energy 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
KPIs. - Westpac A/C
- Focus on making good business decisions any
green benefits are the icing on the cake.
27You 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
- Dont be scared to spend money on Advice!
28Understand Your Site/PortfolioHow Much Energy
do I use? How much is it costing me?
29How does this site compare?
What is a common unit of measure? kWh? FTEs?
Output? What is the trend?How does it
compare to similar sites?
30How 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
31Reduce 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
32Reduce 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
33Reduce 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.
34Where does energy normally get consumed in an
office building?
73/20 RULE
35Review 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
36- Reset public Holidays annually
- Change for daylight savings 2x p.a.
Programme for 5 years
GOOD INVESTMENT?
37Controller 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
38Smart meter energy profile information
Waste A/C - 108 hours/week Approx 5,000 p.a.
39Smart meter energy profile information
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41Saving 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?
42Use 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.
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44What 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
45SOLUTION
- 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
46Key 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
47More Information or Assistance
- If you want further information on this
presentation, or assistance with the energy
management on your site, please contact - Peter McKeown
- peter_at_smartpower.co.nz
48Smart Metering what it means for businesses
- Thursday 13 September, 2012
- Hamish McEwen, Business Marketing Manager
- Meridian Energy
September 2012
49A meter is a meter is a meter, unless its 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
50The benefits of awareness
- Knowing what, how, and when, power is being used
provides for the opportunity to make changes. - Performance monitoring
- Budgeting
51Combining and comparing data
- Benchmarking
- Industry trends and behaviours
Single site consumption compared to city average
Day time consumption patterns across industries
52Smart meters enable the development of new
pricing structures
- 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.
53Time-of-use or not time-of-use
0000
2400
54Access 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.
55Smart 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.
56Smart metering
57Why?
- 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
58How?
- National deployment
- Data analysis and reporting
- Corrective actions
- Performance monitoring
59National Deployment- Site Analysis
- Photographic review of existing installation
60Deployment - Site Analysis
- At times, getting the right photo was a childrens
game of hot and cold.
Warmer.
Warm.
Really warm.
61Deployment - Site Analysis
- At times, getting the right photo was a childrens
game of hot and cold.
Cold!
62National 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)
63National 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
64National Deployment - Data Analysis and Reporting
- What the data wont tell you
- The root cause of excessive consumption
- Whether consumption behaviour is human or
controlled
65National 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
66National DeploymentData 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.
67Case Study KilbirnieCorrective 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
68Summary 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.
69Whats 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
70FMANZ gratefully acknowledges the support of our
Gold Sponsors