Genesis open to long term gas supply contracts

Genesis remains open to negotiating a long-term gas offtake agreements to support security of supply for electricity generation, New Zealand’s industrial gas users and the wider economy.

Responding to the Government’s budget commitment around gas and electricity security, Genesis’ Chief Wholesale Officer Tracey Hickman assured those looking at securing supply of New Zealand’s existing and new gas options that Genesis is open to negotiating long term gas supply contracts.

“Genesis is now one of New Zealand’s largest purchasers of natural gas, primarily to power the Unit 5 turbine at Huntly Power Station,” said Hickman. “At 400 MW, Unit 5 is New Zealand's largest and most efficient electricity generation unit, historically producing electricity at or below the cost of new renewable generation but needing a consistent, stable, long term gas supply to operate efficiently.

“Unit 5 can meet up to 9% of New Zealand's annual electricity demand, but the current gas shortage means the unit is no longer running at full capacity or producing as much low-cost electricity as it has in the past. This is one of the country’s cheapest and fastest ways to bring additional electricity generation to the market.

“In a time of electricity supply and energy security challenges, Unit 5 offers the gas sector, industrial users and the wider economy a solid economic platform to support new supply.”

Hickman added that Huntly Power Station had the footprint, grid connection capacity and advanced concept plans for additional peakers which could be bought to market relatively quickly “If the right fuel was available and the economics stacked up”.

“Unit 5 has produced efficient, low-cost baseload electricity for Kiwi homes and businesses for almost 20 years, but unless new gas supply comes to market and long-term gas contracts can be negotiated, it is likely to be retired around 2030 or soon after. The three Rankine Units at Huntly Power Station would become even more critical to cover electricity security.

“With the right supply contract in place Unit 5 can quickly add stable, long-term electricity supply out to the late 2030’s while also supporting more gas supply being brought to market for New Zealand’s industrial sector,” said Hickman.

“Our door is open should existing or new upstream gas sector operators wish to talk.”

www.genesisenergy.com