Element - - Finance -

The proof there is now a mar­ket for elec­tric­ity in New Zealand may be the ex­is­tence of Sim­ply En­ergy.

The firm was started in 2005 by three ki­wis re­turn­ing home with young fam­i­lies af­ter ex­tended pe­riod work­ing in the elec­tric­ity in­dus­try off­shore.

Mur­ray Dyer, Stephen Peter­son and Chris Seel didn’t want to go back into large cor­po­rates, and saw op­por­tu­ni­ties else­where.

“There were a num­ber of in­de­pen­dent gen­er­a­tors out there not owned by the Gov­ern­ment – coun­cil land­fill gas plants, small river hy­dro projects, wind farms and so on, but the sys­tems and in­fra­struc­ture re­quired to par­tic­i­pate in the mar­ket weren’t re­ally there,” says Dyer, who car­ries the ti­tle of com­mer­cial di­rec­tor.

“Tra­di­tion­ally these com­pa­nies would have gone to one of the big gen­er­a­tors and sold their out­put, but if you are a large gen­er­a­tor pro­duc­ing 200 MW, you are not go­ing to worry about 1MW down the road.

“We saw the op­por­tu­nity to pro­vide ser­vices not only to get projects to mar­ket but also to op­ti­mise the value of that elec­tric­ity to the mar­ket,” Dyer says.

Sim­ply En­ergy inves ted in the in­fra­struc­ture to be a reg­is­tered gen­er­a­tor, putting agree­ments in place with 28 net­work com­pa­nies around the coun­try to pro­vide elec­tric­ity to the net­work.

“Our view of the fu­ture of in­dus­try is it will be more and more dif­fi­cult to con­sent and jus­tify large projects,” says Dyer.

“It makes more sense to have smaller dis­trib­uted gen­er­a­tion closer to the load. From a net­work per­spec­tive, the more dis­trib­uted the gen­er­a­tion, the less need there is for up­grades to the net­work.”

As well as plug­ging the 1MW and 2MW hy­dro sta­tions into the net­work, Dyer sees po­ten­tial in mak­ing it eas­ier to sell ex­cess power from small scale so­lar and wind in­stal­la­tions back into the grid.

That will make it more at­trac­tive for firms with a lot of re­tail or ware­house space to use their roof acreage for so­lar pan­els, or for farm­ers to throw up a wind tur­bine to run the milk­ing shed.

“They want to sell ex­cess gen­er­a­tion, as well as draw en­ergy from the main sup­ply when say the wind is not blow­ing. They may never get off the grid but it is about re­duc­ing re­liance and us­ing lo­cal sup­plies.

“The tech­nol­ogy cost is go­ing in the right di­rec­tion for smaller projects, and the dis­trib­uted gen­er­a­tion reg­u­la­tions of 2008 put a frame­work in place for iden­ti­fy­ing con­nec­tion costs and de­fault con­tracts round con­nec­tions. That gives peo­ple more con­fi­dence, be­cause they are not go­ing to get tied up in a process where they do not know the cost to con­nect.”

While the price of tech­nol­ogy is fall­ing quickly, what’s driv­ing in­vest­ment in small scale so­lar and wind plants over­seas is sub­si­dies or feed in tar­iffs that don’t fit with New Zealand’s pure mar­ket ide­ol­ogy.

“We will get there even­tu­ally. That sort of tech­nol­ogy feeds into the smart me­ter grids be­ing put in now.

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