1 00:00:00,160 --> 00:00:03,280 Speaker 1: Right now. Energy company Genesis almost doubled its half your 2 00:00:03,279 --> 00:00:06,280 Speaker 1: net profit to seventy point three million dollars after tax. 3 00:00:06,600 --> 00:00:10,000 Speaker 1: The wholesale power prices arose dramatically last winter. We all 4 00:00:10,039 --> 00:00:13,280 Speaker 1: know this, the winter energy crunched this response to dry weather. 5 00:00:13,680 --> 00:00:16,680 Speaker 1: Genesis runs the coal and gas fired Huntley Power Station, 6 00:00:16,800 --> 00:00:20,760 Speaker 1: which backs up the hydro dominated National Power Grid when 7 00:00:20,800 --> 00:00:24,480 Speaker 1: the lake levels are low. Genesis chief executive Malcolm John's 8 00:00:24,560 --> 00:00:26,840 Speaker 1: is with me. Hi, Malcolm gooday? 9 00:00:26,880 --> 00:00:27,600 Speaker 2: How are y? Yeah? 10 00:00:27,600 --> 00:00:29,680 Speaker 1: Really good? Good to have you on the show. Look, 11 00:00:30,680 --> 00:00:33,200 Speaker 1: shareholders will, no doubt, including the government, so I guess 12 00:00:33,240 --> 00:00:35,080 Speaker 1: all of us in a sense, we'll be happy with 13 00:00:35,159 --> 00:00:38,519 Speaker 1: that with that number going up, but perhaps not so 14 00:00:38,600 --> 00:00:40,639 Speaker 1: much your customers. How do you view it? 15 00:00:41,960 --> 00:00:46,440 Speaker 2: Well, our customers were largely protected last winter. I mean, 16 00:00:46,440 --> 00:00:49,239 Speaker 2: I think it's important to remember that about ninety nine 17 00:00:49,320 --> 00:00:53,920 Speaker 2: point nine percent of electricity customers didn't experience the volatility 18 00:00:53,960 --> 00:00:58,400 Speaker 2: of July and August because many are on fixed term contracts. 19 00:00:58,680 --> 00:01:01,840 Speaker 2: But you would expect in a dry year for Genesis 20 00:01:01,840 --> 00:01:05,280 Speaker 2: to produce more electricity. We produced about thirty percent more 21 00:01:05,319 --> 00:01:08,200 Speaker 2: electricity last winter than we did the winter before, So 22 00:01:08,280 --> 00:01:11,000 Speaker 2: it kind of flows when the lakes are low and 23 00:01:11,080 --> 00:01:14,240 Speaker 2: Huntley's turned on to its full capacity. We produce more 24 00:01:14,280 --> 00:01:16,720 Speaker 2: electricity and we expect to have more revenue and more 25 00:01:16,720 --> 00:01:17,600 Speaker 2: profit as a result. 26 00:01:17,880 --> 00:01:19,520 Speaker 1: How much extra cold did that mean? 27 00:01:21,120 --> 00:01:24,639 Speaker 2: We burnt as a country about eight hundred thousand tons 28 00:01:24,640 --> 00:01:28,560 Speaker 2: of coal last winter. And I think it's important to 29 00:01:28,600 --> 00:01:31,640 Speaker 2: remember that not only do we have a hydro system 30 00:01:31,680 --> 00:01:34,240 Speaker 2: to back up, but we now have one thy four 31 00:01:34,319 --> 00:01:37,000 Speaker 2: hundred megawatts of wind. And not only do we had 32 00:01:37,000 --> 00:01:40,199 Speaker 2: no rain last winter, but we also had a large 33 00:01:40,240 --> 00:01:42,840 Speaker 2: period of wind routs. In fact, the wind dropped out 34 00:01:42,920 --> 00:01:46,399 Speaker 2: for about ten days at one point last winter. So 35 00:01:46,480 --> 00:01:49,680 Speaker 2: as we build more wind into the system, wind is 36 00:01:49,720 --> 00:01:52,520 Speaker 2: going to become more as relevant as hydro is. 37 00:01:53,720 --> 00:01:55,760 Speaker 1: So you're saying to people, because there were a lot 38 00:01:55,760 --> 00:01:58,200 Speaker 1: of people listening, he'll think, well, how are you managing 39 00:01:58,200 --> 00:02:01,480 Speaker 1: to increase any profit by eighty percent? You said, obviously 40 00:02:01,520 --> 00:02:03,520 Speaker 1: you were doing more. You know, you were producing more 41 00:02:03,560 --> 00:02:05,960 Speaker 1: through Huntley because there was a shortage in other areas, 42 00:02:06,880 --> 00:02:08,959 Speaker 1: but you were your margins increased. 43 00:02:10,000 --> 00:02:14,600 Speaker 2: No, it's a pure result of producing thirty percent more electricity, 44 00:02:15,520 --> 00:02:19,040 Speaker 2: and so we sell that that excess electricity onto the 45 00:02:19,080 --> 00:02:22,760 Speaker 2: other generators who aren't generating as much themselves because the 46 00:02:22,840 --> 00:02:24,240 Speaker 2: lakes are low and the wind. 47 00:02:24,040 --> 00:02:28,000 Speaker 1: Wasn't there the stockpile that you'll need in terms of Huntley, 48 00:02:28,440 --> 00:02:32,280 Speaker 1: do you know how much longer we will need coal 49 00:02:32,400 --> 00:02:34,160 Speaker 1: at Huntley or is that something that will need to 50 00:02:34,160 --> 00:02:36,880 Speaker 1: happen indefinitely And what you're going to look to do 51 00:02:37,120 --> 00:02:39,320 Speaker 1: this year, Well, the. 52 00:02:39,280 --> 00:02:42,280 Speaker 2: System will need Huntley generation for probably the next twenty 53 00:02:42,320 --> 00:02:46,320 Speaker 2: five years, but not in its current form. So the 54 00:02:46,400 --> 00:02:49,680 Speaker 2: generating assets that Huntley can run on multiple fuels, and 55 00:02:49,680 --> 00:02:51,760 Speaker 2: what we're focused on in the next three to five 56 00:02:51,840 --> 00:02:55,800 Speaker 2: years is fuel transition. So we're heavily involved in standing 57 00:02:55,840 --> 00:03:01,560 Speaker 2: up a domestic biomass supply chain which turns into torrified palettes. 58 00:03:02,040 --> 00:03:05,080 Speaker 2: We can run torrified palette through Huntley power station and 59 00:03:05,760 --> 00:03:09,200 Speaker 2: create a zero carbon cycle as opposed to using coal. 60 00:03:09,720 --> 00:03:12,400 Speaker 2: But the reality is without the gas in the system, 61 00:03:12,440 --> 00:03:15,000 Speaker 2: and that was the big shock last winter, we had 62 00:03:15,040 --> 00:03:17,600 Speaker 2: to use coal because we had no other fuel available, 63 00:03:17,960 --> 00:03:20,200 Speaker 2: and until we have bio mass, we'll have to use 64 00:03:20,240 --> 00:03:21,840 Speaker 2: coal as a fuel of last resort. 65 00:03:22,040 --> 00:03:25,160 Speaker 1: In other words, you don't see gases are reliable going 66 00:03:25,200 --> 00:03:27,119 Speaker 1: forward as a reliable alternative. 67 00:03:28,120 --> 00:03:30,960 Speaker 2: It's very difficult at the moment gas was the chosen 68 00:03:31,080 --> 00:03:34,280 Speaker 2: transition fuel. Very difficult to see it that way at 69 00:03:34,320 --> 00:03:38,280 Speaker 2: the moment. The structural decline in gas last year called 70 00:03:38,320 --> 00:03:41,760 Speaker 2: everybody by surprise, and at the moment we don't have 71 00:03:41,920 --> 00:03:47,560 Speaker 2: any publicly announced new gas coming into the market, so 72 00:03:47,600 --> 00:03:51,920 Speaker 2: the gas market is likely to remain quite volatile and expensive. 73 00:03:52,600 --> 00:03:55,600 Speaker 1: So even with the government's announcements and the initiatives and 74 00:03:55,640 --> 00:03:57,840 Speaker 1: the reversing the oil and gas band, et cetera, that 75 00:03:57,880 --> 00:03:59,880 Speaker 1: stuff too far in the future for you to give 76 00:03:59,920 --> 00:04:01,840 Speaker 1: you any relief in the new term. 77 00:04:03,040 --> 00:04:07,000 Speaker 2: Well, I think we're at the point now where we 78 00:04:07,120 --> 00:04:09,720 Speaker 2: as a company have pivoted to move gas out of 79 00:04:09,760 --> 00:04:15,560 Speaker 2: our generation, our baseload generation profile, simply because we don't 80 00:04:15,600 --> 00:04:18,560 Speaker 2: see any new activity happening at the moment. So we've 81 00:04:18,600 --> 00:04:21,200 Speaker 2: got no proof points to say that gas will be 82 00:04:21,279 --> 00:04:24,320 Speaker 2: there in the future, and it's declining at a rapid 83 00:04:24,400 --> 00:04:25,159 Speaker 2: rate at the moment. 84 00:04:25,920 --> 00:04:27,919 Speaker 1: Does what does that mean? You mentioned you want to 85 00:04:28,040 --> 00:04:33,320 Speaker 1: transition from coal to biofuel at Huntley without getting gas involved, 86 00:04:33,360 --> 00:04:36,360 Speaker 1: So does that mean that that process will take longer? 87 00:04:36,400 --> 00:04:38,240 Speaker 1: When do you expect that you might be able to 88 00:04:38,240 --> 00:04:39,240 Speaker 1: be coal free there? 89 00:04:40,400 --> 00:04:43,880 Speaker 2: We're hoping that we'll have our first meaningful biomass supplies 90 00:04:43,920 --> 00:04:47,680 Speaker 2: by twenty twenty eight, and that we'll be running predominantly 91 00:04:48,240 --> 00:04:51,920 Speaker 2: on biomass by around two thousand and thirty. In an 92 00:04:51,920 --> 00:04:54,880 Speaker 2: extreme dry year, we're possibly still going to have to 93 00:04:55,000 --> 00:04:58,479 Speaker 2: use some coal. But to give you a sense, every 94 00:04:58,600 --> 00:05:02,719 Speaker 2: year the felled log in New Zealand could generate roughly 95 00:05:02,760 --> 00:05:07,160 Speaker 2: a quarter of all New Zealands generate electricity today. So 96 00:05:07,600 --> 00:05:11,719 Speaker 2: the forests of New Zealand represent a huge opportunity for 97 00:05:11,760 --> 00:05:16,200 Speaker 2: a zero carbon cycle generation option to back up wind 98 00:05:16,760 --> 00:05:19,159 Speaker 2: and hydro this idea. 99 00:05:19,240 --> 00:05:21,719 Speaker 1: The labor has been floating actually quite loudly this week 100 00:05:21,760 --> 00:05:24,480 Speaker 1: about making the gent tailors reinvest their dividends rather than 101 00:05:24,480 --> 00:05:27,360 Speaker 1: giving it to the government. Reinvest the dividends and new generation. 102 00:05:27,520 --> 00:05:30,080 Speaker 1: Are you open to that, Well. 103 00:05:29,880 --> 00:05:33,560 Speaker 2: We run a dividend reinvestment program now, so any government 104 00:05:33,600 --> 00:05:36,840 Speaker 2: at any stage could tick reinvestment and reinvest all their 105 00:05:36,839 --> 00:05:40,000 Speaker 2: dividends in genesis at any point we would funnel that 106 00:05:40,080 --> 00:05:42,880 Speaker 2: into building new renewables. So obviously we'd welcome that. 107 00:05:43,080 --> 00:05:44,880 Speaker 1: So it'd be quite an easy thing to do. 108 00:05:46,600 --> 00:05:48,920 Speaker 2: It's just a simple tick on a form and your 109 00:05:48,920 --> 00:05:51,279 Speaker 2: dividends go into building new renewables. 110 00:05:51,480 --> 00:05:53,719 Speaker 1: Do we need more renewables built. 111 00:05:54,839 --> 00:05:59,880 Speaker 2: We do. The reality is that we need a substantial amount, 112 00:06:00,080 --> 00:06:02,640 Speaker 2: probably in the order of ten to twenty billion over 113 00:06:02,680 --> 00:06:06,440 Speaker 2: the next twenty five years worth of new renewables built. 114 00:06:07,520 --> 00:06:10,800 Speaker 2: And that's because we're going to electrify more and more 115 00:06:10,800 --> 00:06:12,960 Speaker 2: of our lives as we go forward over the next 116 00:06:12,960 --> 00:06:15,279 Speaker 2: twenty years. So it's absolutely essential. 117 00:06:15,640 --> 00:06:17,560 Speaker 1: Is it frustrating? Then when you get the form back 118 00:06:17,600 --> 00:06:19,560 Speaker 1: from the government and they haven't ticked that box. 119 00:06:20,760 --> 00:06:24,240 Speaker 2: That's a decision for all shareholders to make. What we're 120 00:06:24,279 --> 00:06:28,360 Speaker 2: really clear is that anyone who ticks the dividend Reinvestment form, 121 00:06:28,960 --> 00:06:31,240 Speaker 2: that money will go into building new renewables. 122 00:06:31,440 --> 00:06:33,400 Speaker 1: Malcolm, thank you very much for your time. Appreciate it. 123 00:06:33,400 --> 00:06:36,520 Speaker 1: It's Malcolm John, thank you, Chief executive at Genesis. 124 00:06:37,360 --> 00:06:40,520 Speaker 2: For more from Heather Duplessy Allen Drive, listen live to 125 00:06:40,600 --> 00:06:43,640 Speaker 2: news Talks. It'd be from four pm weekdays, or follow 126 00:06:43,680 --> 00:06:45,400 Speaker 2: the podcast on iHeartRadio.