Latest / Best of Business / Kerre Woodham: Time is running out for businesses that run on gas

Transcript

Kerre Woodham: Time is running out for businesses that run on gas · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
• 0:13
  Speaker 1: and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Time is running out for the businesses that generate billions
• 0:20
  Speaker 2: of dollars worth of GDP and that employ a quarter
• 0:24
  Speaker 2: of a million New Zealanders. They're the businesses that run
• 0:28
  Speaker 2: on gas. Your bakers, your coffee roasters, your wineries, your
• 0:33
  Speaker 2: wood processors, your ag secs. And that's not counting the
• 0:37
  Speaker 2: schools and hospitals dependent on gas to heat their buildings.
• 0:41
  Speaker 2: Time is running out because the gas they operate on
• 0:45
  Speaker 2: is running out. It's a finite resource. And as yet,
• 0:50
  Speaker 2: they haven't found anything to replace it. And yes, we've
• 0:54
  Speaker 2: probably heard about the high-profile businesses like Glenbrook Steel Mill
• 0:58
  Speaker 2: and Spates Brewery in Dunedin who have transitioned to electric
• 1:02
  Speaker 2: arc furnaces and electric boilers respectively. But for a huge
• 1:07
  Speaker 2: number of businesses, a shift is not yet technically or
• 1:10
  Speaker 2: financially possible, but the gas is going to run out.
• 1:16
  Speaker 2: They can't say, we'll just keep it going until we
• 1:18
  Speaker 2: transfer over, because when it's gone, it's gone. And when
• 1:24
  Speaker 2: it comes to making the transition, it's not just the
• 1:29
  Speaker 2: cost of a new electric furnace. If bakers, for example,
• 1:33
  Speaker 2: want to make the move from gas to electric, That
• 1:35
  Speaker 2: will cost upwards of $ 10 million. And that's just the beginning.
• 1:40
  Speaker 2: There are the connection costs. That starts at a couple
• 1:43
  Speaker 2: of million, just to get the thing connected. And then
• 1:47
  Speaker 2: there's the backup plan. Electricity isn't as reliable as gas.
• 1:52
  Speaker 2: Business Desk quotes the country president of Schneider Electric, who
• 1:56
  Speaker 2: had a customer that had to dump 19 million litres
• 1:59
  Speaker 2: of milk because they lost energy for 30 seconds. As
• 2:05
  Speaker 2: a result, businesses that are transitioning are spending capital on
• 2:08
  Speaker 2: battery stabilisation just to make the grid usable before they
• 2:15
  Speaker 2: can completely transition over. And it makes for a really
• 2:19
  Speaker 2: uncertain environment, and that's reinforced by a Schneider Electric survey.
• 2:24
  Speaker 2: They looked at 288 senior business leaders and found 39%
• 2:29
  Speaker 2: of them had delayed expansion or lost contracts due to
• 2:33
  Speaker 2: energy costs. or supply issues in the past year. You know,
• 2:41
  Speaker 2: we've talked about it before. I think we've talked about
• 2:44
  Speaker 2: it and about the fact that it's coming, that the
• 2:47
  Speaker 2: end of the gas is coming, and yet people, businesses,
• 2:57
  Speaker 2: don't seem to be able to afford to make the
• 3:00
  Speaker 2: transition or else they've looked at the numbers and thought...
• 3:04
  Speaker 2: We'll have to go overseas because there we'll have a
• 3:08
  Speaker 2: reliable energy source. It won't be as expensive as it
• 3:11
  Speaker 2: is here. It's a shame. But we've still got the
• 3:15
  Speaker 2: business and we can set up offshore. Energy costs have
• 3:21
  Speaker 2: doubled over the past five years. But even though we've
• 3:27
  Speaker 2: complained about the cost of everything going up, the cost
• 3:32
  Speaker 2: of a loaf of bread hasn't doubled. Where are you
• 3:36
  Speaker 2: at if you are one of those businesses? They're big
• 3:38
  Speaker 2: and they're small in terms of those that rely on gas.
• 3:46
  Speaker 2: With the smaller ones, is it even worth transitioning? Do
• 3:50
  Speaker 2: you just shut up shop and start again? With the
• 3:55
  Speaker 2: bigger ones, I mean, you probably can't afford not to.
• 4:01
  Speaker 2: The eventual exit as business desk rights of Methanex is,
• 4:05
  Speaker 2: New Zealand's single largest user, would free up some volumes
• 4:12
  Speaker 2: currently used for methanol production, but that's only a temporary reprieve.
• 4:19
  Speaker 2: What are we doing here? I can't even imagine what
• 4:23
  Speaker 2: it looks like. I mean, you know what the future
• 4:25
  Speaker 2: looks like. That is, one day you'll go to turn
• 4:27
  Speaker 2: on the gas and it won't be there. So what
• 4:29
  Speaker 2: will you have done before that? Will you be long gone,
• 4:33
  Speaker 2: reading about it from Australia? Will you be in another
• 4:37
  Speaker 2: business entirely? Newstalk ZB 0800 80 1080 is the number
• 4:43
  Speaker 2: to call. Where do we go from here?
• 4:47
  Speaker 1: For more from Newstalk ZB, listen live, on air or
• 4:50
  Speaker 1: online and keep our shows with you wherever you go
• 4:53
  Speaker 1: with our podcasts on iHeart Radio.