Stew Hamilton: Mercury Energy CEO on the Government's energy sector plans

Mercury Energy says the Government's new energy plan gives it confidence to keep investing in projects. 

It's offering Crown-controlled companies more capital to invest in generation projects, establishing a Liquefied Natural Gas import facility, and giving the Electricity Authority greater power. 

CEO Stew Hamilton told Mike Hosking businesses now have some form of clarity. 

He says it allows them to keep building at pace, adding they're on the right track, as more power projects have been delivered in the last 18 months than the past 15 years. 

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Episode Transcript

Speaker 1 (00:00):
This power reform. Where do we land yesterday? Where we
seemed reaction wise to get everything from it was a
missed opportunity through to it being bold the go ahead
for three big gent tailors to raise capital for projects.
We got some LPG importation, eventually some more powers for
the electricity authority. Ste Hamilton is the Mercury Energy Boss
and is with us, Sue Morning, good Mike. Out of
ten ten they couldn't have done more one they barely

(00:22):
touched the sides. What do you give it?

Speaker 2 (00:24):
I think generally the intent is good, like it's covering
the key things around security of supply and creme transparency
in the market. It was a pretty extensive investigation that
took place, and it considered a massively wide range of factors.
But ultimately it comes back to saying, look, the market
is working pretty well at building projects. It really needs

(00:45):
to focus more on delivering firming okay.

Speaker 1 (00:48):
Clarity is what the business community seemed to suggest came
out of that is that some of the subtlety in
the announcement yesterday that the wider public or the media
might have missed. In other words, what you wanted from
the government was some roadscape and that's what you got.

Speaker 2 (01:03):
Yes, I think that's right. Actually, I think we've got
some form of clarity it now lets us continue to
keep building at pace and actually we're now building at
twenty five percent faster than during the Think Big period,
so that puts things into context, and actually delivering in
the last eighteen months more power projects than we did
in the previous fifteen years. So we're on the right track.

(01:25):
Now we've got some clarity just to keep going and
investing in those right things.

Speaker 1 (01:28):
Which makes it interesting because their key or their signature
piece yesterday was apparently you guys of which you are one,
are not doing enough because you thought that they weren't
interested in it. Is any of that true?

Speaker 2 (01:43):
We're actually at the moment we're investing one billion dollars
into projects, so certainly it's not something that we initiated
were the focus on continue to invest, But we've got
a strong balance sheet. As I mentioned, we're spending about
a billion dollars at the moment on three power projects.
We've got a really strong fily away ahead of us,
and so for us, we don't really see that as

(02:03):
been a key blocker at the moment. We certainly welcome
the sort of signal to keep investing, but we'll keep going.

Speaker 1 (02:10):
Do you actually need the government? I mean, can you?
Can you go out to the marketplace and do your
own thing? And can the other gent tailors as owned
by the government on the sheer market can can they
do their own thing? And are they doing their own thing?

Speaker 2 (02:22):
There's two ways you can get money. You can go
out to raise equity, as a government talked about yesterday.
The other way we can get money is to go
out and raise debt. So go out and get get
basically bond holders to give us, give us money. And
so at the moment we've got we've got head room
to keep investing, so we don't see that as a
current block hat for us to keep going.

Speaker 1 (02:40):
Yeah. I don't want to get you in trouble with
the government. I just can't. What you're telling me is
what I thought, and that is you're doing your own thing.
And what they're trying to explain to the public is
that there was some sort of massive blockage that by
making yesterday's announcement they let you loose. And that doesn't
appear to me to be remotely true.

Speaker 2 (02:57):
Yeah, I think in terms of building renewables, absolutely getting
on at pace. So the issue probably that really came
out of the report yesterday and the government talked to
was how do we go about building therm or firming
or how do we provide firming? And at the moment
that gent Taylor's and along with the Big Four have
basically worked with hunt Meat to put in place of
firming option to help with that firming. So there are

(03:19):
a number of options which actually progressing quite well. It's
just trying to work out what else they could be
to fill that gap so when the rain's not falling,
we can cover that drive period.

Speaker 1 (03:28):
I get that, but I'm a simple man, so let's
keep it simple for everybody. So what we got is
that the oil and gas thing that we all know of.
We shouldn't have done it. But here is where we are.
We've got a gap before the windmills and all the
other stuff comes online, and I understand there's plenty coming
online over a period of time. So the gap has
been filled forget the climate for a moment by the coal.
We've got the coal deal. We're kind of sorted, don't we.

Speaker 2 (03:49):
Yeah. I think we're hitting in the right direction absolutely.
I mean, you see wholesale prices have stabilized. I clearly
we want them to be much bigger than what they are.
And a big part of it as well is that
if you look at a household power bill, was only
about half of the household power bill actually comes from
the generation in retail. So there are other factors that
need to be worked on. But in terms of what's
happening in the alegis industry, I think you're right. We

(04:12):
are building at a good pace, and we keep going
at this rate and we affirm it, then things will
get much better.

Speaker 1 (04:17):
The LPG part of that equation is is that a
biggie As far as you can.

Speaker 2 (04:21):
See, it's going to be challenging. There's been a number
of studies that have taken place to look at what
the options are. There are actually a number of options
that the LNG is one, but there are others, including
the Huntley firming option and expanding that. Maybe some diesel peaking,
but we do need some form of firming support for

(04:41):
those dry periods, but there are other options in addition
to LNG.

Speaker 1 (04:45):
All right, appreciate your insight. Stuart Hamilton, who is the
firming term? If you're not aware of it's just that
it's the gap, it's what you need in between what
you want and what you've got. So coal the cold
Huntly deal is currently so. In other words, when things
don't blow and the sun does shine and it doesn't rain,
you fire up the cold that's firming. Stuart Hamilton out

(05:05):
of Mercury. For more from The Mic Asking Breakfast, listen
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