The new chairman of NZ Windfarms says the company has reached a turning point where it must evaluate its future because of the unpredictability of wind power.
Stuart Bauld spoke of the options as he also announced a $14m loss due to Vector selling its 22 per cent shareholding meaning Windfarms lost millions of dollars in tax benefits under continuity of shareholding accounting rules.
Bould said the company can consistently produce a modest profit and a modest cash flow, but will never be a major player in the industry.
“The board is considering proposals from parties who can act as financial advisers and assist NZ Windfarms in this financial review. We will finalise an appointment in the coming days.”
Windfarms faced two formidable obstacles – it was unable to manage its revenue effectively, and was at the mercy of the elements.
“We remain exposed to a completely unsatisfactory and poorly designed wholesale market where our own healthy production drives down our revenue by over supplying the market.
“Wind flow is unpredictable. When the company first started operations, it assumed that it could achieve 160 gigawatts of production per year.
“This was later changed to 140 GWH and then to 130 GWH. Whilst we have occasionally operated at an annual rate close to this, it has never been achieved over a full year, so this year we again reduced it to 120 GWH, production we did not achieve this in 2018.
“The reality is that it is only by putting our plant at risk that we can achieve these higher numbers.”
There were only a few solutions, he said. One was to add an alternative fuel source, or enter the retail market.
A significant infusion of cash was necessary but shareholders were unlikely to fondly view a request for more money when the company had so far failed to consistently produce a profit and returns for investors.
“We see very clearly that all of the new entrants into the retail business find it a very difficult business.
“The customers they attract are the most likely to leave again and are the most price sensitive. They also tend to represent the highest credit risk.”
“We do however have some major and attractive assets. We are now profitable. We have a good location. We have good resource consents.
“Since improving our behaviour towards our neighbours we generally have a good relationship with them.
“No announcement about a dividend is being made at this time. Further details about advisers, actions and a dividend will be made in due course.
“Whatever happens our intention is to provide shareholders with choices about their shareholding.”
Rodger Kerr-Newell, chairman until earlier this year, has been fired from the Shire of Halls Creek in West Australia after allegations he misused his position there for personal gain. He resigned as director from NZ Windfarms on September 12.
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