Cant see that working mainly because he’s dealing with a Government bureaucracy. There will always be some Govt department holding the project up somewhere for whatever reason.
Have to love the straight talking though. Say what you like about Musk, he has a history of putting his money where his mouth is!
Apparently the government is taking this seriously. There’s now talk of upping the order to 1GWh.
At $1000 per kWhr capacity it’s quite expensive. It would be cheaper to encourage distributed storage on a domestic scale where the price is closer to $500/kWhr. Also the transmission losses from production to storage to point of consumption would be far less. It shouldn’t be a choice between one option or the other, but rather the development of both.
Except that the PowerPack system costs about $400/kWh.
ESB lost money on NI interest rate swaps. WTF are they doing playing with those?
It looks like they were just hedging their interest rate. Rates stayed low so they were out of the money I guess
But Northern Ireland inflation???
ESB brought the viridian power plants in the North a few years back.
As far as I remember ESB International used to have a currency trading unit - I remember being surprised by this when I heard about from a friend who was working on a contract in there - they seemed to be very proud of it because it apparently made money. I guess they would be buying oil (in $) selling and buying electricity (in STG) and undertaking a lot of foreign contracts where the might want to hedge these contracts against currency risk.
Also have developed windfarms in NI, and still doing so. Also in JV for roof mounted solar with Kingspan building out of NI. Also own NIE (the NI distribution system owner and operator).
There’s quite a bit of NI exposure all told.
Ok but how does betting on NI inflation help them hedge? Wouldn’t they be better off simply hedging the currency risk directly? What are they trying to hedge against?
maybe you should spend a few minutes reading the ESB annual report rather than RTE’s synopsis
I presume you’re refferring this, which doesn;treally answer my question:
But what would ESB’s risk be in terms of Northern Ireland inflation? I don’t get it.
Edit: I’m sure it’s all done for good reason, but it’s €187m of money that would otherwise go to the taxpayer either as a dividend or in rate reductions, so I think it’s a fair enough question.
not certain but it’s a regulated industry - electricity prices are linked to inflation (in NI presumably) - but input prices may not be
the accounting treatment for the "hedge " may be different to the underlying - i.e. they’re not really worse off but the accounting treatment makes it look like that.
I still don’t get it. Explain using smaller words, or possibly interpretive dance
The swaps lost money because RPI was high, i.e. ESB were betting RPI would be low.
the accounting treatment for the "hedge " may be different to the underlying - i.e. long term they’re not really worse off but the accounting treatment/cash flows makes it look like that. I really don’t know/care
maybe you should reach out to ESB investor relations and ask them to get out the crayons
Perhaps you should read the document Apparently the transaction doesn’t qualify for hedge accounting.
Ah I’m sure it’s all cool; just surprised no-one seems to be talking about a €187m loss on derivatives in a semi-state. That would pay for a lot of water
maybe that’s why it’s a “loss”?
Right, but is there actually a corresponding gain that offsets it? You’d think they would have highlighted it rather than just having a footnote that says “Oh noes, we lost €187m on derivatives!”