Time is running out for the businesses that generate billions of dollars worth of GDP and that employ a quarter of a million New Zealanders.

They're the businesses that run on gas. Your bakers, your coffee roasters, your wineries, your wood processors, your ag sec. And that's not counting the schools and hospitals dependent on gas to heat their buildings.

Time is running out because the gas they operate on is running out. It's a finite resource. And as yet, they haven't found anything to replace it.

And yes, we've probably heard about the high profile businesses like Glenbrook Steel Mill and Spates Brewery in Dunedin who've transitioned to electric arc furnaces and electric boilers respectively. But for a huge number of businesses, a shift is not yet technically or financially possible but the gas is going to run out.

They can't say, we'll just keep it going until we transfer over because when it's gone, it's gone. And when it comes to making the transition, it's not just the cost of a new electric furnace.

If bakers, for example, want to make the move from gas to electric, that will cost upwards of $10 million. And that's just the beginning. There are the connection costs. That starts at a couple of million, just to get the thing connected. And then there's the backup plan. Electricity isn't as reliable as gas.

BusinessDesk quotes the country president of Schneider Electric who had a customer that had to dump 19 million litres of milk because they lost energy for 30 seconds.

As a result, businesses that are transitioning are spending capital on battery stabilisation just to make the grid usable before they can completely transition over. And it makes for a really uncertain environment and that's reinforced by a Schneider Electric survey.

They looked at 288 senior business leaders and found 39 percent of them had delayed expansion or lost contracts due to energy costs or supply issues in the past year. We've talked about it before.

 I think we've talked about it and about the fact that it's coming, that the end of the gas is coming, and yet people and businesses, don't seem to be able to afford to make the transition or else they've looked at the numbers and thought - we'll have to go overseas because there we'll have a reliable energy source. It won't be as expensive as it is here.

It's a shame. But we've still got the business and we can set up offshore.

Energy costs have doubled over the past five years. But even though we've complained about the cost of everything going up, the cost of a loaf of bread hasn't doubled.

Where are you at if you are one of those businesses? They're big and they're small in terms of those that rely on gas. With the smaller ones, is it even worth transitioning?

Do you just shut up shop and start again? With the bigger ones, I mean, you probably can't afford not to. Now, the eventual exit, as BusinessDesk writes, of Methanex, New Zealand's single largest user, would free up some volumes currently used for methanol production, but that's only a temporary reprieve.

What are we doing here? I can't even imagine what the future looks like. That is, one day you'll go to turn on the gas and it won't be there. What will you have done before that?

Will you be long gone, reading about it from Australia? Will you be in another business entirely? Where do we go from here?

LISTEN ABOVE

Time is running out for the businesses that generate billions of dollars worth of GDP and that employ a quarter of a million New Zealanders.
They're the businesses that run on gas. Your bakers, your coffee roasters, your wineries, your wood processors, your ag sec. And that's not counting the schools and hospitals dependent on gas to heat their buildings.
Time is running out because the gas they operate on is running out. It's a finite resource. And as yet, they haven't found anything to replace it.
And yes, we've probably heard about the high profile businesses like Glenbrook Steel Mill and Spates Brewery in Dunedin who've transitioned to electric arc furnaces and electric boilers respectively. But for a huge number of businesses, a shift is not yet technically or financially possible but the gas is going to run out.
They can't say, we'll just keep it going until we transfer over because when it's gone, it's gone. And when it comes to making the transition, it's not just the cost of a new electric furnace.
If bakers, for example, want to make the move from gas to electric, that will cost upwards of $10 million. And that's just the beginning. There are the connection costs. That starts at a couple of million, just to get the thing connected. And then there's the backup plan. Electricity isn't as reliable as gas.
BusinessDesk quotes the country president of Schneider Electric who had a customer that had to dump 19 million litres of milk because they lost energy for 30 seconds.
As a result, businesses that are transitioning are spending capital on battery stabilisation just to make the grid usable before they can completely transition over. And it makes for a really uncertain environment and that's reinforced by a Schneider Electric survey.
They looked at 288 senior business leaders and found 39 percent of them had delayed expansion or lost contracts due to energy costs or supply issues in the past year. We've talked about it before.
&nbsp;I think we've talked about it and about the fact that it's coming, that the end of the gas is coming, and yet people and businesses, don't seem to be able to afford to make the transition or else they've looked at the numbers and thought - we'll have to go overseas because there we'll have a reliable energy source. It won't be as expensive as it is here.
It's a shame. But we've still got the business and we can set up offshore.
Energy costs have doubled over the past five years. But even though we've complained about the cost of everything going up, the cost of a loaf of bread hasn't doubled.
Where are you at if you are one of those businesses? They're big and they're small in terms of those that rely on gas. With the smaller ones, is it even worth transitioning?
Do you just shut up shop and start again? With the bigger ones, I mean, you probably can't afford not to. Now, the eventual exit, as BusinessDesk writes, of Methanex, New Zealand's single largest user, would free up some volumes currently used for methanol production, but that's only a temporary reprieve.
What are we doing here? I can't even imagine what the future looks like. That is, one day you'll go to turn on the gas and it won't be there. What will you have done before that?
Will you be long gone, reading about it from Australia? Will you be in another business entirely? Where do we go from here?
LISTEN ABOVE

Best of Business is the home of all things business at Newstalk ZB, from morning market updates right through to incisive interviews with New Zealand’s top business leaders and decision makers. 

Whether you’re a small business owner or interested in what’s going on in the Big End of Town, this podcast encompasses the sharpest voices and minds in the world of business.

Best of Business is the home of all things business at Newstalk ZB, from morning market updates right through to incisive interviews with New Zealand’s top business leaders and decision makers. Whether you’re a small business owner or interested in what’s going on in the Big End of Town, this podcast encompasses the sharpest voices and minds in the world of business.

Best of Business is the home of all things business at Newstalk ZB, from morning market updates right through to incisive interviews with New Zealand’s top business leaders and decision makers.

Best of Business

Kerre Woodham: Time is running out for businesses that run on gas

https://api.omny.fm/orgs/7784f840-c291-422a-924b-ad9000bbad71/clips/fea333f9-aa64-4596-b313-b4cf00559417/transcript