Re: GDY - Geodynamics Limited
Except that air travel is discretionary and industry participants can be based overseas in a low cost environment, electric power is not discretionary and has to be generated reasonably close to where it is consumed..
Electricity consumption is subject to the same forces to a significant extent.
The largest users, heavy industry, will go wherever electricity is cheap. That the former State Electricity Commissions built large, highly efficient (low cost) power stations is the only reason those industries are in Australia in the first place.
At the commercial (as distinct from industrial) level, the largest uses are:
1. Lighting (which is over done in many cases, and for which electricity consumption now competes against lower energy use / higher capital cost options such as LED). Electrical load is being lost from this area across the country.
2. Heating and cooling for which electricity competes directly against gas (yes, at the commercial scale you can certainly use gas for cooling). There are increasing instances of electrical load being diverted to gas, most notably via a larges scheme in Sydney covering a substantial area.
At the residential level, the largest user is water heating which competes directly against gas, and low-electricity options such as solar/electric and heat pumps. The other large residential use, in terms of total consumption, is heating which competes directly against natural gas, LPG, wood etc. And of course rooftop solar is also a competitor at the residential level, noting that in some markets (notably South Australia) market penetration of solar is now over 20%.
In the Australian context, the extreme situation is Tasmania where about 50% of total electricity use competes directly against overseas suppliers of electricity, 10% is to other trade exposed industries and 20% competes directly against gas / oil / wood. Only 20% of consumption is "safe" although even that now competes against residential solar and increasing energy efficiency of consumer devices, most notably commercial lighting.
It's not as extreme in the other states (although Qld and WA aren't overly dissimilar to Tas) but certainly there is a substantial portion of electrical load which can be relocated overseas should circumstances warrant.
Of note is that following major reform of the industry over the past two decades, Australia is no longer as competitive at electricity supply as it used to be. That is, costs have increased and we are no longer the 3rd cheapest as we used to be and are now quite some way down the list. The effect of that, thus far, has been first a cessation of the establishment of price sensitive industries in Australia and in more recent times some of that load has begun to actually move offshore. Notable in that sense is that the ultimate destination of relocation includes both developed and lesser developed countries - the motive to relocate is electricity cost, not wages which are a lower component of total business costs.
As for GDY, it is in the same position as every other electricity generation company in Australia. If it is to succeed, it will be by means of competing for an increasing share of a shrinking pie. At least it will unless it can significantly undercut the market, and do direct deals with large consumers who would otherwise be overseas (noting that two other generation companies are already going down this track).
