I think I now understand what the Smithfield acquisition is...

I think I now understand what the Smithfield acquisition is about.

This addition transforms IFN from a price-taker into a market maker in NSW.

It isn't necessarily about turning it on when the wind dies, it is about THREATENING to use it - to drive off or blind rivals seeking to game the NEM, and making that threat demonstrably credible. The operations room suddenly has many more options to meet contractual obligations, and the capacity to assume more 'firming' obligations than simply own-use. If IFN can fill the gap more cheaply with financial derivatives than by burning gas, it is free to do so. Or, third-party firming commitments can be satisfied by surplus own-wind, this is money for jam.

This black box effect would be amplified further if IFN added a big battery or synchronous condenser (both!) on the Canberra-Sydney interconnect, either at Smithfield or at Capital/Bodangora.

Meanwhile, IFN can offer the plant when uncommitted as a 'peaker' at high prices as Visy did. It will be interesting to see what price IFN offers it at - Visy wanted $10,000 a Mwh.

Given these benefits, Smithfield is a bargain at $74m for 123MW - even if it is rarely turned on.

Ash