SPECIAL REPORT FEATURE

Key takeaways • $3bn of energy projects under consideration • Closure of Synergy’s Muja C&D coal plant may be considered ahead of schedule • Move to introduce a new ancillary services market to reward coal or alternative technology for grid stabilisation • Changing demand and supply trends add to complexity • Consumers to save $288 million over 50 years from changes to network access

DRIVING: Richard Harris says the cost of Westgen’s Byford project will come in between $70 million and $80 million. Photo: Gabriel Oliveira $3bn of projects amid market flux About $3 billion of electricity projects are in the pipeline in WA, but technological change and regulatory pressure are creating investment uncertainty.

The neighbouring plant, Muja An option for the government, A&B, which was controlled by if it wanted to extend the plant’s BENEFIT FROM government-owned Synergy via life, would be a refurbishment. $ NETWORK ACCESS subsidiary Vinalco, was shut That model was used for the m CHANGES (50 YEARS) down this year as part of a broader A&B facility in 2009, which suf- 288 Source: Public Utilities Office bid to drain 380 megawatts from fered an infamous blowout to cost capacity of 863MW across the April hit a lower minimum during the South West Interconnected twice what was planned, finish- SWIS as of December 2017. the day than at night. System (SWIS). ing at around $310 million. The solar panels mean signifi- Business News has discovered Industry will watch its future An alternative approach might cant extra power is pumped into there were 20 trading intervals Matt Mckenzie closely, as it could affect the $3 be to shut the generators early. the market during the day. (30 minutes each) in the first two [email protected] billion of projects in the pipeline One reason for that would be From the perspective of the weeks of August during which the @Matt_Mckenzie_ in WA. as part of a move by the state market operator, which is unable SWIS balancing market cleared at The four generators in the C&D government to reduce carbon to control dispatch from decen- a negative price. 6-PAGE FEATURE plant together have a maximum emissions. tralised solar systems, that means That means generators would ESTERN Austral- output of 810MW, worth around A second consideration raised peak daily demand for utility effectively be paying customers ia’s oldest operating 17 per cent of the capacity credits by industry sources is that the scale generators is moving later to take electricity about 3 per cent W power plant, Synergy’s for the 2019-2020 capacity cycle. plant may be losing money in into the evening. of the time. Muja C&D coal facility in Collie, The first two generators are certain operating circumstances. In fact, according to Curtin For some generation types, provides a good case study of the scheduled for closure in 2030, while Part of the pressure comes University’s Peter Newman, data such as renewables or peaking gas uncertainty and changing dynam- a further two generators would from the growing prevalence from April shows that electric- plants, a negative price will mean ics in the state’s electricity market. close in 2035 on current timelines. of rooftop solar panels, with a ity demand during some days in units are simply turned off. NEWS & ANALYSIS

SEARCHENGINE Renewables projects ...your key to WA business MW Project Name Proponent Energy type capacity Price Location Yandin Alinta Energy Wind Farm 300 $600m Yandin Warradarge Synergy, DIF, CBus Super Wind 180 $500m Warradarge East Rockingham Waste to Energy New Energy, Macquarie Capital Waste 28 $400m Rockingham Kwinana Waste to Energy Phoenix Energy Waste 32 $380m Kwinana Badgingarra* APA Group Wind and Solar 148 $315m Badgingarra Manjimup Westgen Biomass 40 $200m Manjimup Merredin Stellata Energy Solar 132 $160m Merredin Cunderdin Sun Brilliance Solar 85 $110m** Cunderdin Pilbara waste to energy New Energy Waste 6 $70m Port Hedland Byford solar Westgen Solar 30 $70m Byford Greenough River expansion* Synergy, DIF, CBus Super Solar 30 $60m Geraldton CETO 6* Carnegie Wave/ Hydro 1.5 $56m Albany Onslow microgrid* Horizon Power Microgrid, solar 5.5 $36m Onslow Northam* Carnegie Clean Energy Solar 10 $17m Northam Collie crypto/solar* Hadouken Solar 20 $16m Collie Kalbarri microgrid* Horizon Power Solar, battery 5 $6.8m Kalbarri ATCO Hydrogen microgrid ATCO Hydrogen Electrolysis 0.3 $3.3m Jandakot Albany Grasmere refurbishment Synergy, DIF, CBus Super Wind 35 - Albany Carnarvon distributed energy* Horizon Power Solar, battery - - Carnarvon Standalone power systems* Western Power Solar, Diesel generator <25kW - Ravensthorpe Standalone power systems* Horizon Power Solar, Diesel generator <25kW - Esperance Carnarvon distributed energy* Solar - - Carnarvon *Underway | **Business News estimate Source: BNiQ

The process for base load little progress has been made was with Wesfarmers subsidiary generators is not as clear cut, We don’t want (the Muja since. Kleenheat, which retails power to however, with coal-fired power One project that is currently businesses. plants unable to quickly turn on under construction is APA Mr Harris said the company or off as demand fluctuates. generators) retiring actually, Group’s 130MW Badgingarra wind was also considering a battery for Added pressure will come from farm, with completion due in 2019. the development, one of numer- Synergy’s Bright Infrastructure because that will impact on a small Power from that facility will ous businesses running the ruler Fund, a joint venture with DIF flow to Alinta Energy. over such a move. and CBus Super, which will spend grid like WA - Richard Harris In June, APA announced it The rising interest in batter- about $500 million on a new would add on 18MW of solar ies to support utility scale solar 180MW wind farm at Warradarge options in a changing energy Pipeline capacity at Badgingarra, also con- developments demonstrates how and in two other projects (see list, market. tracted to Alinta. significant the impact of rooftop above). “Over recent years, Synergy The closure of further genera- Three major waste-to-energy panels has been on the market. One energy industry executive has retired assets against the tion units at Muja is expected to projects are under considera- The batteries will be used told Business News that increased backdrop of declining net elec- help pave the way for a series of tion, including New Energy’s to store excess power created supply would not be positive for tricity demand in the wholesale privately backed energy projects and Macquarie Capital’s 28MW during the day for release in the coal generation. electricity market, increasing (see list, above). Rockingham facility and Phoenix evening, coinciding with peak “Synergy is creating a rod for solar (photovoltaic) and large- Business News has found $3 Energy’s 32MW plant in Kwinana demand. its own back, because it’s basically scale renewable generation,” the billion worth of power projects (see page 18). But Mr Harris, who also chairs cannibalising its own coal plant,” spokesperson said. under consideration or in con- Solar projects are the most the Independent Power Asso- the executive said. “Any changes to Synergy’s gen- struction in WA, with most in the numerous on the list, headed by ciation, was clear that an early “You’re starting to get these eration mix will be assessed based South West network. Stellata Energy’s Merredin farm, closure of the Muja C&D plant really big dips (in demand) during on the economic and generation Nearly half of that figure Sun Brilliance’s Cunderdin pro- would be problematic. the day, so coal increasingly, it’s requirements that best meet WA’s comes from wind projects. ject, and Westgen’s 70MW Byford “We don’t want (the Muja gen- not there yet, but it will come energy needs and will include The biggest such investment facility. erators) retiring actually, because under pressure because you can’t liaison with government, key stake- under consideration is Alinta Westgen director Richard that will impact on a small grid turn it off during the day.” holders and the Collie community.” Energy’s Yandin wind farm, worth Harris said the company was like WA,” Mr Harris said. A spokesperson for Synergy did The cost of the Warradarge $600 million and with 300MW finalising financing for Byford, “It comes back to the economic not rule out an early closure for wind farm project, and due dil- capacity. which would cost between $70 value you put on those plants the plants, adding that the enter- igence, were yet to be finalised, Alinta acquired the investment million and $80 million. that provide that base load secu- prise was constantly assessing the spokesperson said. rights to Yandin in 2016, although The offtake deal for the project rity to the grid. FEATURE POWER AND ENERGY

Synergy’s dominance in the wholesale market coupled with a lack of price competition may be driving up wholesale electricity prices

- Public Utilities Office report

controlling about 75 per cent of generation and setting electric- ity market prices three quarters of the time,” the report said. “There is limited competition DECISIONS: Ben Wyatt (left) has signalled he has reform ambitions for the sector, while Synergy chief executive Jason and wholesale electricity prices are increasingly high and volatile. Waters will be an influential player. Photos: Attila Csaszar “This is despite low spot prices for gas. $3bn projects pipeline to customers,” he said. Under the existing system, all “Synergy’s dominance in the “Therefore that’s clearly put generators are guaranteed access wholesale market coupled with a in changing market pressure on project metrics. and the network operator needs lack of price competition may be “At the same time, the pro- to invest in additional capacity to driving up wholesale electricity “The capacity market as it’s to be about 20MW with around ject metrics have improved as allow for it. prices.” currently structured doesn’t dif- 32MW hours of storage. solar panels get cheaper every The POU paper said con- In its recent report into the ferentiate between time of use or Sun Brilliance director Ray year (and) there’s been some straining access would save east coast electricity market, types of generation.” Wills said he was confident the good competitive presence for consumers $288 million across a the Australian Competition and He said the government was company’s Cunderdin project infrastructure builds in the 50-year period. Consumer Commission called for seeking reforms to assign value would be under construction marketplace.” The challenge, however, was the two state-owned generators to plants that could provide those before the end of the year. that changing contracts with in Queensland to be broken into extra functions through a new “Things are progressing well, Reform agenda existing generators would cost three, and for each to have sepa- ancillary services market. we have a timetable we’ve been A suite of possible policy them as much as $194 million in rate ownership. “They’re looking at reforms prosecuting fairly closely since changes, some likely and others compensation. Additionally, the ACCC recom- there to actually give them (their) April and we are pretty much on more remote, will also affect the The report estimates 900MW mended a cap be placed to stop true economic value; it’s not that timetable,” he said of a pro- sector moving forward. of new capacity would be able to any entity controlling more than rewarded in the current market ject expected to take nine to 10 Those include a potential fit onto the market without new 20 per cent of the generation mechanism,” Mr Harris said. months to build. national emissions policy, reforms transmission investment. market. “As a market participant, we “We have a deadline of con- to network access arrangements, “The cost of augmenting the Both recommendations point don’t want those plants to retire struction of the end of next year introduction of greater competi- network is high,’ the report said. to a need to split Synergy. prematurely.” but we’ll beat that with quite a bit tion into the retail market, and “A major transmission line aug- A related issue is Synergy’s con- Stellata Energy director of of room to spare.” moves to reduce Synergy’s market mentation can cost hundreds of trol of the retail market, where it development Troy Santen told An optimistic target was for power. millions of dollars. has a legislated monopoly for all Business News the Merredin pro- the plant to be ready to go in the Australia’s ongoing emissions “A conservative estimate of the customers using below 50MWh a ject was making progress, with middle of 2019, Mr Wills said. reduction policy was unclear at cost of building sufficient capac- year. the intention of selling power into Phase one of the project will be the time of writing. ity in the transmission network Mr Wyatt has previously sig- the merchant market rather than 80MW, with a 48MW second stage That will contribute to to allow current and future gen- nalled ambitions to lower this via an offtake contract. intended for an all up cost of $160 investment uncertainty, both erators expected to connect in the threshold, although it is unclear Merredin will have a capacity million. for renewables and fossil fuel next 10 years to safely transmit when. of 132MW at a cost of around $160 He said finance arrangements generation. their maximum output is $700 The IPA’s Mr Harris said it had million. had been in place since last year. Locally, Energy Minister Ben million to $1 billion.” always been intended that the “We’ve got our capacity credits Mr Wills was confident there Wyatt has made signals that he’s Another government overseer threshold would gradually drop. for the 2019-20 year, we’re looking would be space in the market for eager to bring about reform. of energy, the Economic Regula- As a next step, he said all busi- to be operational in the second the project, with offtake deals The Public Utilities Office tion Authority, has called for a nesses should be allowed to have half of next year,” Mr Santen said. mostly secured. released a paper in August review- reduction of Synergy’s market a choice of power providers. He said Stellata had added a “There’s no doubt that over the ing the benefit of constraining power, including in its annual But he also noted that the battery to be part of the project. past couple of years renewables access to the SWIS for generators. review of the market. government was listening and Details for that were not quite have become a very cost compet- In such a model, generators are “Synergy dominates the consulting with industry, a posi- finalised, although it was likely itive way of supplying electricity competing for network use. wholesale electricity market, tive sign. POWER AND ENERGY FEATURE Changes on horizon for Pilbara Moves to reform the Pilbara’s electricity sector will improve competition and lower prices, proponents claim.

Matt Mckenzie [email protected] @Matt_Mckenzie_ THERE is no shortage of elec- tricity generation capacity in the Pilbara, with about 2,000 meg- awatts of power infrastructure scattered across the region. But peak demand is only around 1,450MW, according to Horizon Power manager of retail and generation, Evette Smeathers, who spoke at the Pilbara 2018 con- ference in August. Much of the capacity is isolated at mining or oil and gas sites, not SWITCH: Reform is under way in the Pilbara electricity network. Photo: Horizon Power linked into a broader network. To the extent there are linkages between generators and potential a 30MW battery system to act as The report recommended a customers, access can be difficult a spinning reserve earlier this light-handed regulatory scheme, to secure. year, showing how technology is seperate network ownership and That is changing, however, with changing the calculus of these an independent operator for the the state government moving CUSTOMERS16,000 ON HORIZON’S PILBARA NETWORK decisions. system. earlier this year to make Horizon A further consideration for the There are other changes – its vertically integrated regional negotiation or drawn-out legal “In the early stages, we will government is the level of sub- taking place in regional power electricity business – facilitate processes.” probably only have a couple of sidies that head into Horizon’s markets. third-party access to its Pilbara The reason for that approach is competitors there, but as you coffers. Horizon has been an early grid. the market’s relative immaturity, start to get an increased number The tariff equalisation fund adopter of microgrid and dis- That decision followed an with lower levels of liquidity, she of competitors accessing the net- is a surcharge on the electricity tributed generation technology, ongoing battle between Horizon said, as the system had grown in a work, you’ll see some benefits.” bills of customers in Perth and with an example being the use and Alinta Energy to negotiate an different way than others. Ms Smeathers said there would surrounds, which is passed to of standalone power systems for access arrangement. Legislation is expected to go to be other benefits for develop- Horizon to keep regional power farmers in the Esperance area. Ms Smeathers said the Pil- parliament for the changes before ment in the north-west. bills down. Such systems are used where bara power market, known as the year is out, with a transition One was that small miners would About $150 million was redis- it is cheaper to not connect a the North West Interconnected to take place between January more easily be able to link into the tributed through this mechanism customer or group of customers System, had unique qualities com- and June. system, reducing capital costs for in the 2017 financial year. into a larger grid, and rely on pared with Australia’s other two The new system will launch in generation at new projects. The amount has grown in storage to smooth fluctuations main markets. July 2019. Another consideration was recent years, although at a much in demand. “Generation infrastructure has The key challenge would be the potential to ease capital less substantial rate than had Microgrids are to be rolled been built as required by each to make sure any reform was investment requirements for big originally been budgeted. out at Onslow, and Kalbarri, as customer, with no central plan- not overkill, Ms Smeathers said, projects. If future projects were There have been numerous examples. ning or market,” she said. noting that Horizon Power was able to connect to the network, reports looking at reform of the A further reform is in electric- “The transmission network fully supportive of open access. proponents would not have to Pilbara market in the past two ity pricing, with a new scheme doesn’t have any central plan- “There are multiple benefits invest in extra capacity to ensure decades, including most recently to change prices based on timing ning, there’s no central dispatch from optimising the infrastruc- they had a reserve generator in a 2015 review by former Synergy of demand being rolled out for function. ture development in the region,” case of a problem. chairman Lyndon Rowe. Broome customers. “We have a semi-interconnected she said. This concept is known as a system, we have significant inef- “If you can create a competitive spinning reserve. SEARCH Horizon Power ficiency, overcapacity, limited market, it results in lower prices At Roy Hill’s Newman mine, There are 317 results from our index of 95,609 articles, collaboration, and either bilateral for electricity consumers. however, Alinta Energy installed 9,440 companies and 33,391 people FEATURE POWER AND ENERGY

Waste-to-energy investment tops $870m Almost a billion dollars worth of waste-to-energy projects are in the pipeline in WA.

BENEFITS: Raj Aggarwal says waste-to-energy power is unique in that it can provide baseload generation and is also eligible for renewable credits. Photo: Gabriel Oliveira

Matt Mckenzie signing a deal to take waste from “Effectively you’re taking [email protected] a series of councils in March. waste, combusting that waste The beauty of this compared to @Matt_Mckenzie_ New Energy Corporation is and generating energy, so then MUCH to their chagrin, succes- working on two projects. you’ve got environmental issues any other baseload facility is that it’s sive national political leaders One is in Port Hedland, a $70 associated with that, you’re trying the only facility that actually gives you have been thwarted by the chal- million project that will have to aggregate 15 or 20 councils. lenge of merging an emissions capacity of six megawatts, scaled “And then you’ve got the elec- renewable energy credits together with reduction policy with the need down from an initial design of tricity market challenge in WA, for stable baseload power. $200 million and 15.5MW. there’s just insufficient (demand) being a baseload - Raj Aggarwal That failure is largely political The company had secured a in the market to offtake energy.” in nature, given the widespread waste and power deal in July, but Combined, that means projects “The beauty of this compared to “But then there’ll be a residual support for emmissions reduc- that was terminated earlier this could sit in the pipeline for a long any other baseload facility is that stream of waste that goes either tions by much of the business month. time, he said. it’s the only facility that actually to landfill or waste to energy, and sector. The company’s second project, The project’s recent progress gives you renewable energy cred- that’s the point where we say it’s Now, three projects in Western in Kwinana, is a $400 million included moves towards a power its together with being a baseload.” better to go to waste to energy.” Australia hope to go some way investment in collaboration with purchasing agreement and a deal Mr Aggarwal said a recent paper The South West Interconnected to mitigating the emmissions Swiss contractor Hitachi Zosen to offtake waste. by the Environmental Protection System power network does not issue using waste-to-energy Inova and Middle Eastern fund “We think within the next two Authority had found landfill was currently have any waste-to-en- technology. Tribe Infrastructure, with each to three weeks we’ll be able to a far worse option for green- ergy facilities, although there Such generators take waste party holding a third. definitively find ourselves with house gas emissions than waste are nine landfill gas-powered from local governments that The Kwinana plant will have almost all our waste contracted, to energy, because the latter pro- generators. might otherwise go to landfill, capacity of about 30MW. which would mean we’d have all duced carbon dioxide rather than They produced about 2.5 giga- drawing out gases that are then The proponents are hoping to of the fuel supply locked in,” Mr the more damaging methane. watt hours in the year to August set alight to release energy that get construction under way in the Aggarwal said. However, he said it was still 15, according to the Australian drives electricity turbines. March quarter of 2019, with com- He said about 70 per cent of important for councils to manage Energy Market Operator, about The process produces carbon pletion in 2021. revenue for a waste to energy waste effectively. 0.7 per cent of total generation. dioxide, which is less environ- Tribe director Raj Aggarwal plant came from the waste con- “(We say) from a council per- Facilities include Red Hill, mentally damaging than the said the consortium had made tracts themselves. spective, make sure you do South Cardup and Tamala Park, methane released through land- significant strides in the past “The government has imposed absolutely everything you can, which are operated by Landfill fill decomposition. month. a landfill levy, it’s the same thing,” whether it’s compost or recycling, Gas & Power, CleanTech Ener- Macquarie Capital and Phoe- “These projects … they are actu- Mr Aggarwal said. all the processing you can,” Mr gy’s biogas plant and Waste Gas nix Energy started preliminary ally very difficult to get off the “Instead of putting (their Aggarwal said. Resources’ Henderson facility. groundworks at a $400 million ground, mainly because your fuel garbage) in the landfill, they’re waste-to-energy plant in Rock- supply is effectively coming from paying you to take it and gener- SEARCH New Energy Corporation ingham earlier this year, with councils and there’s many councils,” ate energy from it ... it’s a baseload There are 31 results from our index of 95,609 articles, the Melbourne-based company Mr Aggarwal told Business News. facility. 9,440 companies and 33,391 people POWER AND ENERGY FEATURE

SEARCHENGINE Electricity generators in swis ...your key to WA business ranked by capacity Source: AEMO

Bluewaters Power 434 MW 766 MW

Sumitomo Chow Tai Fook Wagerup gas (391MW), Pinjarra gas (286MW), Corporation & Bluwaters coal Enterprises Walkaway wind (89MW) Kansai Electric

Western NewGen Neerabup 2,824 MW Energy 342 MW 206 MW 116 MW

UBS, Rest Collgar wind Perth Kwinana ERM Power, Industry Super farm Energy gas Energy Infrastructure Trust Neerabup gas Goldfields Power 93 MW 68 MW 55 MW Palisade Merredin NewGen Kwinana Goldfields Energy Mumbida Partners gas dual Infrastructure wind 335 MW generation Trust farm Ownership | Assets Tronox Management Tesla 80 MW 42 MW 40 MW WA government Muja C&D coal (816MW), Pinjar (600MW), Collie coal (318MW), Kemerton gas (310MW), Sumitomo Corporation, Kwinana combined Cockburn CC gas (250MW) Energy Infrastructure Trust cycle gas ASX-listed Emu Downs wind Tronox Tiwest gas

MW - Capacity August 2018 Geraldton gas (9.9MW), Kemerton (9.9MW), Koon Holdings Northam (9.9MW), Picton (9.9MW) Electricity retailers ranked by customers 2016-177

Customers Customers Company Ownership 2016 2017 Synergy WA government 1,081,854 1,060,806 Horizon Power WA government 46,809 47,922 Alinta Energy CK Infrastructure 2,428 2,775 Perth Energy Infratil (majority share) 599 301 Amanda Energy Henry Cook, Martin Jurat 73 95 Kleenheat Wesfarmers 28 74 Rottnest Island Authority WA government 25 24 Advanced Energy Resources Castelli Group 21 23

Source: ERA SPECIAL REPORT

SEARCH Energy There are 17,865 results from our index of 95,609 articles, 9,440 companies and 33,391 people

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