Power Sector in Australia
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Opportunities for Japanese Investors Power Sector in Australia Allens is an independent partnership operating in alliance with Linklaters LLP. Where we're at Australia's power sector is changing rapidly, spurred by increasing political pressure, ongoing reforms at state and national level and a growing international focus on renewable energy. For more than two decades, the power industry has been in a state of evolution, with disaggregation, corporatisation and privatisation breaking down traditional markets and creating major opportunities for investors, financiers and operators. The renewables market is a particular focus for investors, especially in the areas of wind, solar and energy storage. Australia has set a Renewable Energy Target (RET) for large-scale generation of 33,000 GWh. To meet this goal, almost a quarter of electricity must be generated through renewable energy, and 6,000 MW will need to be constructed by 2020. But time is of the essence, as success is dependent on new renewable energy projects reaching financial close during 2017, allowing enough time for construction before 2020. There are currently 9,000 MW of shovel-ready renewable energy projects to invest in, all with the necessary development approvals to begin construction. While traditional sources of power, such as coal and gas, are slowing down, there is still potential for future development and it's an area to watch. The imminent retirement of ageing coal-fired power stations has also accelerated interest in energy technologies which resolve short-term power supply concerns, such as grid-scale batteries and pumped hydroelectric energy storage. Update on Japanese investment into Australia Japan is the largest source of investment Recent Japanese investment into Australia has extended to a broad range of industries, including power. The Japan- from Asia and Australia Economic Partnership Agreement (JAEPA), which came into effect in January 2015, enhanced the ability of fourth-largest overall, Japanese companies to invest in Australia and they can now operate in a more diversified market. with an investment Japanese companies are also attracted to strategic investments in non-sensitive sectors since the Foreign stock of A$199.6 Investment Review Board (FIRB) threshold was increased from $248 million to $1,078 million. billion in 2015. Recent Japanese investment into the power sector includes: > Acquisition and expansion of Bluewaters power stations in Western Australia ABS INTERNATIONAL INVESTMENT POSITION, AUSTRALIA: > Development of Bald Hills Wind Farm in Victoria SUPPLEMENTARY STATISTICS, 2015 > Development of Coonooer Bridge Wind Farm in Victoria > Acquisition of interest in Hallett 4 Wind Farm 2015 in South Australia > Acquisition of Hallett 5 Wind Farm Power sector in Australia: sale and development pipeline WESTERN AUSTRALIA > Goldfields Gas Transmission Pipeline (Alinta)* QUEENSLAND > Horizon Pilbara Network > Balcardine Solar Farm > Karratha Peaking Power Plant > Kidston Solar Farm > Muja AB Power Station > Braemer Power Station (Alinta)* > Newman Power Station (Alinta)* > Darling Downs Pipeline (Origin) > Pinjarra Power Station (Alinta)* > Darling Downs Solar Farm > Port Hedland Power Station (Alinta)* (Origin) > Wagerup Power Station (Alinta)* > Moranbah Power Gas Assets (AGL) > Powerlink speculative > Spring Gully Gas Assets (AGL) NEW SOUTH WALES > Snowy Hydro 2GW expansion > Endeavour Energy SOUTH AUSTRALIA TASMANIA > Ceres Project (Senvion) > Granville Harbour (WestCoast > Port Augusta Renewable Energy Park (DP Energy) Wind) > Port Augusta Solar Thermal Generation (Alinta)* > South Australia Grid Scale Battery VICTORIA > Spencer Gulf Pumped Hydroelectric Storage > Stockyard Hill Wind Farm (Origin) Project > Bairnsdale Power Station (Alinta)* > Willogoleche Wind Farm (Engie) > Mortlake Pipeline (Origin) > Canunda Wind Farm (Engie) > Flinders Operation Division (Alinta) including: > Northern Power Station > Playford Power Station NEW ZEALAND > Glenbrook Power Station (Alinta)* > Brownfield > Greenfield * Procurement commenced Allens' experience Allens has been at the forefront of major power projects across the region and has unrivalled depth of experience in Australia and Asia. Our advice to clients spans the full spectrum of this sector, whether helping governments plan and implement reform, or advising financiers, developers, operators and new entrants on the complex legal issues in the business of generation, transmission, distribution and supply. NEW SOUTH WALES VICTORIA QUEENSLAND > Boco Rock wind farm > Bald Hills wind farm > Coopers Gap wind farm > Broken Hill solar power plant > Berrimal wind farm > Darling Downs solar farm > Cullerin Range wind farm > Challicum Hills wind farm > Forsayth wind farm > Gullen Range wind farm > Gannawarra Solar Farm > Hamilton solar farm > Gunning wind farm > Kerang Solar Project > Mount Emerald wind farm > Manildra Solar farm > Macarthur wind farm > Queensland Government wind farm asset sales > Moree solar farm > Mortlake wind farm > Whitsunday solar farm > Nyngan solar power plant > Morton’s Lane wind farm > Windy Hill wind farm > Silverton wind farm > Mount Gellibrand wind farm • Acquisition and sale of Tarong North power > Taralga wind farm > Mt. Mercer wind farm station > Trina Solar, rollout of roof-top solar leasing > Nirranda wind farm • Central Queensland gas pipeline divestment product > Portland wind farm • Development of Braemar 1 and 2 power stations > White Rock wind farm > Stockyard Hill wind farm • Queensland Government’s proposed long-term > Woodlawn solar farm > Toora wind farm lease of SunWater industrial pipelines > Woodlawn wind farm > Waubra wind farm • Refinance of Oakey power station • Acquisition of Bald Hills wind farm > Wonthaggi wind farm • Sale of Energex and Ergon’s energy retail • Acquisition of Colongra power station > Woolsthorpe wind farm businesses and Allgas gas distribution business • Acquisition of Cullerin Range wind farm • Acquisition of Basslink interconnector • Sale of Enertrade merchant gas business • Acquisition of Gullen Range wind farm • Acquisition of Powercor's electricity retail • Sale of the Rocky Point Cogeneration power plant • Acquisition of Macquarie Generation business • Scoping Study for divestment of Stanwell/CS power stations • Acquisition of Southern Hydro power station Energy generation and Ergon electricity retail businesses • Acquisition of Vales Point power station • Development and operation of Deer Park • Development and sale of Frasers’ tri- Terminal Station • Tarong and Stanwell wind farms portfolio sale generation thermal energy plant • Electricity and gas privatisation • Sale of Ausgrid’s energy retail businesses • Sale of Loy Yang B power station SOUTH AUSTRALIA • NSW Government’s privatisation of 49% of • Sale of Loy Yang A power station > Allendale wind farm its generation and transmission networks • State Grid’s acquisition of Jemena/ SP AusNet > Cathedral Rocks wind farm (long-term lease) > Canunda wind farm TASMANIA > Hallett wind farm WESTERN AUSTRALIA > Granville Harbour wind farm > Lake Bonney wind farm > Collgar wind farm > King Island solar power station > Mt. Millar wind farm > Emu Downs wind farm > Musselroe wind farm > Starfish Hill wind farm > Flat Rocks wind farm > Woolnorth Studland Bay wind farm > Tungketta Hill wind farm > Greenough River solar power plant • Acquisition of Tamar Valley gas-fired power > Waterloo wind farm > Lake Bonney wind farm station > Wattle Point wind farm > Mumbida wind farm • Sale of Aurora Energy electricity retail business > Willogoleche wind farm > Walkaway wind farm > Wyalla wind farm • Acquisition of the Dampier to Bunbury ASIA • Electricity generation, transmission, distribution pipeline > Babcock & Brown Wind Partners global wind and retail privatisations (long-term leases) • Acquisition of Neerabup power station portfolio • Merchant gas business privatisation > China Datang Corporation Renewable Power – • Acquisition of the Moomba to Adelaide pipeline AusChina Energy Group • Acquisition of ElectraNet (long-term lease) > Datang Jilin Shuangliao wind farm > Hekou, Lijin & Zhanhua wind farms (Phases > Renewable 1&2) • Non-renewable Contacts Nigel Papi Andrew Mansour John Maxwell Head of Japan Group Partner Managing Partner, Tokyo T +61 2 9230 5179 T +61 2 9230 4552 T +81362121227 M +61 424 111 845 M +61 410 402 646 [email protected] [email protected] [email protected] Ryokichi Asaka Penny Alexander Senior Counsel and Co-head of Managing Associate Japan Group T +61 3 9613 8513 T +61 3 9613 8114 M +61 424 712 844 M +61 410 096 992 [email protected] [email protected] Allens is an independent partnership operating in alliance with Linklaters LLP www.allens.com.au Power sector in Australia: issues and opportunities SOLAR WIND Large-scale solar generation projects have increased Wind power is the lowest cost source of utility-scale following the Australian Government’s commitment to renewable energy in Australia, with more than 3GW of developing solar projects and making solar power more installed capacity, and is expected to contribute 75% of economically efficient. Onshore wind generation has renewable energy generated to meet the RET. In 2016, historically contributed to most large-scale renewable wind power generators received approximately $600 energy projects in Australia, but the government has set a million in Australian Government subsidies to compete goal to achieving cost parity between solar and wind with more conventional