APPLICATION NOTICE 2 July 2010 Maintaining a Reliable Electricity Supply within Central Queensland Disclaimer While care was taken in preparation of the information in this document, and it is provided in good faith, Powerlink accepts no responsibility or liability (including without limitation, liability to any person by reason of negligence or negligent misstatement) for any loss or damage that may be incurred by any person acting in reliance on this information or assumptions drawn from it, except to the extent that liability under any applicable Queensland or Commonwealth of Australia statute cannot be excluded. This document has been prepared for the purpose of inviting information, comment and discussion from interested parties. The document has been prepared using information provided by a number of third parties. It contains assumptions regarding, among other things, economic growth and load forecasts which may or may not prove to be correct. Powerlink makes no representation or warranty as to the accuracy, reliability, completeness or suitability for particular purposes, of the information in this document. All information should be independently verified before assessing any investment proposals. POWERLINK QUEENSLAND – APPLICATION NOTICE ADDRESSING RELIABILITY OF SUPPLY REQUIREMENTS IN NORTH AND FAR NORTH QUEENSLAND 2007-2010 DOCUMENT PURPOSE For the benefit of those not familiar with the National Electricity Rules (Rules) and the National Electricity Market (NEM), Powerlink offers the following clarifications on the purpose and intent of this document: 1. The Rules require Powerlink to carry out forward planning to identify future reliability of supply requirements and to issue this type of document for “proposed new large network assets”. 2. The Rules require Powerlink to identify, evaluate and compare both network and non-network options (including generation and demand side management) to determine which can address the future supply requirements at the lowest cost to the market and hence to electricity consumers. 3. This document contains the results of this evaluation and a draft recommended solution to address future supply requirements from the summer of 2013/14. Registered Participants and interested parties are invited to comment on the draft recommendation. What the document does NOT mean: A. It does NOT mean that the lights are about to go out. The identified supply requirements are expected to arise some years into the future, assuming that demand for electricity continues to grow. There is enough time between now and then to implement a solution. B. It does NOT mean that Powerlink has been surprised, or that anything is “out of the ordinary”. On the contrary, it is part of the normal, routine planning processes in the NEM. POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 2 CONTENTS EXECUTIVE SUMMARY ............................................................................................................ 4 1. INTRODUCTION ................................................................................................................. 7 2. BACKGROUND: EXISTING SUPPLY SYSTEM .................................................................. 8 2.1 Geographical Area ........................................................................................................ 8 2.2 Existing Supply Arrangements ...................................................................................... 8 2.3 Committed Network Developments ............................................................................... 9 2.4 Existing and Committed Generation Facilities ............................................................... 9 3. Electricity Demand ............................................................................................................. 11 3.1 Overview ..................................................................................................................... 11 3.2 Supply Requirement .................................................................................................... 11 3.3 Pattern of Use ............................................................................................................. 12 4. Forecast Reliability of Supply Requirements ...................................................................... 13 4.1 Planning Criteria for Network Development ................................................................. 13 4.2 Supply and Demand Assumptions............................................................................... 13 4.3 Description of Forecast Transmission Network Capability ........................................... 13 5. OPTIONS CONSIDERED .................................................................................................. 15 5.1 Non Network Options .................................................................................................. 15 5.2 Network Options .......................................................................................................... 15 5.2.1 Option 1 – 275kV double circuit line augmentation between Calvale and Larcom Creek (one circuit strung) and 275kV double circuit line rebuild from Larcom Creek to Gladstone .......... 17 5.2.2 Option 2 – 275kV double circuit line augmentation between Calvale and Larcom Creek and 275kV double circuit line rebuild from Larcom Creek to Gladstone ....................................... 19 5.2.3 Option 2a – 275kV double circuit line augmentation between Calvale and Larcom Creek (alternative circuit arrangement) ............................................................................................. 21 5.2.4 Option 3 – 275kV double circuit line augmentation between Calvale and Stanwell (one circuit strung) ..................................................................................................................................... 22 5.2.5 Option 4 – 275kV double circuit line augmentation between Calvale and Stanwell ............... 24 6. SCENARIOS CONSIDERED ............................................................................................. 26 6.1 Context for Evaluation of Options ................................................................................ 26 6.2 Assumed Market Development Scenarios ................................................................... 27 6.2.1 Existing Network and Future Transmission Developments .................................................... 27 6.2.2 Variations in Load Increase .................................................................................................... 27 6.2.3 Existing and Committed Generators and Demand Side Developments ................................. 27 6.2.4 Potential New Generation ....................................................................................................... 28 7. FORMAT AND INPUTS TO ANALYSIS ............................................................................. 29 7.1 Regulatory Test Requirements .................................................................................... 29 7.2 Inputs to Analysis ........................................................................................................ 29 7.3 Cost of Network Augmentations .................................................................................. 29 8. FINANCIAL ANALYSIS ...................................................................................................... 30 8.1 Present Value Analysis ............................................................................................... 30 8.2 Sensitivity Analysis ...................................................................................................... 30 8.3 Inter-Network Impact ................................................................................................... 32 9. CONCLUSIONS ................................................................................................................. 33 10. DRAFT RECOMMENDATION ........................................................................................... 34 11. CONSULTATION ............................................................................................................... 34 POWERLINK QUEENSLAND – APPLICATION NOTICE MAINTAINING A RELIABLE ELECTRICITY SUPPLY WITHIN CENTRAL QUEENSLAND – 2 July, 2010 Page 3 EXECUTIVE SUMMARY Introduction Electricity use in Queensland has exhibited strong growth during the past ten years. Notwithstanding the effects of the brief recent economic slowdown, demand is expected to continue to grow over the next ten years at approximately 2.7% per annum for the Central West and Gladstone zones, with the potential for significant additional mining related load, particularly in the Gladstone area. Powerlink Queensland recognises the importance of maintaining a reliable electricity supply to its customers and has identified thermal limitations in the electricity transmission network arising within and between the Central West and Gladstone zones. Currently, thermal limitations are managed by operational strategies and redispatch of generation. In November 2009, Powerlink published a Request for Information (RFI) inviting submissions from proponents of genuine and feasible network support services that maybe able to operate in conjunction with the transmission network to reliably supply forecast demand with respect to transfer capability between the Central West and Gladstone zones