28/05/2009 - 00:00

Coal dominates agency’s power supply list

28/05/2009 - 00:00

Bookmark

Save articles for future reference.

Coal and wind power are predicted to dominate new electricity generation projects in WA.

Coal dominates agency’s power supply list

THE state government agency that supervises the wholesale electricity market has identified 10 new electricity generation projects likely to start operating by 2014-15.

The Independent Market Operator's (IMO) latest progress report lists 10 power projects that it believes can potentially provide capacity in the South West Interconnected System (SWIS).

In terms of capacity, the list is dominated by four coal-fired projects: Griffin Group's Bluewaters 3 and Bluewaters 4 projects at Collie; Verve Energy's refurbishment of its Muja AB unit at Collie; and Aviva Corporation's Coolimba project in the Mid West.

The list does not include Eneabba Gas, which has spent the past four years developing plans for its 168-megawatt Centauri 1 gas-fired power station near Dongara.

Just last week, Eneabba declared it was the only viable provider of cost effective clean energy in the Mid West.

Eneabba was excluded because it does not intend to supply capacity into the SWIS

Eneabba Gas managing director Mark Babidge said the Centauri 1 project planned to supply mining customers directly and confirmed it did not intend to feed into the SWIS.

"The IMO don't want the process that we are pursuing," Mr Babidge said. "We would never want to be on that list."

The IMO's assessment adds spice to the debate over power supplies to the Mid West, which took an unexpected turn earlier this month when the state government deferred funding for a planned upgrade of Western Power's transmission network.

Aviva, along with several wind farm proponents, had been counting on the upgrade so it could hook into the SWIS.

Similarly, iron ore miners in the Mid West, including Gindalbie Metals, had factored the upgrade into their long-term planning.

Gindalbie signed a power supply agreement with Verve in 2007 and since then has been working with Western Power on the expected transmission line upgrades.

Mr Babidge believes the Centauri power station can directly meet the needs of iron ore projects in the region, and allow the government to defer spending $700 million upgrading the transmission line.

"All the building blocks are in place to ensure that Centauri 1 is able to meet the needs of the mining companies in the Mid West, not least all necessary approvals, finalised technical plans and a gas supply agreement," Mr Babidge said.

Eneabba has not yet signed up any customers through Mr Babidge said discussions were proceeding.

The IMO's progress report, released last week, has highlighted the profound changes since deregulation of the electricity market in 2005 and points to even bigger changes ahead.

The capacity of the SWIS has grown by 8.8 per cent a year since deregulation.

Nine market generators were active in 2005 and by 2010-11 the IMO expects that number to have risen to 20.

More than 2,100MW of new capacity (including demand side management initiatives) is scheduled to enter the market by 2010-11, when the required capacity will be 5,146MW.

"This is an outstanding level of performance by any measure," the IMO concluded.

Gas projects account for about half this total, provided mainly by three generators: Alinta, which has halted new investment; NewGen Power, which has commissioned its first plant at Kwinana and is building a second at Neerabup; and Perth Energy, which is building its first plant at Kwinana.

Another major new player is Ric Stowe's Griffin Group, which has established both coal and wind power projects and has plans for more.

The emergence of these firms means the market share of state-owned generator Verve Energy will have reduced from 90 per cent to about 66 per cent by 2010-11.

This accords with the former state government's plans. When it deregulated the energy market, it capped Verve's capacity at 3,000MW to ensure new entrants could come into the market.

The IMO report says the 10 future projects it has identified will provide enough generation capacity out to 2014-15 to meet demand.

"Currently there appears to be sufficient capacity projected to enter the SWIS to comfortably meet projected demand until the 2014-15 period," the IMO stated.

The IMO's commentary appears more upbeat than Energy Minister Peter Collier's recent comments.

Announcing two major initiatives by Verve earlier this month, Mr Collier said they would: "help address potential energy security concerns flowing from the slowdown of investment in new generation caused by the current economic downturn".

The government plans to spend $260 million on new high efficiency gas turbines at Verve's Kwinana power station and has confirmed that Verve is looking to recommission its Muja AB units at Collie.

Looking ahead, other new generation projects identified by the IMO include three wind farms.

Griffin already operates the Emu Downs wind farm and is planning to establish the Badgingarra wind farm, with a capacity of 130MW.

Investec Bank and Windlab Systems have teamed up to develop the 220MW Collgar wind farm near Merredin, at an estimated cost of $600 million.

Engineering company Emerson Stewart is behind a third wind farm project at Henderson.

The IMO expects geothermal energy to start making a small contribution to the SWIS.

New World Energy accepted nine geothermal exploration permits in the Perth Basin, with projects between Jurien Bay and Geraldton and at Binningup, south of Perth.

It has a memorandum of understanding with Synergy for the supply of electricity from its Perth Basin projects.

Another new market entrant is the Namarrkon project near Merredin. It is a biodiesel back-up generation system designed to operate over the summer months for 15-20 days a year.

The introduction of mandatory renewable energy targets and the planned adoption of an emissions trading scheme are expected to underpin the growth of renewable energy.

The Council of Australian Govern-ments has committed to 20 per cent of Australia's electricity being generated by renewable sources by 2020.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options