BHP Billiton subsidiary Worsley Alumina could become a significant player in the Western Australian electricity industry after gaining approval to build a second 120 megawatt gas-fired power station.
BHP Billiton subsidiary Worsley Alumina could become a significant player in the Western Australian electricity industry after gaining approval to build a second 120 megawatt gas-fired power station.
If Worsley proceeds with the gas option it would be another setback for the Collie coal industry, and in particular Worsley’s current coal supplier, Rick Stowe’s The Griffin Group.
Worsley’s co-generation plant is likely to be built in joint venture with Western Power and coincides with Alinta announcing plans to build two 162MW co-generation gas turbines at Alcoa’s Wagerup alumina refinery.
In both cases, the new power stations are being developed in conjunction with major expansions of the alumina refineries.
Alcoa is planning to spend $1.5 billion expanding its Wagerup refinery and Worsley is planning to spend $900 million at its refinery.
The alumina producers do not need extra electricity; their main need would be extra steam, which is used in the alumina production process.
Worsley currently sources steam and power from a 110MW coal-fired power station and a 120MW gas-fired power station, which is jointly owned by Western Power.
Worsley’s original plan for the refinery expansion included a proposal to expand its coal-fired power station. That proposal is still awaiting a final decision by the Environmental Protection Authority.
It subsequently applied for the construction of a second gas-fired power station, and has already obtained approval.
EPA chairman Wally Cox said the gas-fired co-generation option would provide the “best environmental outcome”.
“Significant energy efficiencies will be achieved by using the recovered heat from power generation in the alumina refining process,” Dr Cox said.
“Also, the gas alternative is predicted to result in a significant reduction in emissions of sulphur dioxide, particulates and carbon monoxide.”
A Worsley spokesman said the company, which is 86 per cent owned by BHP Billiton, had not yet made a final decision on which power option it would choose, nor had it decided whether Western Power would be involved.
However, given the environmental approval for the gas-fired plant, and Western Power’s current role as a joint venture partner, it is probable that Worsley will build a second gas-fired plant in partnership with Western Power.
The spokesman said nearly all of the output from its existing gas-fired plant went into the electricity grid, and the entire output from the second plant would be sold into the grid.
Western Power’s main rival in the electricity market, Alinta, has been pursuing a similar strategy with WA’s second big alumina producer, Alcoa.
Alinta has nearly completed construction of its first 140MW co-generation power station at Alcoa’s Pinjarra refinery, and construction of a second co-gen plant commenced this year.
Alinta announced this week the gas turbines at Wagerup would initially operate only in periods of peak demand.
The stage 1 development would cost $250 million.
Alinta said it would add heat recovery steam generators at a later date, enabling operation as a baseload power station. The stage 2 development is planned to be completed by the time Alcoa finishes its refinery expansion.
Alinta has been granted ‘capacity credits’ for the Wagerup plant by the State Government’s independent market operator.
It receives the credits in return for providing reserve electricity generation capacity.
The Griffin Group is also aspiring to enter the electricity generation market but its plans are in a state of flux.
In April it announced plans to build the 200MW Bluewaters coal-fired power station but now it wants Western Power to guarantee it will buy at least 50MW of power.
Griffin’s coal business also faces an uncertain future, after Western Power decided it would buy all of its coal from Wesfarmers’ Premier Coal from 2010.
Griffin is lobbying for Rio Tinto to buy Collie coal for its HIsmelt pig iron plant at Kwinana and is also hoping to develop coal exports to offset the loss of the Western Power contract.