Electricity generation Major development projects – April

Alan Copeland

May 2009

Electricity generationMajor development projects –

April 2009 listing

ii

© Commonwealth of Australia 2009

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reporting, criticism or review. Selected passages, tables or diagrams may be reproduced for

such purposes provided acknowledgment of the source is included. Major extracts or the

entire document may not be reproduced by any process without the written permission of the

Executive Director, ABARE.

ISSN 1447-8358

ISBN 978-1-921448-45-4

Copeland, A 2009, Electricity generation – major development projects – April 2009 listing,

Canberra, May.

Australian Bureau of Agricultural and Resource Economics

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ABARE project 3357

1

Electricity generation

Major development projects – April 2009 listing

Alan Copeland

• As at the end of April 2009, there were 22 major electricity generation projects at an

advanced stage with a total generating capacity of 4792 megawatts and value of around

$6.7 billion.

• There were a further 101 projects at a less advanced stage of development.

ABARE’s list of major electricity generation development projects ABARE has been compiling its biannual list of major minerals and energy projects for more

than a decade. In October 2008, ABARE released the first edition of the major electricity

generation list. April 2009 marks the second release of the list, which contains information

on electricity generation projects based on black and brown coal, oil, natural gas, coal

seam methane and renewable energy sources (solar, wind, hydro, biomass and wave).

The information draws predominantly on publicly available sources but, in some cases, is

supplemented by information provided directly by companies.

ABARE’s list provides details of each announced project where total capacity is expected to

exceed 30 megawatts. Generally these projects are at relatively advanced stages of planning,

that is, ranging from ‘planning approval underway’ through to ‘under construction’.

The projects list contains information on 123 projects, and provides the following details:

• project name

• location

• expected startup date

• capital cost of the project

• proponent company or joint venture

• project status

• additional output capacity

• additional employment at the construction and operating stages, where available.

With a focus on projects planned to commence generation over the next few years, projects

at more advanced stages of planning, that is, those identified as ‘committed’ or ‘under

construction’, are grouped together and listed first within each principal energy source. These

projects appear in the blue shaded areas of the table. Projects at less advanced planning

Electricity Generation – major development projects – April 2009 listing abare.gov.au

2

Supply chaina

GenerationElectricity is generated

at a power plant

Low voltage electricity is converted to high voltage

electricity for transport

High voltage electricity isconverted to low voltageelectricity for distribution

TransmissionHigh voltage electricity is

transported long distances

DistributionLow voltage electricity istransported to customers

Electricity is convertedto safe, useable levels

RetailElectricity is sold

and usage metered

ConsumptionElectricity is used for heating,

lighting and for powering appliances etc

stages (for example, those at planning approval stage) follow within each energy source and

appear in the yellow shaded areas. The listing includes new greenfield projects as well as

expansions of existing projects.

Electricity market in AustraliaThe electricity supply chain begins with electricity generators, which are normally located

near fuel sources such as natural gas pipelines, coal mines and hydroelectric water reservoirs.

There is typically a long distance between electricity generators and consumers, requiring a

transmission and distribution network to transport power. The

supply chain is completed by retailers who purchase wholesale

electricity and package it with transmission and distribution

services for sale to customers (fi gure a).

Increased investment in generation capacity is required to

meet future growth in electricity demand in Australia and to

maintain security of supply. This can include the construction of

new power stations or upgrades/expansions at existing power

stations.

Market structureThe current structure of the Australian electricity market

was shaped by industry reforms in the early 1990s. Vertically

integrated state-owned utilities were disaggregated into

separate generation, transmission, distribution and retail supply

components, where the electricity businesses were either

corporatised or privatised.

A key element of these reforms was the establishment of the

national electricity market in 1998 linking the Australian Capital

Territory, New South Wales, Queensland, South Australia and

Victoria (Tasmania joined in 2005). This allowed for power

to flow across state and territory borders to meet customer

demand in other jurisdictions.

The national electricity market comprises of a wholesale market

and a competitive retail sector, which promotes competition

and efficiency in the production and provision of electricity and

allows for choice of supplier. Most electricity retailers purchase

electricity from generators on a contract basis. Additional

electricity can be purchased through the spot market.

The management of the electricity spot market and the central

coordination of the dispatch of electricity from generators

(fi gure b) is the responsibility of the National Electricity Market

3


Structure of the national electricity marketb

determines the amount of power required

Supply offers

Electricity settlement paymentsElectricity settlement payments

Financial contracts

Plant dispatch instructions Load dispatch instructions a

Physical electricity flows

Purchase bids a

a Currently no customers submit demand side bids.

Management Company (NEMMCO). In April 2007, the Council of Australian Governments

(COAG) agreed to establish an industry funded National Energy Market Operator for wholesale

electricity and gas, which will replace NEMMCO. The National Energy Market Operator will

commence on 1 July 2009.

The regulation of transmission and generation is the responsibility of the Australian Energy

Regulator (AER). By 2010 it is anticipated that the AER’s responsibilities will extend to electricity

and gas markets, gas transmission in eastern and southern Australia and electricity distribution

in the Northern Territory. This will allow for a consistent near-national approach to regulation in

the market. Western Australia will retain state-based regulation of its electricity and gas sectors.

Western Australia is not connected to the national electricity market primarily because of its

geographic distance from the national market. Electricity infrastructure is organised in several

distinct systems including the South West Interconnected System (SWIS); the North West

Interconnected System (NWIS); and 29 regional, non-interconnected power systems. SWIS is

the largest network and serves Perth and the other major population centres in the south-west

of Australia.

The SWIS became a wholesale market (where generators sell directly to retailers) in 2006.

Because of the small scale of the other systems it is impractical to introduce a wholesale

market. Instead, they operate as retail markets where end use consumers purchase from

competing retailers.

The wholesale market for electricity in Western Australia was deregulated in 2006; the

Independent Market Operator (IMO) is responsible for the administration and operation of

this market. The retail market is regulated by the Economic Regulation Authority of Western

Australia.


4

In the Northern Territory, market reforms were undertaken from 2000 to phase in competition

of electricity supply and reduce Power and Water Corporation’s natural monopoly. New

entrants into the Northern Territory electricity market are permitted to use existing

infrastructure (transmission and distribution) after signing an access agreement and payment

of a network charge. The Utilities Commission of the Northern Territory is responsible for the

regulation of the market.

Consumption and generationAustralia’s electricity generation sector faces a number of challenges over the medium to

longer term including increasing domestic consumption, the need for investment in new

generation facilities and policy measures aimed at reducing greenhouse gas emissions.

In 2006-07, Australian consumption of electricity was 261 799 gigawatt hours (GWh). New

South Wales, Victoria and Queensland account for more than three-quarters of total electricity

consumption because of the large population base in these states (fi gure c). Electricity

consumption in Western Australia has increased over the past few years. This largely reflects

the increased use of electricity in the mining industry.

The majority of Australia’s electricity is produced using

coal, accounting for 83 per cent of total generation

in 2006-07. This is because coal is a relatively low cost

energy source in Australia. It also reflects the abundance

of coal reserves along the eastern seaboard, where the

majority of electricity is generated and consumed.

Effect of the Carbon Pollution Reduction Scheme on the electricity sectorThe Australian Government White Paper on the Carbon Pollution Reduction Scheme (CPRS),

released on 15 December 2008, sets out the details of the scheme to reduce Australia’s

greenhouse gas emissions in response to climate change. A subsequent revision will see

Australian electricityconsumption by state

c

TWh

50

100

150

200

250

300

New SouthWales (inc ACT)

VictoriaQueenslandWestern Australia

South AustraliaTasmaniaNorthern Territory

1960-61

2006-07

1976-77

1992-93

Electricity generation by energy source 2006-07d

brown coal 27%

gas 12%

oil 1% renewables 4%

black coal 56%

5


the scheme commence in July 2011. Emissions from industrial processes, the energy sector

(stationary, transport and fugitive), waste and forestry will be covered. The White Paper

identified coal-fired electricity generation as a strongly affected sector and as such has

proposed an assistance package. Factors on which the basis for the support is considered to

be justified include:

• the inability of a number of power stations, which have higher emissions relative to

competitors, to pass on costs associated with carbon permits, leading to a potential loss in

asset value

• the significant sunk capital costs

• the lack of significant and economically viable abatement opportunities currently available.

To address some of the potential effects of the scheme and to ensure a smooth transition to

lower emissions intensity, the government will provide assistance in the form of the Electricity

Sector Adjustment Scheme. The ESAS will be available to coal-fired generators which have an

emissions intensity above 0.86 tonnes of carbon dioxide equivalent per megawatt hour (CO2-

e/MWh), which were in operation or committed to be constructed on 3 June 2007. Eligible

power stations will receive a fixed allocation of permits (or around $3.9 billion of assistance in

nominal terms or around $3.5 billion in real 2008-09 dollars) over the first five years of the CPRS,

after which the ESAS will cease.

A review of the assistance measures will take place in 2014, to ensure that power stations

allocated permits are not earning windfall profits. In the event that the regulator deems the

ESAS assistance has resulted in windfall profits, it may recommend that all or part of the last

two years of assistance be withheld.

Completed projectsDuring the six months to April 2009, there were 10 electricity generation projects completed

– six gas, two wind and two biomass fired. The largest of these projects, in terms of generation

capacity, is the 640 megawatt Uranquinty power station, which had a capital expenditure of

$700 million and is located near Wagga Wagga in south-west New South Wales. Also in New

South Wales is the 400 megawatt Stage 1 of the Tallawarra power station which is located

around 100 kilometres south of Sydney. In Western Australia, the $400 million, 330 megawatt

gas-fired NewGenKwinana power plant was completed by Babcock and Brown Power and

ERM. Babcock and Brown Power subsequently sold its stake in the power station to ERM. Origin

Energy completed a 120 megawatt expansion of its Quarantine power station, which is located

in South Australia.

The largest renewable energy project completed, in terms of generation capacity, is the

192 megawatt Waubra Wind Farm located in Victoria. The wind farm is the largest in the

southern hemisphere and contains 128 wind turbines spread over an area of 170 square

kilometres. A second wind farm (Stage 2 of the Portland Wind Farm), also in Victoria,

commenced operation during the six months to April 2009. It has a capacity of 58 megawatts

and is one of a number of wind farms Pacific Hydro is constructing and planning in south-

west Victoria.


6

Two biomass projects were completed in late November, located on the far north coast of

New South Wales. The two power stations have a combined capacity of 60 megawatts and

cost around $220 million to develop. The power stations will use bagasse, a waste product

associated with the crushing of sugar cane, as a feedstock.

Advanced projectsAt the end of April 2009, there were 22 projects at advanced stages of development included

in ABARE’s project list. Total capacity of the 22 advanced projects at the end of April 2009 was

4792 megawatts (fi gure e).

This is equivalent to 12 per cent of Australia’s total generating capacity as at June 2007. The

location of projects is widespread, with at least one advanced project in every state and in the

Northern Territory (fi gure f ).

Non-renewable electricity projectsAs at April 2009, non-renewable electricity generation projects accounted for 13 of the

22 advanced projects on ABARE’s list and around 84 per cent (or 4049 megawatts) of planned

additional capacity (fi gure e, table 2). Natural gas-fired projects account for 51 per cent of

the announced capacity of advanced non-renewable electricity projects, while coal seam

methane accounts for a further 30 per cent.

In terms of capacity, Delta Electricity’s Colongra project in New South Wales is the largest

advanced project in Australia’s electricity generation sector. The project has an announced

capacity of 660 megawatts and is scheduled to be completed in late 2009 at a cost of

$500 million.

1 Major electricity generation developments – projects completed October 2008 – April 2009

capital

fuel project location company capacity expenditure

MW A$m

Gas NewGenKwinana WA Babcock and Brown Power/ERM 330 400

Newman WA Babcock and Brown Power 37 90

Quarantine Expansion SA Origin Energy 120 86

Tallawara Stage 1 NSW TRUenergy Tallawarra 400 350

Uranguinty NSW Origin Energy 640 700

Weddell Stage 2 NT Power and Water Corporation 43 na

Wind Portland Stage 2 Vic Pacific Hydro 58 130

Waubra Vic Acciona Energy 192 400

Biomass Broadwater NSW Delta Electricity 30 110

Condong NSW Delta Electricity 30 110

7


In March 2009, Origin Energy commenced construction on Stage 1 of the Mortlake power

station in Victoria. The project is scheduled to be completed in 2010 with a capacity of

550 megawatts and a capital cost of $640 million. A second 450 megawatt unit at the complex

could be built by Origin Energy at a later date.

Four other natural gas-fired projects account for a further 837 megawatts of committed

additions to capacity. The largest of these is Aurora Energy’s Tamar Valley project in Tasmania.

The project has an announced capacity of 375 megawatts, a capital cost of $464 million and

is scheduled to be completed in late 2009. Also scheduled for completion in late 2009 is the

Neerabup power station, located 50 kilometres north of Perth. The project, which is owned by

ANZ Infrastructure Services and ERM, will have a capacity of 320 megawatts and a capital cost

of $425 million.

Three coal seam methane powered projects account for 1220 megawatts of committed

additions to capacity. The largest of these projects is Origin Energy’s Darling Downs project in

other 5.6%

gas 42.7%coal seam 25.5%

wind 12.6%black coal 13.7%

Capacity of committed projects, by fuel April 2009e

Northern Territory 0.5%

Victoria 15.3%

New South Wales 23.3%

Tasmania 10.5%

Queensland 28.1%

South Australia 5.4%

Western Australia 17.9%

Capacity of committed projects, by state April 2009f

2 Advanced projects, April 2009

non-renewable electricity projects renewable energy projects total

no. capacity cost no. capacity cost no. capacity cost

MW $m MW $m MW $m

New South Wales 2 900 745 2 170 310 4 1 070 1 055

Victoria 1 550 640 2 184 312 3 734 952

Queensland 4 1 346 1 759 0 0 0 4 1 346 1 759

Western Australia 4 856 1 345 0 0 0 5 856 1 345

South Australia 0 0 0 4 260 635 4 260 635

Tasmania 1 375 464 1 129 350 2 504 814

Northern Territory 1 22 130 0 0 0 1 22 130

Australia 13 4 049 5 083 9 743 1 607 22 4 792 6 690


8

Queensland. The project has an announced capacity of 630 megawatts and is scheduled to

be completed in early 2010. The project has a capital cost of $951 million, which includes the

construction of a pipeline to access coal seam methane reserves in the area around Roma and

Chinchilla.

In relation to black coal, stages 1 and 2 of Griffin Energy’s Bluewaters project have an

announced capacity of 208 megawatts each. The two stages are expected to be completed in

the second half of 2009, at a total capital cost of $800 million.

The only non-renewable electricity generation project to progress to an advanced stage during

the six months to April 2009 was the upgrade of the Eraring power station on the central coast

of New South Wales. The upgrade of the power station will result in a 240 megawatt increase

in capacity at a cost of around $245 million. The Eraring power station upgrade is scheduled for

completion in 2011.

Victoria

TasmaniaTasmania

Queensland

Northern Territory

Western Australia

South Australia

New South Wales

Advanced electricity generation projectsApril 20091

existing gas pipeline

proposed gas pipeline

capital city

Bluewaters stages 1&2

Newman

Goldfields

Midwest

Dampierto Bunbury

Owen Springs

Mount Stuart

Darling Downs

Colongra gas project

Cullerin RangesCapital Wind Farm

Bogong powerdevelopment

Tamar Valley

Musselroe

Crowlands wind farm

Whyalla solar oasisHallett 4

Hallett 2

Mortlake stage 1

Portland stage 3

Condamine

Braemar 2

Neerabup

Kwinana

gas

hydro

oil

solar

wind

CSM

black coal

biomass

LEGEND

0–100MW

101–300MW

301–500MW

>500MW

PerthAdelaideAdelaide

Hobart

Brisbane

Canberra

Perth

Darwin

Sydney

MelbourneMelbourne

Queensland

Surat Basinto Gladstone

Moranbah to Townsville

Central Queensland

Cheepie toBarcaldine

South WestQueensland

Carpentaria

Eraring

Ottway Basin to Adelaide

Clements Gap

Moomba to Adelaide

Moomba to Sydney

Ballera to Moomba

AmadeusBasin toDarwin

BayuUndan

Blacktip

Telfer

Lions Way

Eastern

Tasmanian gas

Queensland-HunterGloucester coal seam

9


Renewable energy projectsAt the end of April 2009, there were nine renewable energy projects at an advanced stage of

development. Seven of these projects are wind powered and comprise more than 80 per cent

of the committed additions to renewable energy capacity.

During the six months to April 2009, there were three wind projects added to the advanced

list, Clements Gap and Hallet 4, both located in South Australia and Musselroe in Tasmania.

Clements Gap is being developed by Pacific Hydro and has a capacity of 57 megawatts and

a capital cost of $135 million. The project is scheduled for completion in late 2009. In March,

AGL approved the 132 megawatt Hallet 4 project which has a capital cost of $341 million and is

scheduled for completion in 2011. The Roaring 40s Musselroe project has a capacity of

129 megawatt and is expected to be completed in 2011 at a capital cost of $350 million.

The largest advanced wind project, in terms of capacity, is Renewable Power Ventures’ Capital

Wind Farm, located 50 kilometres north-east of Canberra. The wind farm will have a capacity

of 140 megawatts when complete in mid-2009 and has a capital cost of around $220 million.

There are three other advanced wind projects, all of which are due for completion during

2009. Hallet 2, Portland Stage 3 and Cullerin Range have capacities of 71, 44 and 30 megawatts,

respectively.

At the end of April 2009, the average capacity for projects using natural gas and coal seam

methane was around 340 megawatts and 400 megawatts, respectively (fi gure g). Given that

a large proportion of advanced and less advanced projects will be using natural gas and coal

seam methane as a fuel, these energy sources will account for an increasing proportion of

baseload power generation. The average capacity of wind powered projects at an advanced

stage was around 80 megawatts. The lower capacity for these projects reflects the large

amount of land required for wind turbines.

Electricity generation projects in Australia using solar as an energy source do not feature

prominently in ABARE’s listing, largely because these tend to be below the 30 megawatt

threshold.

g Average capacity of advanced projects, by energy source, April 2009

MW 100 200 300 400 500

hydro

wind

oil

gas

coal seam methane

black coal


10

Less advanced projectsProjects in the less advanced category are either still undergoing a feasibility study (in some

cases, pre-feasibility study), or not subject to a definite decision on development following the

completion of a feasibility study. Some of these projects may not proceed for several years.

Some may confront changes in economic conditions, or may be targeting the same emerging

market opportunities, necessitating rescheduling. In addition, securing finance for project

development may also be an issue.

Despite the uncertainty inherent to projects at these earlier stages of consideration, there is a

significant number of large scale projects at less advanced planning stages. These projects, if

completed, are expected to provide a firm platform for future growth in Australian electricity

generation in the medium term and beyond.

Of the 123 projects in ABARE’s April 2009 projects list, 82 per cent (101 projects) are less

advanced. Table 3 contains a summary of the numbers and fuel distribution by state of the

101 less advanced projects, together with an aggregated capacity figure.

Non-renewable electricity generation projectsAt the end of April 2009 there were 43 non-renewable electricity generation projects at a less

advanced stage. Natural gas-fired and coal seam methane fired plants account for 29 and

7 projects, respectively. There are a total of six coal-fired projects (brown and black coal) and

an oil-fired power plant under consideration.

3 Number of less advanced projects, April 2009

potential

NSW Vic Qld WA SA Tas NT ACT Aust capacity

MW

Fossil-fuel based

Brown coal 0 1 0 0 2 0 0 0 3 1 240

Black coal 0 0 2 1 0 0 0 0 3 920

Coal Seam Methane 4 0 3 0 0 0 0 0 7 1 720

Gas 15 4 6 1 1 0 1 1 29 9 563

Oil 1 0 0 0 0 0 0 0 1 150

Sub-total 20 5 11 2 3 0 1 1 43 13 593

Renewable energy

Wind 11 20 2 2 15 0 0 0 50 8 156

Wave 0 1 0 0 0 1 0 1 3 786

Biomass 0 0 0 1 0 1 0 0 2 240

Solar 0 1 0 0 0 0 1 0 2 176

Geothermal 0 0 0 0 0 1 0 0 1 50

Sub-total 11 22 2 3 16 2 1 1 58 9 408

Total 31 27 13 5 19 2 2 2 101 23 001

11


Among the largest in terms of capacity is the 600 megawatt gas fired power station ERM

Power is proposing to build near Wellington in central New South Wales. AGL is also proposing

to build several large gas-fired power stations including two in south-east Queensland

(capacity of 360 megawatts and 1150 megawatts), and power stations near Townsville

(360 megawatts), Sydney (350 megawatts) and Canberra (500 megawatts).

There are also a number of coal seam methane based power stations at a less advanced stage.

These include Braemar 3 (450 megawatts) and Spring Gully Stages 1 and 2 (1000 megawatts) in

Queensland and Stages 1 and 2 of the Narrabri project (210 megawatts) and Richmond Valley

power station (30 megawatts) in New South Wales.

Renewable energy projectsAt the end of April 2009, there were 58 less advanced renewable energy projects. Of these

projects, 50 are wind farms, accounting for around 87 per cent of the proposed addition to

renewable energy capacity.

The largest wind energy project is the Silverton Wind Farm in New South Wales with a planned

capacity of 1000 megawatts. If developed, the wind farm will be the largest in the southern

hemisphere and one of the largest in the world. The project is scheduled to be completed in

2011 at a capital cost of $2.2 billion.

AGL and Windlab Systems’ Cooper’s Gap wind project in Queensland has an announced

maximum capacity of 440 megawatts. The site will have up to 250 wind turbines and is

scheduled to start operating in 2011. The project is expected to cost around $1.2 billion.

Projects new to ABARE’s listThere are 14 projects (all at a less advanced stage) new to ABARE’s list since October 2008.

Figure h provides a summary of the 14 newly listed projects by generation fuel. Of the new

projects, 10 are wind and there is one each of brown coal, gas, coal seam methane and solar.

The HRL IDGCC brown coal project is a joint venture between HRL Technology and China’s

Harbin Power Engineering Co to build a 400 megawatt power plant in Victoria. The power

project will be a demonstration of the integrated drying and gasification combined cycle

technology and it is expected the electricity generated will emit 30 per cent less carbon

dioxide and consume 50 per cent less water than traditional brown coal-fired power stations.

The $750 million project has funding from the Australian and Victorian governments.

Of the 10 new wind powered projects, four are located in South Australia, three in Victoria

and three in New South Wales. These 10 projects, if developed as currently planned, could

have a capacity of more than 1865 megawatts, with the Yass and Stockyard Hill wind farms

accounting for over 55 per cent of this capacity.


12

solarwindgascoal seammethane

brown coal

Projects added to list: six months to April 2009

no.

6

8

2

4

10

h The ACT government has tendered for a 22 megawatt

solar power project which a recently completed pre-

feasibility study indicated would cost $141 million for

construction with a completion date by 2012.

13

RESEARCH FUNDING ABARE relies on fi nancial support from external organ isations

to complete its research program. As at the date of this publication, the following

organisations had provided fi nancial support for ABARE’s research program in 2007-08

and in 2008-09. We gratefully acknowledge this assistance.02.09

AusAid

Australian Fisheries Management Authority

Australian Government Department of Climate

Change

Australian Government Department of the Envi-

ronment, Water , Heritage and the Arts

Australian Government Department of Resources,

Energy and Tourism

CRC Plant Biosecurity

CSIRO (Commonwealth Scientifi c and Industrial

Research Organisation)

Dairy Australia

Department of Primary Industries, Victoria

DN Harris and Associates

European commission

Fisheries Research and Development Corporation

Fisheries Resources Research Fund

Forest and Wood Products Australia

Grains Research and Development Corporation

Grape and Wine Research and Development

Corporation

Horticulture Australia

International Food Policy Research Institute

Land and Water Australia

Meat and Livestock Australia

National Australia Bank

OECD

Rural Industries Research and Development

Corporation

The Treasury

13

Documents

Electricity generation Major development projects – April