Renewable Energy Off-Grid Presentation

Progressing Renewables in the Pilbara and
Mid West Off-Grid Power Systems
Barrie Brandt, Executive Consultant, Perth
CEC Off-Grid Workshop, Perth, 27 September 2012
Presenter & acknowledgements
Barrie Brandt (Perth)
Antony Piccinini (Perth)
Executive Consultant
Principal Consultant
bbrandt@evanspeck.com
antony.piccinini@worleyparsons.com
Paul Ebert (Australia)
Global Lead – Renewable
Energy
paul.ebert@worleyparsons.com
“Assessment of the potential for renewable
energy projects and systems in the Pilbara”
“Assessment of the potential for renewable
energy projects and systems in the Mid
West”
Evans & Peck for the Federal Department of Resources &
Tourism, October 2011
2
Stuart McCreery (Sydney)
Principal
smccreery@evanspeck.com
Talk synopsis
 Who we are
– Evans & Peck
– WorleyParsons
 The assignment
– Pilbara
– Mid West
– Most of discussion around Pilbara, but the outcomes are broadly
attributable in off-grid Mid West and elsewhere
 Issues around renewables
 Thoughts on progressing renewables in that context
Evans & Peck
 100% owned by WorleyParsons, independently operated
 Complimentary focus to WorleyParsons
 Corporate advisory company with a business outcomes focus
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Business case support
Contractual services
Contracting strategy & procurement
Independent audit, due diligence and health checks
Delivery support
 Major infrastructure and energy focus, including for resources industry
– Renewable and conventional generation, transmission, market advice and
negotiation
Solar Dawn Project
Collie South West CCS Hub
Burdekin Hydro project
Grid connected PV impact study
Water use in power generation
450 MW CCGT Pilbara power plant
Colongra 600 MW OCGT project
Various Pilbara power opportunities and projects
Asset
Management
Program
Delivery
Procurement
Strategy
Business
Development
Regulatory
Support
Project
Strategic
Planning
E&P adds value: renewable and conventional energy areas
WorleyParsons
 Leading global professional services provider to energy, resource and
complex process industries
 Full lifecycle of services
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Infrastructure & Environment
Minerals, Metals & Chemicals
Power: renewable, conventional and hybrid
Hydrocarbons
 Centred around project delivery, project optimisation and value
realisation
 Worldwide power and renewables teams
WorleyParsons Australian Renewables Involvement
….part of a much bigger international renewables and conventional scene
What is Renewable Energy?
Water
Sun
Stored hydro
Photovoltaic
Run-of river hydro
Solar Thermal
Wave power
Solar hot water
Tidal power
Passive solar heating
Heat pumps
Bio-energy
Co-firing
Bagasse
Biomass
Sewage gas
Waste to energy
Landfill gas
Black liqour
Earth
Wind
Geothermal
Wind energy
EGS
Propulsion
Heat sinks/sources
Pumping
Milling
The assignment
 Client: Australian Centre for Renewable
Energy (ACRE), within DRET
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ACRE incorporated into the Australian
Renewable Energy Agency (ARENA) on 1 July
2012
 Task: Investigate opportunities in the Pilbara
and Mid West for off-grid applications for
sustainable use of renewable energy:
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market nature, size, demand forecast
conventional generation types and costs
renewable resources
renewable technologies and costs
policy settings
barriers and enablers to more renewables
The renewable macro value proposition
Renewable
resource
Cost of
finance
Technical
maturity
Siting,
social
issues
Energy
options
Off-grid
renewable
energy value
proposition?
In a broad pricing sense….
Macro price comments
Renewables can be price competitive now
against liquid fuels (for power generation)
Competitiveness hugely dependent on
quality of supply requirements which
drive integration costs
Generally downward pressure on
renewable capital costs
Many renewables difficult to cost,
particularly those (or their enablers) just
emerging
Renewable price competitiveness also
needs to consider external value
Note: Very general price indication only, as actual price depends
significantly on project details
In the Pilbara (and little difference in Mid West)….
But…
 Some renewables are competitive now
 Capital costs have, as generally accepted, decreased
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especially for PV, panel costs have decreased and efficiency increased
A $1/GJ increase in fuel cost increases conventional generation by >$10/MWh
 Still not a major take up of renewables. Why?
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Time horizons for contracting can be too short, eg: 5-10 years, to recover
capital, due to limited mine reserves life
Risk of mine’s viability adds to cost of capital off-grid
Perceptions about reliability risks. What happens if…?
Miners require low risk & high availability; production loss = cash flow
Integration costs and risks: Low up to 10-20% renewable penetration
Fossil generator characteristics re load profile
Requirement for simplicity
Absence of renewable resource quality information
1. There is a significant opportunity – but the value proposition is not
straight-forward. For large players, getting attention is difficult as energy is
a secondary issue, investment time scales short and competition tough.
2. The business case is almost completely around fuel offsets (green
certificates are a small component). Saving fuel ($) is the big issue and
this is proportional to renewable system penetration.
Source: Horizon Power
Generalised study results – the top 5
4. Enablers are a key. Integration of renewables will be in hybrid form,
including smart devices, energy storage, good control design & novel
thinking around “energy products” (heat, bio-fuels) – all are key enablers.
5. Policy is only part of the solution. Policy setting is important, but
some renewables are competitive now – why aren’t they being used?
Source: Verve Energy
3. Reliability, practicality & cost are primary drivers. The systems must
work, be rugged and reliable in hostile, remote environments. At large
scale there is a perception that renewables do not offer this.
Investment issues for resource sector
 With large, remote loads, resource
companies appear sensible for “off-grid”
renewables
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Process risk a considerable issue
Extremely competitive businesses
Shorter term investment horizons (generally)
 “Single customer” risks
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New entrants, higher capital costs and less certain on
future – shorter term focus, less efficient low capital cost
generation plant
Established miners, lower capital costs and longer term
focus – more efficient generation investment but more
difficult for renewables to compete
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Issues which could cloud the renewable value proposition
Progressing off-grid renewables generally
Conclusions
 Some renewables viable now, but its an issue of what does the
customer want
 Costs are declining with worldwide penetration and experience
– Perceptions about:
 Cost
 Continuity of supply
 Technical risks
 Crawl before you walk before you run
 Reports available on the DRET website at:
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http://www.ret.gov.au/energy/clean/acre/studies/Pages/Studies.aspx
 This page provides access to both Pilbara and Mid West reports
– But, note the changes, even since the report was prepared last year.
Thank you for your attention
Thank you for your attention