Accelerating the next phase of Australia’s clean energy transition

Since its inception, the Clean Energy Finance Corporation’s (CEFC) direct investment commitments in new large-scale solar and wind projects have exceeded $1 billion and catalysed the development of almost two gigawatts of additional renewable generation capacity Australia-wide.

As the single largest debt financier in large-scale solar, with $440 million committed to 10 new projects in 2016–17, the CEFC saw rapid improvements in the cost competitiveness of solar, so that it is now possible to develop a commercially viable large-scale solar project without grant funding. Such projects are attracting new domestic and international financiers alongside the CEFC’s debt finance.

As the wind sector has matured, the CEFC has also seen growing investor interest in projects that may have either partial offtake arrangements or full merchant price exposure. CEFC commitments to large-scale wind projects in 2016–17 were notable for both the size of the CEFC investments, at $200 million, and the scale of the projects, to accelerate 383 megawatts of new clean energy.

Recent CEFC investment commitments underscore its innovative approach to financing renewable energy generation.

The CEFC is investing $94 million in Australia’s first fully integrated wind, solar and battery project, at the central north Queensland Kennedy Energy Park. The 60 megawatt hybrid project will connect to the local grid, providing electricity to communities from Julia Creek to Charters Towers, more than 500 kilometres away.

The landmark project creates a new model for renewable energy that brings together the benefits of wind, solar and battery storage to overcome intermittency and improve reliability. Financing three separate technologies on one site was a complex undertaking that had not previously been achieved in Australia. As the sole debt financier for the project, the CEFC demonstrated the bankability of large-scale, integrated hybrid renewable energy projects for the future. The CEFC expects such projects to become an increasingly important part of Australia’s electricity system, with complementary battery storage addressing the intermittency of wind and solar generation to support grid stability.

The CEFC committed a further $150 million in debt finance to the Lincoln Gap wind farm in South Australia. The project includes Australia’s first unsubsidised large-scale grid-connected battery alongside a greenfield wind development, signalling an important new milestone in the evolution of the energy storage sector.

With large-scale battery technology developing rapidly, costs are expected to fall significantly, reflecting the pathway of wind and solar. As the first development project in Australia that has been able to secure debt finance for a grid-connected large-scale battery component on a non-subsidised basis, Lincoln Gap provides an important financing model for other developers and investors wanting to be at the forefront of closer integration of renewables into the grid.

These commitments confirm the CEFC’s view that, through a planned and coordinated approach, Australia’s energy mix can incorporate higher levels of clean energy alongside strengthened transmission, better demand management systems and increased storage capacity, contributing to improved system reliability, energy affordability and environmental sustainability.

CEFC provided this content.

Origin’s investment in renewables rapidly accelerating

Origin is accelerating its commitment to clean energy with plans to nearly triple capacity from solar and wind in coming years.

With an aim for renewable energy to comprise up to 25 per cent of its generation mix by 2020, Origin is targeting 1500 megawatts of new large-scale solar and wind coming online by the end of the decade.

Four major solar farms in Queensland—Clare, Lakeland, Darling Downs and Daydream—are expected to come online in 2018 with a combined capacity ofmore than 470 megawatts.

The biggest of the Queensland solar farms is the 150 megawatt Daydream project near Collinsville in northern Queensland, which features a single-axis tracking system with panels that track the sun during the day to maximise output. It will generate approximately 380,000 megawatt hours of electricity a year—enough to power more than 53,000 homes with clean energy.

Despite the Lakeland solar farm being the smallest of the four projects at just10.8 megawatts, it punches above its weight. Its location at the edge of the grid in Far North Queensland and an integrated 5.3 megawatt hour battery will provide valuable insight into how to achieve a consistent supply from solar during periods of cloud cover and how to stretch a renewable resource into periods when it is not generating. Insights like these will enable battery storage to improve in effectiveness and cost, and in the future help batteries to play a stronger role in maintaining energy security.

In Victoria, work is expected to start early in 2018 on the huge 530 megawatt Stockyard Hill wind farm. Slated to be Australia’s largest wind farm, Origin’s agreement to purchase energy from Stockyard Hill set a new benchmark for renewable power purchase agreement pricing in the market and demonstrated how rapidly renewable energy costs have come down.

Origin is also involved in one of the largest solar farms in Australia, the 220 megawatt solar farm at Bungala near Port Augusta, which will have nearly 1.2 million solar photovoltaic panels. Also due to come online in 2018, Bungala will further add to Origin’s ability to deliver clean energy to Australians, and importantly will boost jobs in South Australia, with more than 350 local jobs created during construction.

As Origin rapidly grows the share of clean energy in our portfolio, it is also mindful of the need to maintain downward pressure on energy prices and maintain reliable supply. With Australia’s largest fleet of peaking gas-fired power stations, Origin is already able to support its growing renewables portfolio with firm, dispatchable power to maintain a reliable energy supply that homes and businesses rely on.

All of this demonstrates Origin’s commitment to lead the transition to a cleaner and smarter energy future for Australia.

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The Kidston renewable energy hub

The small, rural town of Kidston inFar North Queensland was once a prosperous, bustling mining centre, home to the largest open-cut gold mine in the country. In 2001, the mining operations ceased, and the town was left desolated.

Turning to 2018, Genex Power is in the process of transforming this abandoned mine into a renewable energy hub.Genex has completed the first of two stages of the hub, with the 50 megawatt solar project (‘K1’) finalised and connected to the grid.

K1 comprises 540,000 solar panels, capable of producing 145,000 megawatt hours of renewable energy each year. This is the equivalent of powering 26,500 homes entirely with renewable energyand offsetting 120,000 tonnes of CO₂ per year.

Significantly, this renewable energy hub is unlike any other in the world, as it utilises the existing infrastructure left behind from the mining operations in order to significantly reduce construction timeand cost.

Genex has used the tailings storage facility of the abandoned mine for the K1 Project, as the consistent, flat topography creates an ideal surface for a large-scale solar project. Genex has also capitalised on a number of other infrastructure pieces left from the mining operations, including an existing substation, transmission line connected to the grid, solid road access, accommodation camp and airstrip.

However, of most significance for Genex are the two mining voids that were left behind. As a result of previous rehabilitation processes, these voids are now filled with large volumes of water, providing the perfect framework for the company’s 250 megawatts Pumped Storage Hydro Project (‘K2H’).

K2H will use the mining voids as the upper and lower reservoirs for the Project, releasing the water from the upper to the lower reservoir via a turbine-generator system to generate electricity during peak demand, and pumping water back into the upper reservoir during off-peak periods. The scheme is essentially a ‘giant water battery’, as water held at height is potential energy stored, with the ability to release the water/produce electricity instantaneously on demand.

K2H is capable of storing and producing250 megawatts for eight hours. Furthermore, the scheme will be paired with an additional 270 megawatts of solar panels, which will be used to pump the water back into the upper reservoir during the day. This will be the first integrated solar-pumped hydro project in the world, creating dispatchable, reliable and affordable renewable energy, or in other words, ‘renewable energy on tap’.

Genex Power provided this content.

Sun Metals Solar Farm

Sun Metals Zinc Refinery is located 15 kilometres south of the city of Townsville in North Queensland. The refinery was built in 1996 by Sun Metals Corporation Pty Ltd, the Australian subsidiary of the Korea Zinc Company Limited. Korea Zinc produces 10 per cent of the world’s zinc from plants in Korea and Australia.

Sun Metals is the largest electricity user in the region and the second largest industrial consumer in Queensland. Its state of the art facility consumed just less than one million megawatt hours of electricity in 2017 to produce more than 220,000 tonnes of special high grade zinc products.

Zinc metal production is highly energy intensive, even with the very latest technology and management practices. Sun Metals is at the forefront of energy efficiency in zinc production because of its drive to reduce electricity costs, with electricity charges currently representing more than 50 per cent of its operating costs.

Sun Metals has actively sought to find the most cost effective way to meet current and future power requirements. This included a detailed review of solar power in 2016, which culminated in the company’s decision to invest $200 million of capital to construct a124 megawatt (AC) solar farm on approximately 130 hectares of suitable land surrounding the Sun Metals Zinc Refinery.

Detailed design was conducted in early 2017, and construction commenced in April 2017. Half of the solar farm will be energised in March 2018 and full generation will occur in April 2018, with project completion in May 2018. Benefits to the region include around 300 local construction jobs and the injection of millions of dollars into labour, housing, materials and increased general economic activity.

The Sun Metals Solar Farm will consist of approximately 1,260,000 solar photovoltaic modules installed on frames that are supported byaround 135,000 steel posts. The modules will be installed at a fixed (non-tracking) tilt, at a 14 degree angle, and will face north.The modules will be wired together in arrays connected to inverters to transform the DC current produced by the modules into AC current that can be fed into the grid network. Sun Metals has an existing132 kilovolt substation allowing for efficient connection into the electrical grid.

The power generated by the solar farm will supply the zinc refinery’s own industrial load and/or be sold into the National Electricity Market (NEM) depending on a dynamic consideration of the NEM price and production requirements. The Sun Metals Solar Farm is expected to generate 294,000 megawatt hours of clean, renewable electricity in the first year of operation, supplying about 30 per cent of Sun Metals’ total electricity need. The solar farm will reduce greenhouse gas emissions by 229,320 tonnes of CO₂ equivalent per annum.

Sun Metals Corporation provided this content.

AGL large-scale investment

The Powering Australian Renewables Fund (PARF) is a landmark partnership to develop, own, and manage approximately 1000 megawatts of large-scale renewable energy infrastructure assets and projects.

PARF is a partnership between AGL (20 per cent) and QIC (80 per cent, on behalf of clients the Future Fund and the QIC Global Infrastructure Fund). PARF’s scope represents 20 per cent of the estimated 5000 megawatts of new renewable generation capacity required by 2020 to meet the Renewable Energy Target.

Since its inception in July 2016, PARF now consists of more than 800 megawattsof renewable generation, both operational and under construction.

In November 2016, AGL announced it had reached financial close selling its 102 megawatt Nyngan and 53 megawatt Broken Hill solar plants to PARF. Following this, in January 2017, AGL announced it had reached financial close on the sale to PARF of the greenfield 200 megawatt Silverton Wind Farm construction project in western New South Wales.

Once constructed (expected 2018) the Silverton Wind Farm will produce approximately 780,000 megawatt hours of renewable energy annually, which can power more than 137,000 average Australian homes. The renewable energy produced from the wind farm’s 58 turbines will reduce CO₂ emissions by655,000 tonnes annually, which is the equivalent of taking 192,000 cars offthe road each year.

In August 2017, AGL announced it had reached financial close on the sale toPARF of the greenfield 453 megawatts Coopers Gap Wind Farm construction project at Cooranga North, approximately 250 kilometres north west of Brisbane.On completion in 2019 the project will be the largest wind farm in Australia.

Once constructed (expected 2019), the Coopers Gap Wind Farm will consist of up to 123 wind turbines and produce around 1,510,000 megawatt hours of renewable energy, powering more than 260,000 average Australian homes.The renewable energy produced would reduce CO₂ emissions by approximately 1,180,000 tonnes annually, which is the equivalent of taking 340,000 cars off the road each year.

AGL provided this content.

EnergyAustralia's demand response trial

Right now, Australia’s energy system is underpinned by coal but as those big, centralised plants retire fresh approaches and technologies are emerging, giving shape to a new,modern energy system.

In 2017, EnergyAustralia was announced as the largest single contributor to a three-year joint program by the Australian Renewable Energy Agency and Australian Energy Market Operator to explore how demand response can support delivery of affordable, reliable and cleaner supplies of energy.

Under the program, EnergyAustralia was awarded $9.8 million to secure38 megawatts of demand response—or reserve capacity—from this summer acrossNew South Wales, Victoria and South Australia, increasing to 50 megawatts byDecember 2018.

“Demand response is really exciting for its potential to reduce the peak draw onenergy, avoiding or minimising the need for investment to ‘gold plate’ the system,”said EnergyAustralia Managing Director Catherine Tanna.

“We think demand response has a critical role to play maintaining system reliability and security while supporting the integration of new supplies of renewable energy. It’s an approach that puts customers in control and keeps costs down,” she said.

Ms Tanna said customers participating in demand response initiatives agree to provide reserve capacity the market operator can call upon at short notice to stabilise the energy system.

The technique has already been used to offset extreme demand or emergencies, easing the strain on the electricity system and avoiding involuntary load shedding.

For example, a particularly high-demand summer day might trigger an agreement for a business to reduce its load by running its equipment less. Or it might mean tapping into the solar energy stored—but not being used—on a customer’s rooftop.

Customers typically receive a financial incentive in exchange for reducing their demand or making excess energy available.

Under the trial, EnergyAustralia will work with a range of customers from residential households to large industrial users, and through a mix of technologies and approaches such as:

• Implementing mass market SMS alert campaigns, in which residential and business customers would agree to reduce or moderate their energy demand in response to a real-time notification that system capacity is tight.
• Installing Wattwatchers monitoring and remote-control capability in residences and small businesses, allowing appliances (such as air-conditioners, pool pumps, machinery or other loads) to be curtailed.
• Aggregating “smart” Redback solar battery storage systems across multiple sites to secure a reliable source of reserve for use during extreme peak periods or emergencies.
• Working with large customers and energy exchange technology company Greensync on load shifting, for example, so businesses can schedulepre-cooling/heating activities to times of the day that minimise consumption.
• Converting diesel generators at large customer sites to run on Australian made biofuel, which is derived from ethically sourced feedstock such as recycled cooking oils.

EnergyAustralia provided this content.