Abare Aust Energy Generation April 2010

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Alan Copeland

May 2010

Electricity generationMajor development projects

April 2010 listing


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Commonwealth of Australia 2010

This work is copyright. TheCopyright Act 1968permits fair dealing for study, research, newsreporting, criticism or review. Selected passages, tables or diagrams may be reproduced for

such purposes provided acknowledgment of the source is included. Major extracts or theentire 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, A2010, Electricity generation major development projects April 2010 listing, Canberra, May.

Australian Bureau of Agricultural and Resource Economics

Postal address GPO Box 1563 Canberra ACT 2601 Australia

Location 7B London Circuit Canberra ACT 2601

Switchboard +61 2 6272 2000

Facsimile +61 2 6272 2001

ABARE is a professionally independent government economic research agency.

ABARE project 3357


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Electricity generation

Major development projects April 2010 listingAlan Copeland

As at the end of April 2010, there were 15 major electricity generation projects at an

advanced stage with a total generating capacity of 2687 megawatts (MW) and value ofaround $4.9 billion.

There were a further 127 projects at a less advanced stage of development at that time.

ABAREs list of major electricity generation developmentprojects

ABARE has been compiling its biannual list of major electricity generation projects sinceOctober 2008. The list includes electricity generation projects based on black and brown coal,

oil, natural gas, coal seam gas and renewable energy sources (solar, wind, hydro, biomass andwave). The information draws predominantly on publicly available sources but, in some cases,

is supplemented by information provided directly by companies.

ABAREs list provides details of each announced project where the total capacity is expectedto exceed 30 megawatts. By setting a threshold of 30 megawatts, a number of electricity

generation fuels are under represented on the list, including solar energy and biomass. Whilesmall scale electricity generation units have an important role to play in Australias electricity

supply, it is not feasible to attempt to collect data across all potential projects.

In general, the included projects are at relatively advanced stages of planning, that is, theyrange from planning approval underway through to under construction.

The major development projects list of April 2010 contains information on 142 projects, with

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.


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Electricity Generation major development projects April 2010 listing abare.gov.au

2

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

at more advanced stages of planning (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 stages (for

example, those at planning approval stage) follow within each energy source and appear inthe yellow shaded areas. The listing includes new greenfield projects as well as expansion ofexisting projects.

The list is only available as an electronic product and can be downloaded from www.abare.

gov.au.

The long-term outlook for Australias electricity

generation sectorIn March 2010, ABARE released Australian energy projections to 2029-30 which identifiedpotential changes to Australias electricity generation sector over the next two decades

under certain assumptions. These assumption included, population growth, economicgrowth, energy prices, electricity generation technologies, end use energy technologies and

government policies. For further information on underlying assumptions and the model used,please refer to the Australian energy projections to 2029-30 (which can be downloaded at

www.abare.gov.au).

The electricity generation major projects list and article identifies some of the individual

electricity generation projects that will support future electricity supply.

1 Electricity generation, by fuel terawatt hours (TWh)average annual

share (%) growth (%)

2007-08 2029-30 2007-08 2029-30 2007-08 to 2029-30

Non- renewables 229 297 93 81 1.2

Coal 178 157 72 43 0.6

Black coal 131 121 53 33 0.4 Brown coal 47 36 19 10 1.2

Gas 46 135 19 37 5.0

Oil 5 5 2 1 0.0

Renewables 18 69 7 19 6.4

Hydro 12 13 5 3 0.2

Wind 4 44 2 12 11.6

Bioenergy 2 3


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Gross electricity generation in Australia is projected to grow over the outlook period by an averageof 1.8 per cent a year, from 889 petajoules (247 terawatt hours) in 2007-08 to 1318 petajoules

(366 terawatt hours) in 2029-30.

Under an assumed policy setting that includes both the expanded Renewable Energy Target(RET) and a 5 per cent carbon emissions reduction target below 2005 levels by 2020, the

relative shares of non-renewables and renewables in electricity generation are expected tochange significantly over the projection period to 2029-30. In 2007-08, 93 per cent of electricity

was generated from non-renewables (coal, oil and gas) and the balance from renewableenergy sources. Under these policy settings, the share of renewables is projected to increase to

around 20 per cent by 2019-20 and remain broadly at that level until the end of the projectionperiod. This reflects the effect of the RET, which requires a ramp up of renewable energy in theperiod to 2020. After 2019-20, renewable electricity generation continues to increase, albeit at a

slower rate.

Within the category of non-renewable energy, the key change projected over the outlookperiod is a substitution away from coal-fired generation to gas-fired generation. While coal is

expected to continue to dominate the electricity fuel mix under the assumed policy setting,emission pricing leads to a switch away from higher-emission energy sources for electricity

generation. Coal-fired electricity (both black and brown coal) generation is projected todecrease at an average rate of 0.6 per cent a year over the projection period (table 1), leading

to a fall in its share from 72 per cent in the base year to 43 per cent in 2029-30.

Further, the longer term role of coal is heavily dependent on technological developmentsrelated to carbon capture and storage. The timing for the deployment of carbon capture and

storage (CCS) technologies hinges on the economic viability of this technology given emissionprices.

A large part of the decline in coal based electricity is taken up by gas-fired generation

technologies. The share of gas in electricity generation is projected to grow from 19 percent in 2007-08 to 37 per cent in 2029-30. Gas-fired electricity generation is based on mature

technologies with more competitive cost structures relative to many renewable energytechnologies. As such, it has the potential to play a major role in the transition period until

lower-emission technologies become more viable. However, the cost competitiveness of gasas a fuel for electricity generation depends on gas prices.

In parallel with the increasing share of gas in the electricity fuel mix, these projections highlightthe significant expansion in the use of non-hydro renewable energy resources between

2007-08 and 2029-30. Wind energy is projected to account for the majority of the increase inelectricity generation from renewable sources over the projection period. Wind is projected to

account for 12 per cent of electricity generation in 2029-30. Within the renewable technologycluster, wind energy is a proven technology with relatively lower costs, notwithstanding the

influence of site specific factors on these costs.

Given Australias large potential bioenergy resources, the potential commercialisation of

second generation technologies using a new range of non-edible biomass feedstocks,and the RET, bioenergy has the potential to make a growing contribution to renewable


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electricity generation in Australia. However, this growth prospect is likely to be constrainedby competition for bioenergy resources, water availability and logistical issues associated with

handling, transport and storage.

In these projections, bioenergy for electricity generation is projected to grow by 2.3 per a yearover the period to 2029-30 but will still account for less than 1 per cent of electricity generated

in that year. A significant proportion of the projected growth in the use of bioenergy forelectricity generation is projected to occur in Queensland.

In comparison, solar energy is projected to grow at an average annual rate of 17 per cent, albeit

from a very low base. Electricity generation from solar energy in Australia is currently almostentirely sourced from photo voltaic installations. Electricity generation from solar thermalsystems is currently limited to small pilot projects, although interest in solar thermal systems

for large scale electricity generation is increasing.

The high investment costs of solar technologies represent the most important barrier totheir deployment. However, there is considerable scope for the cost of these technologies to

decline significantly over time. The competitiveness of solar energy and renewable energysources generally will also depend on government policies aimed at reducing greenhouse

gas emissions. In this context, the RET, the Clean Energy Initiative and the assumed carbonemissions reduction target are all expected to underpin the growth of solar energy in Australia

over the outlook period.

As with solar energy, Australia is considered to have considerable geothermal energypotential (AERA 2010), although Australias geothermal resources are currently sub-economic

because the commercial viability of the necessary technologies in Australia has not yet beendemonstrated. Electricity generation from geothermal energy in Australia is currently limited

to pilot power plants producing small amounts of electricity. In addition, a major impedimentto geothermal electricity generation in Australia is the distance of many of the resources from

existing transmission lines or consumption centres.

In these projections, geothermal energy is projected to account for 1.6 per cent of electricitygeneration by 2029-30.

Hydroelectricity generation is projected to remain broadly unchanged over the outlook period,

reflecting the limited availability of suitable locations for the expansion of large grid-basedhydroelectricity generation and water supply constraints. Most of the projected expansionin capacity is assumed to be associated with the upgrading of existing equipment and small

scale schemes.

Completed projects

During the six months to April 2010, there were seven electricity generation projects completed;

two wind powered, one coal, one coal seam gas, one natural gas, one oil and one hydropowered project. The seven projects have an electricity generation capacity total of around

1400 megawatts and a total capital cost of $1.7 billion. The largest of these projects, in terms


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of generation capacity, was the 660 megawatt, gas-fired Colongra power station, which hada capital expenditure of $500 million and is located at Munmorah on the central coast of New

South Wales. In Queensland, the 140 megawatt coal seam gas-fired Condamine power plant wascompleted at an estimated capital expenditure of $170 million. Also in Queensland, the Mount

Stuart power plant expansion was also completed. The oil-fired power station is owned by OriginEnergy and was expanded by 126 megawatts to 418 megawatts at a cost of $92 million. The other

non-renewable power station completed in the six months to April 2010 was Griffin Energyssecond stage of the Bluewaters power station. This coal-fired power station has a generation

capacity of 208 megawatts and a capital cost of around $400 million.

There were three renewable energy projects completed in the six months to April 2010; two

wind powered and a hydro powered project. Both wind projects, Clements Gap and Hallet2, are located in South Australia and have capacities of 57 megawatts and 71 megawatts,

respectively. The construction cost for Clements Gap was $135 million, while Hallet 2 was builtat a cost of $159 million. The Bogong Power Development, located in the Victorian Alps, will

add 140 megawatts of capacity at a cost of $240 million.

Advanced projects

At the end of April 2010, there were 15 projects at advanced stages of development. Theseprojects are either committed or under construction and have a total capacity of 2687

megawatts (figure a). This is equivalent to 6 per cent of Australias total generating capacityas at June 2008. The location of projects is widespread, with at least one advanced project in

every state and the Northern Territory. (figure b).

2 Major electricity generation developments projects completedNovember 2009 April 2010 capital

fuel project location company capacity expenditureMW A$m

Black coal Bluewaters stage 2 WA Griffin Energy 208 400

Coal seam gas Condamine Qld BG Group/ANZ 140 170

Infrastructure Services

Gas Colongra NSW Delta Electricity 660 500

Oil Mount Stuart Qld Origin Energy 126 92

Hydro Bogong Power Development Vic AGL 140 240

Wind Clements Gap SA Pacific Hydro 57 135

Wind Hallet 2 SA AGL 71 159


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completed in 2010. The project has a capacity of 550 megawatts and a capital cost of $640 million.A second 450 megawatt unit at the complex may be built by Origin Energy at a later date.

There are two gas-fired power projects at an advanced stage in Western Australia; the Kwinana

Power Station rebuild and Kwinana Swift. The Kwinana Power Station rebuild will result in twonew 100 megawatt gas-fired turbines being installed at a cost of around $260 million at the

existing Kwinana power station. The project is scheduled to be completed in late 2011. TheKwinana Power Station rebuild is the only non-renewable power project to be added to the list

at an advanced stage. The other gas project in Western Australia is the Kwinana Swift powerstation which will have a capacity of 120 megawatts and a capital expenditure of $120 million.

The fourth gas-fired power station at an advanced stage is Owen Springs in the NorthernTerritory. The 33 megawatt power project has a capital expenditure of $126 million and is

scheduled to be completed in mid 2010. Included in the capital cost of the Owen Springs

expansion is an upgrade of existing transmission and distribution infrastructure.

Victoria

TasmaniaTasmania

Queensland

Northern Territory

Western Australia

South Australia

New South Wales

Advanced electricity generation projectsApril 20101

capital city

Darling Downs

Crookwell 2

Gunning

Musselroe

Hallett 4Hallett 5

Waterloo stage 1

Mortlake stage 1

Lake Bonney stage 3

Kwinana Swift

Kwinana PowerStation rebuild

Collgar Wind Farm

gas

hydro

oil

solar

wind

CSM

black coal

biomass

LEGEND

0100MW

101300MW

301500MW

>500MW

PerthAdelaideAdelaide

Hobart

Brisbane

Canberra

Perth

Darwin

Sydney

MelbourneMelbourne

Eraring

OaklandsWind Farm

Owen Springs


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Renewable energy projectsAt the end of April 2010, there were nine renewable energy projects at an advanced stage ofdevelopment, which were all wind powered.

During the six months to April 2010, there were three wind projects added to the advanced list;Collgar in Western Australia, Gunning in New South Wales and Hallet 5 in South Australia.

The largest of these projects, in terms of generation capacity, is the Collgar wind farm withan expected capacity of 206 megawatts. This would make Collgar the largest wind farm in

Australia. The project has a capital cost of $750 million and is scheduled for completion in 2012.The Gunning wind farm, located in the Southern Highlands of New South Wales is expected tohave a generation capacity of 47 megawatts and a capital cost of $140 million. Hallet 5, which

is located in South Australia, has a capacity of 52 megawatts, a construction cost of around$140 million and a scheduled completion date of 2011.

Of the other six wind farms, three are located in South Australia and one each in New South

Wales, Victoria and Tasmania. The largest wind farm under construction in South Australia is Hallet4 (North Brown Hill) which has a capacity of 132 megawatts and a capital cost of $341 million. The

other two wind farms under construction in South Australia are Waterloo Stage 1 (111 megawatts)and Lake Bonney (39 megawatts).

In Tasmania, the 168 megawatt Musselroe wind farm is under construction with an estimated

capital cost of $425 million. Construction is also under way on Union Fernosa Wind AustraliasCrookwell 2 project located in the southern tablelands of New South Wales. The project will

have an electricity generation capacity of 92 megawatts and a capital cost of $238 million.The Oaklands Wind Farm in Victoria will have a generation capacity of 67 megawatts when

operational in 2011 and has an estimated capital cost of $200 million.

At the end of April 2010, the average capacity of projects using natural gas and wind wasaround 220 megawatts and 101 megawatts, respectively (figure c). Given that a large

proportion of advanced and less advanced projects will be using gas and wind, these energysources will account for an increasing proportion of power generation.

c Average capacity of advanced projects, by energy source, April 2010

MW 700600500400300200100

wind

gas

coal seam gas

black coal


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Electricity generation projects in Australia using solar energy do not feature prominently inABAREs listing, largely because these tend to be below the 30 megawatt threshold.

Less advanced projectsProjects in the less advanced category are either still undergoing a feasibility study (in somecases, prefeasibility 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 projectdevelopment 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, ifcompleted, are expected to provide a firm platform for future growth in Australian electricitygeneration in the medium term and beyond.

Of the 142 projects in ABAREs April 2010 projects list, 89 per cent (127 projects) are less

advanced.Table 4contains a summary of the numbers and fuel distribution by state of the127 less advanced projects, together with an aggregated capacity f igure.

4 Number of less advanced projects, April 2010potential

NSW Vic Qld WA SA Tas NT ACT Aust capacity

MW

Fossil-fuel based

Brown coal 0 1 0 0 3 0 0 0 4 1 710

Black coal 0 0 3 3 0 0 0 0 6 1 950

Coal seam gas 4 0 4 0 0 0 0 0 8 1 750

Gas 13 5 4 1 0 0 0 1 24 9 063

Oil 1 0 0 0 0 0 0 0 1 150

TBD 2 0 0 0 0 0 0 0 2 4 000

Sub-total 20 6 12 4 3 0 0 1 45 18 123

Renewable energy

Wind 16 31 4 3 16 2 0 0 72 10 469

Wave 0 1 0 0 0 1 0 1 3 786

Biomass 0 0 0 0 0 1 0 0 1 180

Solar 0 0 0 0 1 0 1 0 2 102

Geothermal 0 2 0 0 2 0 0 0 4 245

Sub-total 16 34 4 3 19 4 1 1 82 11 782

Total 36 40 16 7 22 4 1 2 127 30 405


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Non-renewable electricity generation projectsAt the end of April 2010 there were 45 non-renewable electricity generation projects at a lessadvanced stage, of which 24 are natural gas-fired and eight are coal seam gas-fired plants.

There are six black coal and four brown coal-fired plants and an oil-fired power plant underconsideration. There are two power plants in New South Wales, Bayswater B and Mt Piperexpansion, for which a decision has yet to be made as to whether they will be coal or gas-fired.

The proposed Bayswater B and Mt Piper expansion are the two largest projects on the list with

a potential capacity of 2000 megawatts each and are scheduled to be in operation around themiddle of this decade.

Another potential large project is the 840 megawatt gas-fired power station AGL is proposing

to build near Tarrone in south western Victoria. AGL is also proposing to build several largegas-fired power stations including two in south east Queensland (capacity of 360 megawatts

and 1150 megawatts), and one near Townsville (360 megawatts), Sydney (350 megawatts) andsouth west New South Wales (250-780 megawatts initially).

There are also a number of coal seam gas-based power stations that are at a less advanced

stage. These include Braemar 3 (450 megawatts), Spring Gully stages 1 and 2 (1000 megawatts)and the Mungi Power Generation project (30 megawatts) in Queensland; and stages 1 and 2

of the Narrabri project (210 megawatts) and Richmond Valley power station (30 megawatts) inNew South Wales.

Renewable energy projectsAt the end of April 2010, there were 82 less advanced renewable energy projects of which

72 are wind farms, accounting for around 90 per cent of the proposed addition to renewableenergy capacity. The significant number of proposed wind powered electricity projects,

in part, ref lects the RET and the cost competitiveness of wind relative to other less maturerenewable energy technologies.

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 southernhemisphere 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 Meridians Macarthur wind project in Victoria has conditional company approval andan announced capacity of 365 megawatts.

Projects new to ABAREs list

There are 10 projects new to the list since October 2009. Of the new projects, there are fourgas-fired power stations, two wind and two geothermal power projects and one coal and one

coal seam gas-based power project (figure d).


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The largest of the non-renewable power projects is the Galilee Power Project in CentralQueensland, which is being developed by a subsidiary of Waratah Coal. The 900 megawatt

power station will incorporate carbon capture and storage technologies and source coal fromWaratah Coals proposed adjacent mine. The capital expenditure associated with the Galilee

Power Project is $1.25 billion. Of the gas-fired power stations, the largest new to the list, is AGLsproject near Dalton in south west New South Wales. The project will initially have a capacity of

250-780 megawatts and a capital cost of $250-800 million. A second stage to the project couldbring the power stations total capacity to 1500 megawatts.

Two geothermal projects were added to the list;

the Geelong thermal power project and Koroit.Both are located in Victoria and will be staged

developments. The Geelong thermal powerproject will initially involve the development

of 12 megawatts of capacity followed by anincrease in scale to 140 megawatts. At Koroit, a

10 megawatt demonstration plant is scheduledto be in operation in 2012 followed by a further

40 megawatts of capacity in 2013-14.

geo-thermal

windgasblackcoal

coal seamgas

Projects added to list:six months to April 2010total number = 10

no.

2

3

1

4

d


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RESEARCH FUNDINGABARE relies on financial support from external organisations

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

organisations had provided financial support for ABAREs research program in 2007-08

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

AusAid

Australian Fisheries Management Authority

Australian Government Department of Climate

Change

Australian Government Department of the

Environment, Water , Heritage and the Arts

Australian Government Department of

Infrastructure, Transport, RegionalDevelopment and Local Government.

Australian Government Department of Resources,

Energy and Tourism

CRC Plant Biosecurity

CSIRO (Commonwealth Scientific 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

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