ii
© Commonwealth of Australia 2009
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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
Postal address GPO Box 1563 Canberra ACT 2601 Australia
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ABARE is a professionally independent government economic research agency.
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
Electricity Generation – major development projects – April 2009 listing abare.gov.au
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.
Electricity Generation – major development projects – April 2009 listing abare.gov.au
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
Electricity Generation – major development projects – April 2009 listing abare.gov.au
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.
Electricity Generation – major development projects – April 2009 listing abare.gov.au
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
Electricity Generation – major development projects – April 2009 listing abare.gov.au
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
Electricity Generation – major development projects – April 2009 listing abare.gov.au
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
Electricity Generation – major development projects – April 2009 listing abare.gov.au
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
Electricity Generation – major development projects – April 2009 listing abare.gov.au
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
Electricity Generation – major development projects – April 2009 listing abare.gov.au
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.
Electricity Generation – major development projects – April 2009 listing abare.gov.au
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