Assessment of the potential for renewable energy projects and systems in the Pilbara
October 2011
156BTable of Contents
1 0BExecutive summary 2
1.1 10BGeneral 2
1.2 11BRegional context 2
1.3 12BLegislation, regulation and market 5
1.4 13BEnergy demand 7
1.5 14BEnergy resources 8
1.6 15BRenewable energy utilisation 10
1.7 16BCommercial considerations 15
1.8 17BFurthering renewable deployment 17
1.9 18BCase studies 26
1.10 19BConclusions 27
1.11 20BRecommendations 30
2 1BRegional context - PILBARA 32
2.1 21BRegional boundaries and overview 32
2.2 22BCurrent energy supply infrastructure 33
2.2.1 Electricity generation and transmission 33
2.2.2 Gas supply and transmission 36
2.2.3 Diesel supply 37
2.3 23BAgricultural/pastoral/aquaculture 37
2.4 24BIndustrial/manufacturing 37
2.5 25BMining 38
2.6 26BLNG production 39
2.7 27BUrban development 40
2.8 28BRemote communities 40
3 2BLegislation, Regulation and MarketS 42
3.1 29BElectricity legislation and regulation 42
3.2 30BGas legislation and regulation 43
3.3 31BStatutory planning 43
3.4 32BGrid connection 44
3.5 33BRenewable energy policy 44
3.5.1 Commonwealth 44
3.5.2 State 50
3.6 34BRenewable energy markets 51
3.6.1 Western Australian Wholesale Electricity Market (WEM) 51
3.6.2 ERET and liable entities 51
3.6.3 STC market 55
3.6.4 GreenPower 56
3.7 35BOperational approval 57
3.7.1 On-grid 57
3.8 36BCarbon price 57
4 3BEnergy Demand - PILBARA 61
4.1 37BMining/industrial demand 61
4.2 38BUtility (Horizon) demand 63
5 4BEnergy Resources - PILBARA 67
5.1 39BHydrocarbons 67
5.1.1 Oil 68
5.1.2 Gas 68
5.1.3 Gas transportation 74
5.1.4 Coal 76
5.2 40BRenewable resources 76
5.2.1 Geothermal 77
5.2.2 Hydro 81
5.2.3 Wind 83
5.2.4 Solar 88
5.2.5 Bio-energy 96
5.2.6 Ocean energy 99
6 5BRenewable energy utilisation - Pilbara 104
6.1 41BThe fossil technology context 105
6.2 42BRenewable technologies 106
6.2.1 Geothermal 106
6.2.2 Hydro 108
6.2.3 Wind 108
6.2.4 Solar 111
6.2.5 Ocean 117
6.2.6 Bio-energy 118
6.2.7 Hybrid 120
6.3 43BTechnology enablers 123
6.3.1 Energy storage 123
6.3.2 Smart grid 125
6.4 44BRenewable generation deployment 126
6.4.1 Historical 126
6.4.2 Existing 131
6.4.3 Proposed 134
6.4.4 Constraints and renewable integration 137
6.4.5 Likely deployment in the Pilbara – near to mid-term 141
6.5 45BDeployment costs 144
6.5.1 Wind 146
6.5.2 Photovoltaics (PV) 147
6.5.3 CSP (parabolic trough) 148
6.5.4 ISCC 150
7 6BCommercial 152
7.1 46BBusiness case considerations 152
7.1.1 Risk 152
7.1.2 Demand 152
7.1.3 Technology 153
7.1.4 Construction 154
7.1.5 Fuel 154
7.1.6 Regulation 155
7.2 47BOperations and maintenance 156
7.2.1 Finance 156
7.2.2 Carbon price and ERET 157
7.3 48BBarriers and constraints 159
7.3.1 Carbon price and RET risk 160
8 7BFUTURE RENEWABLE GENERATION DEPLOYMENT - pilbara 163
8.1 49BOpportunities 163
8.2 50BBreaking the barriers 163
8.2.1 Pathways to commercial viability 163
8.2.2 Technology solutions 164
8.2.3 Measures of change 168
8.2.4 Market-related issues 170
8.2.5 Technology-related drivers 171
8.2.6 Regulatory issues 179
8.2.7 Financial 187
8.3 51BModelled electricity tariff reduction trajectories 191
8.3.1 Diesel-fuelled generator 192
8.3.2 Gas-fuelled generator 193
8.3.3 PV small-scale (5 MWAC) 194
8.3.4 PV medium scale (20 MWAC) 195
8.3.5 Wind small-scale (5 MW) 196
8.3.6 Wind medium scale (50 MW) 197
8.3.7 CSP parabolic trough large-scale without storage (150 MW) 198
8.3.8 CSP parabolic trough large-scale with 6hrs storage (150 MW) 199
8.3.9 Integrated Solar Combined Cycle (ISCC) large-scale (150 MW) 200
8.4 52BConclusions 201
9 8BCASE STUDIES GREATER RENEWABLES DEPLOYMENT 202
9.1 53B40 MW remote case studies 204
9.1.1 Diesel with 5 MWAC of PV 204
9.1.2 Gas with 5 MW of wind 206
9.2 54BRemote ‘grid’ case studies 207
9.2.1 Integrated Solar Combined Cycle (ISCC) 208
9.2.2 Integrated wind and conventional generation 208
9.2.3 150 MW of CSP with storage on a super grid 209
9.3 55BGrid issues 210
10 9BConclusions and Recommendations 213
10.1 56BConclusions 213
10.2 57BRecommendations 217
10.2.1 First order recommendations for implementation 218
10.2.2 Second order recommendations for further consideration 219
157BList of Figures
Figure 1: Pilbara region location map 2
Figure 2: Existing power and gas infrastructure in the Pilbara region 3
Figure 3: Renewable energy target 6
Figure 4: Forecast additional demand in the Pilbara 8
Figure 5: Monthly averaged global insolation, near Port Hedland, in kWh/m2/day 10
Figure 6: Esperance Nine Mile Beach Wind Farm, consisting of six 600kW wind turbines 13
Figure 7: Macro-constraints analysis for large-scale CSP 15
Figure 8: Comparison of cost components for relevant technologies 19
Figure 9: Example use of modelled changes 20
Figure 10: Effect on LCOE of individual changes 21
Figure 11: Effect of various enablers on LCOE Costs ($/MWh) 26
Figure 12: Existing power and gas infrastructure in the Pilbara region 32
Figure 13: Existing power and gas infrastructure in the Pilbara region47F 33
Figure 14: WA petroleum pipelines map 37
Figure 15: Annual LRET targets (from ORER RPP) 46
Figure 16: Forecast for new renewable generation capacity 54
Figure 17: ACIL Tasman - LGC price projection 54
Figure 18: Projected total STC creation (ACIL Tasman) 56
Figure 19: ACIL Tasman - GreenPower sales forecasts 57
Figure 20: SKM/MMA forecast electricity pool prices under various carbon price scenarios 59
Figure 21: Forecast additional industrial demand in the Pilbara 62
Figure 22: Load variation in Karratha and Port Hedland18F 64
Figure 23: Forecasts of Horizon's requirements for Karratha and Port Hedland 65
Figure 24: Schematic of typical gas field production and contracting capacity profiles 69
Figure 25: Indicative domgas processing capacity (excl uncommitted LNG projects) 71
Figure 26: Summary of Department of Mines & Petroleum domgas supply projections 73
Figure 27: Interpreted crustal temperature at 5km depth. 78
Figure 28: Geothermal exploration tenements in Western Australia as at 9 May 2011 79
Figure 29: Geothermal gradients with depth for the Canning, Carnarvon and Perth basins. 80
Figure 30: Estimated (modelled) heat flow rates (mW/m2) for 101 wells in the Canning Basin. 81
Figure 31: 3 yearly rainfall up to present 82
Figure 32: Predicted average wind speed at 80 m from numerical modelling 84
Figure 33: Predicted average wind speed at 80 m from numerical modelling 84
Figure 34: Early WA wind speed prediction 85
Figure 35: Predicted annual average wind speed at 80m based on numerical modelling using a 5 km grid (also shown are estimated normalised diurnal curves and wind roses for 3 months, from November 2010 to January 2011 at two random locations in the Pilbara) 86
Figure 36: Coastal crossing points of cyclones 1970 – 2008 (red dots indicate severe category cyclones) 87
Figure 37: Path map of Cyclone Vance, 1999, which crossed the coast at severe category 5 with measured wind speeds to 279 km/h 88
Figure 38: The solar relationship between incoming solar energy and direct and indirect solar insolation 88
Figure 39: The ways in which energy from the sun can be utilised 89
Figure 40: Average annual global insolation for Australia, MJ/m2/day 90
Figure 41: Average annual normal insolation for Australia, MJ/m2/day 91
Figure 42: Average December 2010 daily global insolation, MJ/m2/day 92
Figure 43: Average June 2010 daily global insolation, MJ/m2/day 92
Figure 44: Monthly averaged global insolation, near Port Headland, in kWh/m2/day 93
Figure 45: Average daily profile per month for an area near Port Headland 94
Figure 46: Global horizontal and direct normal insolation for an area near Port Headland. 94
Figure 47: Modelled output of a nominal 250 MW solar thermal plant located near Newman, Pilbara for an average January (top) and June (bottom) 95
Figure 48: Estimated yearly energy yield for a nominal CSP plant based on satellite data correlated to ground data. Coloured area indicates ‘suitability’ for project with green indicating the best sites 96
Figure 49: Distribution of bio-energy facilities and generalised land-use across Australia. 98
Figure 50: Spatial distribution of time average tidal current power (9km2 resolution) - King Sound expanded and shown as inset 101
Figure 51 Spatial distribution of time averaged wave power in terms of kW/m (left) and KJ/m2 (right) on the West Australian Continental Shelf 102
Figure 52: Schematic and basic parameters of the Birsdville 80kWe (net) geothermal power system, which uses a hot sedimentary aquifer. 107
Figure 53: Typical sizes of commercially available wind turbines 109
Figure 54: 275 kW tilt down, cyclonic wind turbines are used at Coral Bay 110
Figure 55: Rotor erection, 2.1 MW machine at the Bluff Wind farm, South Australia, 2011 111
Figure 56: Graphical Description of CSP technologies 112
Figure 57: Cleaning CSP mirrors, PS20 20 MW Solar Tower, Sevilla, Spain 113
Figure 58: 50 MW Lebrija 1 CSP plant, during construction, November 2009 113
Figure 59: Fresnel-based CSP in operation near Murcia, Spain 114
Figure 60: Molten salt energy storage system at the 50 MW Andasol 1 CSP plant near Grenada, Spain. This supplies 8 hours of storage. 115
Figure 61: The 58MWAC Copper Mountain PV power station, USA, commissioned in 2010 116
Figure 62: Carnegie Wave Energy concept 118
Figure 63: Bio-energy facilities in Australia 119
Figure 64: Schematic representation of an ISCC plant 121
Figure 65: Example optimisation considerations for a CSP/Gas Turbine ISCC Hybrid 122
Figure 66: Forms of energy storage and their general characteristics and use for power systems 124
Figure 67: Graphic representation of smart grid components and enabled results 125
Figure 68: The Remote Area Power Supply Investigation project was initiated in 1977 and undertook research and development into remote systems such as these. 127
Figure 69: Early wind energy deployment projects in Western Australia. From l-r; 55 kW vertical axis and 20 kW horizontal axis machines, Rottnest Island (1980); Westwind turbine at South Fremantle supplied by local firm, Westwind (1984) 127
Figure 70: Esperance Nine Mile Beach Wind Farm, consisting of six 600 kW wind turbines 128
Figure 71: Views of the 100 kWe Meekatharra solar thermal/diesel power station installed in 1982; (a) close-up of mirrors and heat collection elements and (b) from the air 129
Figure 72: The Narrogin Integrated Wood Processing pilot plant, which used mallee trees to create activated carbon, eucalyptus oil and renewable electricity – shown in 2008 130
Figure 73: Carnegie Wave Energy’s buoyant actuator, part of their wave power technology being developed and tested in Perth 130
Figure 74: Muradel pilot algae plant in Karratha 134
Figure 75: Project pipeline for the application of the CETO wave power technology, including a site at Exmouth in conjunction with the Department of Defence 136
Figure 76: Areas of focus and expected geothermal potential by the company New World Energy, who is investigating areas in the Carnarvon Basin 137
Figure 77: Macro-constraints analysis undertaken by WorleyParsons in 2009 in regards to locations for very large-scale CSP development. Colour indicates suitability 138
Figure 78: Simplified relationship between renewable technology, system penetration and integration cost to achieve penetration for a hybrid system in a large off-grid system 141
Figure 79: Renewable energy technology development path and current broad technology position 142
Figure 80: General range in levelised cost for various forms of renewable energy ($US) 143
Figure 81: Capital (top) and operating (bottom) cost estimates for wind energy in real dollars 146
Figure 82: Capital (top) and operating (bottom) cost estimates for PV in real dollars 147
Figure 83: Capital (top) and operating (bottom) cost estimates for CSP in real dollars 149
Figure 84: Capital (top) and operating (bottom) cost estimates for ISCC in real dollars 150
Figure 85: Electricity prices structure 158
Figure 86: Effect of carbon price and fuel cost on the marginal cost of wholesale electricity 159
Figure 87: LCOE base case 167
Figure 88: Example use of modelled changes 169
Figure 89: Effect on LCOE of 5% reduction in capex 172
Figure 90: Effect on LCOE of rise in fuel cost of $1/GJ 174
Figure 91: Effect on LCOE of fuel delivery to remote locations 175
Figure 92: Effect on LCOE ($/MWh) in improvement of renewable resource to optimal 177
Figure 93: Effect on LCOE (%) in improvement of renewable resource to optimal 178
Figure 94: Immediate effect of REC multiplier 180
Figure 95: Whole of Life effect on required selling price if additional 0.5 REC awarded 180
Figure 96: Effect on LCOE of indexing the REC shortfall penalty charge 181
Figure 97: Small grid rule change sensitivity 183
Figure 98: Effect on LCOE of changing the ‘small grid’ rules 183
Figure 99: Effect on LCOE of a shift in carbon price of $10/t CO2e 185
Figure 100: Effect on LCOE of discontinuing REC once a carbon price is established 186
Figure 101: Effect on LCOE of an investment tax credit 187
Figure 102: Effect on LCOE of accelerating depreciation 188
Figure 103: Effect on LCOE of a reduction in the cost of equity by 1% 189
Figure 104: Effect on LCOE of a 50 km grid connection 190
Figure 105: Comparison of technologies under the combined effect of 'measures' 191
Figure 106: Interpretation of waterfall charts 191
Figure 107: Effects of various enablers on LCOE of diesel plant 192
Figure 108: Break up of LCOE for Diesel 30MW 192
Figure 109: Effects of various enablers on LCOE of gas plant 193
Figure 110: Break up of LCOE for Gas 30 MW 193
Figure 111: Effects of various enablers on LCOE of a 5 MWAC PV plant 194
Figure 112: Breakup of LCOE for PV 5MW 194
Figure 113: Effects of various enablers on LCOE of a medium scale solar PV slant 195
Figure 114: Breakup of LCOE for PV 20MW 195
Figure 115: Effects of various enablers on LCOE of a small-scale wind plant 196
Figure 116 Breakup of LCOE for wind 5MW 196
Figure 117: Effects of various enablers on LCOE of a medium scale wind plant 197
Figure 118: Breakup of LCOE for Wind 50MW 197
Figure 119: Effects of various enablers on LCOE on 150 MW of CSP Plant 198
Figure 120: Breakup of LCOE for CSP 150MW 198
Figure 121: Effects of various enablers on LCOE from a CSP plant with storage 199
Figure 122: Breakup of LCOE for CSP 150MW with storage 199
Figure 123: Effects of various enablers on LCOE of ISCC plant 200
Figure 124: Breakup of LCOE for ISCC 40MW on 150MW 200
Figure 125: Breakup of basic Pilbara diesel generation costs (based on analysis in Section 8.3) 206
Figure 126: Breakup of Pilbara gas generation costs (based on analysis in Section 8.3) 206