Supply gap could turn SA coal hub into green energy powerhouse

Renewable energy generators are racing to get large-scale projects financed and built in time to fill the supply gap created by the closure of coal-fired power stations across the country. And they could turn the home of SA’s last coal-fired power station into the state’s green powerhouse.

Apr 11, 2017, updated Apr 11, 2017
Port Augusta's Northern power station closed in 2016.

Port Augusta's Northern power station closed in 2016.

Construction began this morning on Australia’s largest solar farm, the 300-megawatt Bungala project, located 12km from Port Augusta.

Also this morning, Singaporean developer Nexif revealed it was one step closer to financing the construction of a 59 turbine, 212-megawatt wind farm, 15km from the town.

The announcements come less than a fortnight after the Federal Government offered a $110 million concessional loan for another major Port Augusta renewables project – a long-touted solar thermal plant – in exchange for Nick Xenophon’s agreement to pass company tax cuts through the Senate.

According to Nexif CEO Zeki Akbas, renewable generators are now bustling to fill the supply gap caused the closure of several Australian coal-fired power plants over the past five years – including Port Augusta’s Northern Power Station (last year) and Victoria’s largest coal-fired power station, Hazelwood (earlier this month).

“We are observing some of the old plants being progressively phased out,” Akbas told InDaily.

“They are very, very large stations; that’s leading [to] a very big gap in supply.

“We have seen a very steep increase in electricity forward contract prices … that is [the] markets saying there’s a shortage of electricity here.

“Developers are working towards meeting that requirement [and] replacement power is coming from renewables.”

The $450 million Lincoln Gap wind farm project has failed to launch over more than a decade under the stewardship of Sydney-based company OneWind Australia.

But the Singapore-based company that now manages it this morning announced it had signed two long-term Large Scale Generation Certificate agreements with energy retailer ERM Power, placing the project a step closer to financing and construction.

Akbas said “the time is right” for the project and that getting it financed and built quickly was key to its business case.

He said it would help fill the gap in supply emerging “not just in the South Australian system, but the entire [National Energy Market]”.

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“The project has been in development for several years … [but now] the time is right,” he said.

“That’s what we’ve been working on, expeditiously … over the past three or four months.”

Akbas said the company was confident it would have the project financed “in the next couple of months” and that construction would begin later this year.

He said that the combination of coal generators withdrawing from the market and rising gas prices gave renewable generators key advantages in the electricity market – and for that reason several renewable projects were “arriving at the finishing line” at the same time.

“We have seen a many fold increase in gas prices which is also putting upward pressure on [power prices].”

He added that his company was considering including utility-scale battery storage to mitigate the fluctuation in power output inherent in wind generation.

The project is expected to begin generating electricity by mid-2018.

The developers of the prospective Bungala solar farm reportedly reached financial close on the project last week.

Reach Energy expects the first two stages of the plant – constituting the majority of its generation capacity – to be complete by late 2018.

CEO Tony Concannon told green energy publication RenewEconomy that there were “no ‘ifs’ and no ‘buts’” and that the project is “definitely happening”.

He is quoted as saying the company had maintained a low profile on the project because “Port Augusta has had a number of false dawns”.

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