AWATEA ConferenceAWATEA Conference · AWATEA ConferenceAWATEA Conference Projects, Partnerships &...
Transcript of AWATEA ConferenceAWATEA Conference · AWATEA ConferenceAWATEA Conference Projects, Partnerships &...
AWATEA ConferenceAWATEA Conference Projects, Partnerships & Pitfalls
April 2010
Peter Apperley, Commercial Development Manager
So you want to build a renewable power station?station?
What are some of the pitfalls that canthe pitfalls that can occur along the way?Who can you partner
Meridian’s former CEO keen to get White Hill wind farm (picture right) under way
with to improve your chances of success?
Potential value of site steadily eroded through the development processthrough the development process
Scope/characteristics
Concept creation
ntia
l
Pre-feasibility
Commercial structure
men
t pot
en
Site acquisition
Procurement strategy
e en
hanc
em Revenue enhancement
Manufacturer selection
Resource consents
gy
Creatable value
Feasibility
Cos
t
Detailed design
Intrinsic value
Valu
e
Consent compliance and warrantyMid life
Intrinsic value
Time Graph courtesy Meridian Wind Development team
Who owns the land that you need for the project?the project?
Landowners are a keyLandowners are a key long term partner in your developmentMake sure your agreements are robust and commercially sensibleand commercially sensibleEven marine projects will need access to onshore l dlandDon’t forget Dept of Conservation concessionsConservation concessions
Te Apiti project manager David Green discussing the project with the Moars
Who else uses the resource?Who else uses the resource?
Water resources have many alternative yuses and usersCompromise required to get a mutually b fi i l l tibeneficial solution
Interislander Ferry heading into the Cook Strait
What else uses the resource?What else uses the resource?
Be prepared to spend the time and p p pmoney to understand the local ecology and the effect of your project on itWhat are the options for mitigationWhat are the options for mitigation, restoration, enhancement?
West Coast Powelliphanta Snail
Meridian’s Merlin Bird Radar
Hector’s Dolphin in Catlins, Southland – courtesy Department of Conservation
What’s in it for the local community?What s in it for the local community?
Your project will be part of theYour project will be part of the community and shares community resourcesNeed to consider local benefitsNeed to consider local benefits - what can your project give back to the community? P ibilit f i t ithPossibility for co-existence with locally-owned ventures
White Hill Wind Farm Mountain Classic – courtesy of Southland TimesSalmon farm on Tekapo canal – courtesy of Mt Cook Alpine Salmon
All Blacks, animators and artists aren’t necessarily going to be your friendsnecessarily going to be your friends
Don’t assume that all opposition toDon t assume that all opposition to your project will come from those who are locally affectedUse of emotive imagery and highUse of emotive imagery and high profile campaigners can turn your project into a political football
Courtesy of SaveCentral.org
Wind turbines in Queenstown - Courtesy of Animation ResearchMendocino Wave Energy Moratorium march – 29 Mar 2008 from http://mendocoastcurrent.wordpress.com/page/9/
Sometimes the best thing you can do is stop and cut your lossesstop and cut your losses
Can you stage your development process in some way to reduce upfront costs and risks?If not the risk of continuing may be too high
Simulations of Project Aqua impacts on Waitaki river flow and proposed canal
Technology moves onTechnology moves on
How much flexibilityHow much flexibility for technology change?
Makara wind farm proposal in 1997 (ECNZ)
Quartz Hill land only
40-70 x 250-750kW wind turbinesBlades: 25 35m• Blades: 25-35m
• Towers: 40-50m• Generator: Variable pitch
asynchronous
Output: 30MW, 120GWh pa
ECNZ Makara Wind farm Proposal – from 1997 Fact Sheet
Technology moves onTechnology moves on
Premature consentingPremature consenting might have shut down a more valuable option
Project West Wind – commissioned 2009 (Meridian)
Quartz Hill and Terawhiti Station
62 x 2.3MW wind turbines• Blades: 41m• Towers: 68m• Generator: Full Power Converter
Project West Wind – Photo taken by Ray Brown Dec 2009
Output: 143MW, 570GWh pa
How will you connect to the grid?How will you connect to the grid?
Th i f j t illThe size of your project will determine whether you connect into the local lines company or Transpower
CREST – Kaipara200MW staged
TranspowerIn most cases there is insufficient line capacity near the coast – so connection distances could be
New RenewablesOcean CurrentWave
connection distances could be significantRequires easements and consents which add cost and time Neptune –consents which add cost and timeEarly engagement with lines co’s and Transpower importantTh t k l d tl
pCook St1MW prototypeFuture 900MW?WET NZ
2kW WEC prototypeThe network may also need costly
strengthening Map of NZ Grid courtesy of Transpower
prototype
What works at distribution voltage may not at transmission voltagesnot at transmission voltages
New technologies can get caught out by Grid Codes thatby Grid Codes that were designed for conventional generatorsgeneratorsMake sure your proposed project is p p p jgrid compliant with the rules of the system operator orsystem operator or has dispensation
Meridian’s CalRenew 5MW solar project under construction
Suppliers and contractors are a key partner in your developmentpartner in your development
Your choice of equipment supplier willYour choice of equipment supplier will be a key factor in the long term success of your projectPick the right contractor arrangement for the level of risk you’re comfortable withwithThe more risk you try to offload, the higher the overall priceo e a p ce
TBM assembled in Deep Cove (Manapouri 2nd
Tailrace Tunnel) – Fletcher Dillingham Ilbau Alliance – courtesy of tunnelandminingnz.co.nz
Signing of turbine supply, logistics & civil construction contracts for West Wind – representatives of Meridian, Siemens Wind Power, Deugro & Higgins Construction
Construction consent conditions –breach them and you may be shut downbreach them and you may be shut down
Make sure your ycontractors are well aware of your consent conditionsY ill b li bl if thYou will be liable if they breach them and it could end your project
Small hydro development stalled and fined for breaching resource consent conditions
What are offtake providers prepared to pay for your output and what are their alternatives?your output and what are their alternatives?
Wholesale Electricity Price (real $/MWh)Forward wholesale prices
6080
100120140
ProjectionForward wholesale prices driven by the long run marginal cost of available
ti j t
0204060
990
992
994
996
998
000
002
004
006
008
010
012
014
016
018
020
022
024
026
028
030
generation projectsOfftake PPAs driven by the supplier’s view of above not
19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
GDP: Very Low Grow th Emissions Price: $50/t Emissions Price: $75/t
Emissions Price: $100/t Reference Courtesy of Ministry of Economic Development Energy Outlook 2009 Ed.
supplier s view of above not by the unit cost of your projectTh l di t fThey may also discount for location, transmission risk, reliability, intermittency,
Courtesy of Options Choices Decisions 2006 by Meridian
y, y,length of PPA term
Maybe you might want to joint venture or alliance with your offtake provider?or alliance with your offtake provider?
Joint ventures can be hard work if you Ross Island Windfarm, Antarctica commissioned Feb 2009Developed by Meridian in Alliance with Antarctica NZJoint ventures can be hard work if you
don’t have common goals Expect high legal bills and an
Developed by Meridian in Alliance with Antarctica NZ
expensive project if everyone tries to de-risk themselvesA cooperative alliance framework mayA cooperative alliance framework may be preferable
Vi l i l ti f 330MW M th i d f Vi t i 50 50 j i tVisual simulation of 330MW Macarthur wind farm, Victoria – a 50:50 joint venture development between Meridian Australia and AGL Energy.
Who will underwrite your development?Who will underwrite your development?
Do you have sufficient balance ysheet or need to issue new shares?JV Partnership with an energy or i f t t ?infrastructure company?Project financing? Long term financing based on projected g p jcashflows of the project rather than balance sheet of sponsors
“City Banker”– Courtesy http://kennedy121.wordpress.com
Courtesy http://www.tradeindia.com/fp306248/
Project-Finance-Consultancy.html
ConclusionsConclusions
Renewable generation projectsRenewable generation projects are difficult and can take a long from inception
Pelamis courtesy of www.new-energy-portal.com
Many pitfalls along the wayKey to success or failure is in the strength of the partnerships instrength of the partnerships in each facet of the developmentGood luck!
Tidal stream generation simulation courtesy of www.libertyparkusafd.org
Questions?
White Hill wind farm