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ElectricityGeneration

Major ProjectsOctober 2013

George Stanwix

© Commonwealth of Australia 2013

This work is copyright, the copyright being owned by the Commonwealth of Australia. The Commonwealth of Australia has, however, decided that, consistent with the need for free and open re-use and adaptation, public sector information should be licensed by agencies under the Creative Commons BY standard as the default position. The material in this publication is available for use according to the Creative Commons BY licensing protocol whereby when a work is copied or redistributed, the Commonwealth of Australia (and any other nominated parties) must be credited and the source linked to by the user. It is recommended that users wishing to make copies from BREE publications contact the Chief Economist, Bureau of Resources and Energy Economics (BREE). This is especially important where a publication contains material in respect of which the copyright is held by a party other than the Commonwealth of Australia as the Creative Commons licence may not be acceptable to those copyright owners.

The Australian Government acting through BREE has exercised due care and skill in the preparation and compilation of the information and data set out in this publication. Notwithstanding, BREE, its employees and advisers disclaim all liability, including liability for negligence, for any loss, damage, injury, expense or cost incurred by any person as a result of accessing, using or relying upon any of the information or data set out in this publication to the maximum extent permitted by law.

BREE 2013, Electricity generation major projects, Bureau of Resources and Energy Economics, Canberra, October.

ISSN (PDF) 978-1-921516-17-7ISSN (Word) 978-1-921516-16-0Postal address:Bureau of Resources and Energy EconomicsGPO Box 1564Canberra ACT 2601 Australia

Phone: +61 2 6276 1000Email: [email protected]: www.bree.gov.auElectricity Generation Major Projects • October 2013 2

AcknowledgementsThe author would like to express his appreciation for the assistance and support provided by Wayne Calder, Ross Lambie and colleagues from the Bureau of Resources and Energy Economics, Ben Skinner from the Australian Energy Market Operator, Jonathon Milne from the Australian Energy Regulator, Greg Ruthven from the Independent Market Operator of Western Australia, Michael Reid from the Western Australian Department of Finance, and the companies involved in the development projects listed in this report.

Electricity Generation Major Projects • October 2013 3

ForewordThis annual BREE publication, previously known as Major Electricity Generation Projects, provides an update of major projects that covers all significant areas of electricity generation including renewable and non-renewable sources. A separate publication, Mining Industry Major Projects, records the investment pipeline from exploration through to completed projects in the resources and energy sector in Australia. The data in this publication comes from a wide variety of sources and provides a summary of major electricity generation projects under consideration or development across Australia. This publication is made possible by the valuable input from the companies involved in these development projects.Electricity Generation Major Projects covers the period since October 2012 to August 2013 and features several improvements and provides more detailed information on the investment ‘pipeline’ than in the past. Previously projects were reported in only two categories (‘advanced’ and ‘less advanced’), but are now grouped into four stages: (1) Publicly Announced; (2) Feasibility Stage; (3) Committed; and (4) Completed. The additional categories help to track where a project is at from first announcement through planning and approvals to final investment decision and eventual completion. Projects at the Committed Stage of development have received a final investment decision (FID) and have either started, or are about to start, construction. As of August 2013, there are 22 known projects in the committed category with a total planned capacity of 2 689 megawatts and an estimated capital expenditure of $5.6 billion. Renewable energy generation accounts for around 78 per cent of these projects in capacity terms. To put this in perspective, and to show the scale of the pipeline, the total additional committed generation capacity is equivalent to 5 per cent of existing installed capacity in Australia. If you are interested in other publications or further information about BREE and its activities, please contact us at www.bree.gov.au

Bruce WilsonExecutive Director


ContentsAcknowledgements 3Foreword 4Abbreviations and acronyms 7Executive summary 81 Profile of electricity generation in Australia 12Consumption 12Generation 12Investment trends 16Investment outlook 162 Background to the Electricity Generation Major Projects Report 19Project classification 193 Projects at the Publicly Announced Stage 21Overview 21Analysis of projects at the Publicly Announced Stage 214 Projects at the Feasibility Stage 23Overview 23Analysis of projects at the Feasibility Stage 235 Projects at the Committed Stage 25Overview 25Analysis of projects at the Committed Stage 26Analysis of projects at the Committed Stage by region 306 Projects at the Completed Stage 32Overview 32Analysis of projects progressing to the Completed Stage 337 Outlook for investment in generation capacity 33Overview 33References 34


FiguresFigure 1: Investment pipeline for new capacity generation in Australia, by fuel type and by year of expected start up 8Figure 2: Number and nominal value of projects at the Committed Stage 9Figure 3: Additional capacity and average nominal cost of projects at the Committed Stage 10Figure 4: Australia’s electricity consumption, by region 12Figure 5: Installed generation capacity installed in Australia, by fuel type, share of total (%) 13Figure 6: Australia’s total electricity generation, by fuel type 14Figure 7: Principal generation plant installed, by fuel type and by State and Territory 15Figure 8: Annual investment in registered capacity, by fuel type 17Figure 9: Growth in installed generating capacity in the NEM region and demand for electricity (Index 1999–00=100) 18Figure 10: The stages of the investment pipeline 20Figure 11: Share of additional capacity of projects by energy source and by location– Publicly Announced Stage–as at September 2013 21Figure 12: Share of additional capacity of projects by energy source and by location–Committed Stage–as at September 2013 27Figure 13: Pipeline of investment in Australia’s electricity generation sector 29

TablesTable 1: Summary of projects in the investment pipeline 11Table 2: Major electricity projects–Publically Announced Stage–as at September 2013 22Table 3: Major electricity projects–Feasibility Stage–as at September 2013 24Table 4: Major electricity projects–Committed Stage–as at September 2013* 25Table 5: Major electricity projects–Committed Stage–as at September 2013 * 26Table 6: Regional investment pipeline 28Table 7: Major electricity projects–Completed Stage–as at September 2013 32

MapsMap 1: Electricity generation projects—Committed Stage—September 2013 29An accessibility version of the report and the major projects list are located on the BREE website, bree.gov.au.


Abbreviations and acronymsACCC Australian Competition and Consumer CommissionAEMO Australian Energy Market OperatorAES Australian Energy Statistics BREE Bureau of Resources and Energy Economicsesaa Energy Supply Association of AustraliaFID Final Investment DecisionIMOWA Independent Market Operator of Western AustraliaNEM National Electricity MarketNWIS North-West Interconnected SystemSWIS South-West Interconnected System


Executive summaryThe investment climate for electricity generation projects has changed substantially in the period following the release of BREE’s Major Electricity Generation Projects report in November 2012. Falling electricity demand since 2010–11 has resulted in a capacity overhang in the market, and led to a general softening of investment in new electricity generation projects, particularly for non-renewable projects. Annual energy demand forecasts have been revised down in the last three consecutive years. Electricity demand forecasts for 2013 project an annual average growth rate of 1.3 per cent from 2012–13 to 2022–23 in the National Electricity Market, which is lower compared to 1.7 per cent forecast in 2012 and 2.3 per cent forecast in 2011 for the 10-year outlook period (AEMO 2013b; AMEO 2012).Responses received while compiling this report highlight how industry concerns over potential asset stranding of coal-fired generation projects, the prospect of sustained high gas prices and the effect of renewable energy policies are impacting on market conditions for investing in non-renewable electricity generation projects. In contrast, renewable energy continues to increase its share of electricity generation largely due to the introduction of policies targeting development of renewable generation, with the Renewable Energy Target (RET) increasingly driving decisions of choice of fuel for additions to generation capacity.This release of the Electricity Generation Major Projects report covers the period from October 2012 to August 2013 and provides a comprehensive list of potential and planned electricity generation projects. In this report, the listed projects are categorised based on the stage of the development cycle as reported by companies. The classification includes four categories: the Publicly Announced stage, Feasibility Stage, Committed Stage and Completed Stage. Details of the projects are summarised in Table 1 using the four categories and are reported by the major fuel types used in generation. While the overall outlook for investment in electricity generation for the remainder of the decade remains subdued, there is a need to maintain a robust pipeline of projects that can move forward should conditions change. In this regard Australia remains well-placed with a balanced portfolio of potential new capacity, including: Thirty-seven projects at the Publicly Announced Stage that have a combined disclosed value of

$7.9 billion and 6 246 megawatts of planned capacity; One hundred projects at the Feasibility Stage that have a combined disclosed value of

$42.8 billion and 33 129 megawatts of planned capacity; Twenty-two projects at the Committed Stage worth $5.6 billion with 2 689 megawatts of planned

capacity; and Four projects at the Completed Stage worth $2.2 billion with 883 megawatts of planned additional

capacity. In total, there are 163 projects in the investment pipeline with a combined disclosed value of $58.5 billion and 42 947 megawatts of planned capacity (see Figure 1). Figure 1: Investment pipeline for new capacity generation in Australia, by fuel type and by year of expected start up


Notes: * As at August 2013; Projects with undisclosed timelines are presented as post 2018.

Investment in coal-fired generation continues to slow, with total planned capacity in additional coal-fired projects amounting to 2 926 megawatts or 7 per cent of the capacity of new projects in the investment pipeline. Gas-fired generation projects represent the largest share of investment in the non-renewable energy mix and 35 per cent of total additional planned capacity. Renewable energy projects constitute 48 per cent of total proposed new capacity in the investment pipeline and 58 per cent of total capital expenditure. Wind powered generation projects represent the greatest share of planned capacity for renewable projects accounting for 42 per cent of total planned capacity and 53 per cent of the value of proposed electricity generation projects in the investment pipeline.Over the past year one coal-fired generation project (240 megawatts) was commissioned while three new large scale wind energy projects (643 megawatts) were completed.Projects at the Committed Stage of development have the greatest potential to receive Final Investment Decision (FID) and proceed to construction. At this point renewable energy generation projects make up the majority of committed projects (2 101 megawatts) with gas making up the remainder (588 megawatts). There are no committed coal-fired power proposals. Although the number of projects at the Committed Stage increased between October 2012 and August 2013, the total nominal value of these projects is lower in August 2013 compared to October 2012 (Figures 2 and 3). The difference is largely due to a number of larger scale coal-fired and gas-fired generation projects which were curtailed during the year. An additional 3 346 megawatts of capacity has been delayed or reconsidered, including 1 215 megawatts of wind powered, solar, and gas- and coal-fired capacity in Queensland, 750 megawatts of gas-fired capacity in New South Wales, 500 megawatts of gas-fired capacity in Victoria, as well as proposals for 770 megawatts of gas- and coal-fired capacity in Western Australia. Figure 2: Number and nominal value of projects at the Committed Stage


Figure 3: Additional capacity and average nominal cost of projects at the Committed Stage


Table 1: Summary of projects in the investment pipeline

Publicly Announced *

Feasibility Stage ** Committed Stage ***

Completed Stage Total

energy source No. capacity

MW

Value$m

No. capacity

MW

Value$m

No. capacity

MW

Value$m

No. capacity

MW

Value$m

No. capacity

MW

Value$m

non-renewable 9 2 530 2 640 29 18 764 19 865

4 588 1 217 1 240 600 43 22 122 24 322

Oil 0 0 0 1 150 110 0 0 0 0 0 0 1 150 110

Gas 9 2 530 2 640 20 11 928 9 755 4 588 1 217 0 0 0 33 15 046 13 612

Brown coal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Brown coal gasification

0 0 0 1 600 1 100 0 0 0 0 0 0 1 600 1 100

Black coal 0 0 0 5 2 086 5 100 0 0 0 1 240 600 6 2 326 5 700

To be determined 0 0 0 2 4 000 3 800 0 0 0 0 0 0 2 4 000 3 800

renewable 28 3 716 5 227 71 14 365 22 959

18 2 101 4 350 3 643 1 600 120 20 825 34 136

Wind 23 3 086 4 697 55 12 359 20 889

14 1 867 3 775 3 643 1 600 95 17 955 30 961

Hydro 0 0 0 1 37 na 1 na na 0 0 0 2 37 na

Solar 3 294 530 10 646 1 420 3 194 555 0 0 0 16 1 134 2 505

Biomass 0 0 0 1 83 500 0 0 0 0 0 0 1 83 500

Geothermal 0 0 0 3 790 150 0 0 0 0 0 0 3 790 150

Ocean 2 336 na 1 450 na 0 0 0 0 0 0 3 786 na

Total 37 6 246 7 867 100 33 129

42 824

22 2 689 5 567 4 883 2 200 163 42 947

58 458

Notes: * capital expenditure data for project costs is undisclosed for 18 of the 37 projects at the Publically Announced Stage;** capital expenditure data for project costs is undisclosed for 25 of the 100 projects at the Feasibility Stage;*** capital expenditure data for project costs is undisclosed for three of the 22 projects at the Committed Stage;na not available.


1 Profile of electricity generation in AustraliaConsumption In 2011–12, Australian consumption of electricity was 254 851 gigawatt hours (GWh), an increase of 0.5 per cent compared to 2010-11. Electricity consumption increased at an average annual rate of 1.1 per cent in the decade ending 2011–12 (BREE 2013). Figure 4 illustrates the proportion of electricity consumption by jurisdiction in Australia. New South Wales, Victoria and Queensland account for around three-quarters of total electricity consumption due to the large population and industrial base in these states.Figure 4: Australia’s electricity consumption, by region

Notes: a Includes ACT.

Source: BREE 2013, AES Table I.

However the overall statistics, which include the growth in off-grid consumption by the mining sector, masks a recent and important pattern of falling demand in the National Electricity Market (NEM). The Australian Energy Market Operator has reported that electricity demand across the NEM fell by 4.7 per cent from 2009–10 to 2012–13. Forecasts for annual electricity demand growth for the 10-year outlook period have also been revised down to 1.3 per cent from 2012–13 to 2022–23, compared to 1.7 per cent forecast in 2012 and 2.3 per cent forecast in 2011 (AEMO 2013b; AMEO 2012). Key drivers for a return to demand growth include the three large LNG projects coming online from 2013–14, increased demand from industrial loads and overall population growth.

Electricity consumption in Western Australia increased by 30 per cent from 2007–08 to 2010–11. However, electricity demand in Western Australia subsequently declined by 2.4 per cent in 2011–12, compared to 2010–11 (BREE 2013). Average annual growth forecasts of electricity consumption have also been revised down from the forecast of 2.1 per cent in 2012 to 1.9 per cent in 2013 for projected growth to 2023–24 (IMOWA 2013).

Generation Australia has over the past decade acquired a more diverse generation mix with strong growth in gas-fired and renewable energy generation.


Electricity dispatched to the market reflects demand requirements for baseload and peak (or maximum) demand. Different generation technologies may be grouped by their capability of responding to variations in demand and fuel type: baseload, peaking or maximum demand, intermediate and intermittent generation. In general, baseload generation technologies have been fuelled by non-renewables—coal and gas—as well as hydroelectricity. In contrast, new renewable technologies in the form of wind and solar provide intermittent generation which can be used to meet both baseload and peak needs at different times of day (when available).Figure 5 shows that as at June 2012, coal-fired power stations represented 54 per cent of total electricity capacity installed in Australia (esaa 2013). However, due to their higher utilisation factor, coal-fired power stations contribute the majority of output to the Australian electricity market, amounting to 69 per cent of total electricity generation in 2011–12 (Figure 6). This share has declined from 77 per cent in 2001–02 due to the stronger growth in gas and renewable power plants.

Figure 5: Installed generation capacity installed in Australia, by fuel type, share of total (%)

Source: BREE; esaa


Gas-fired power stations represented 26 per cent of total electricity capacity installed in Australia in 2011–12 (esaa 2013). The share of gas-fired generation in total Australian electricity generation has increased from 14 per cent in 2001–02 to 19 per cent in 2011–12 (BREE 2013). The share of renewables in Australian electricity generation increased at an annual average growth rate of 2 per cent from 2001–02 to 2011–12 with most of the growth in new wind and solar PV capacity. New wind powered capacity has grown, on average, by 36 per cent a year from 2006–07 to 2011–12, compared to 10 per cent annual growth in gas-fired generation over the period (BREE 2013).


Figure 6: Australia’s total electricity generation, by fuel type

Notes: Other category includes: Oil products; Multi-fuel fired power plants; Bioenergy; Biogas; and Solar PV.

Source: BREE 2013, AES Table O.

The composition of installed capacity differs markedly across jurisdictions (Figure 7). Queensland, New South Wales and Victoria rely more heavily on coal-fired generation compared to other regions. Whereas, hydroelectricity forms the majority of installed capacity in Tasmania. Gas-fired generation capacity is more prevalent than other fuel choices for installed capacity in South Australia, Western Australia and the Northern Territory. Changes in fuel choice for new capacity have been strongly influenced by government policy.


Figure 7: Principal generation plant installed, by fuel type and by State and Territory

Notes: Data are gross estimates that do not account for decommissioned plants.

Source: BREE; esaa.Electricity Generation Major Projects • October 2013 17

Investment trendsThe annual investment profile in registered capacity in the Australian electricity market since 1999–00 differs markedly between States and Territories as shown in Figure 8.At the commencement of the NEM in 1998–99, high wholesale spot prices fuelled investment in gas-fired generation particularly in South Australia and Queensland. Capacity additions combined with easing spot prices after 2000 lead to a slower rate of capacity expansion during 2002–03 to 2003–04. The mix of investment has diversified since 2004–05 with a broader range of alterntives to coal-fired electricity generation technologies being deployed, particularly wind generation. More recent increases in gas-fired generation reflect the impact of the Queensland gas target and the need for additional capacity to meeting growing peak demand.

Investment outlookDecisions to add generation capacity and the choice of fuel for new capacity depend on a number of factors: fuel input prices, prospective growth in electricity demand, wholesale prices, the need to replace or refurbish ageing plant, and the long-run marginal cost of different generation technologies. Increasingly, environmental costs and government policy reform, such as the renewable energy target are also influencing investment decisions and fuel choice for additions to generation capacity. The 2013 Annual Electricity Statement of Opportunities report by the Australian Market Energy Operator concluded that all regions in the NEM (except Queensland) are likely to have adequate generation capacity to meet market conditions over the remainder of the decade. Queensland may begin to incur a small low reserve deficit by 2019–20. Reasons for this outlook include the growth in household PV installations, lower-than-expected load growth in most industrial sectors, the impact of energy efficiency measures and customer responses to higher electricity prices. In the NEM, growth in electricity generation capacity has generally been in parallel to growth in end-use electricity demand. Figure 9 shows two indexes summarising relative incremental changes in installed generating capacity and electricity demand in the NEM. This shows that from 1999–00 to 2003–04, the capacity and demand indexes tracked relatively closely. However, starting in 2004–05 the indexes diverge following the drop off in investment in new capacity from 2003–04 to 2004–05. However, the unexpected plateauing and subsequent fall in demand around 2009–10 has resulted in some excess capacity in the NEM. The lower expectations for growth in electricity consumption, along with the impact of policies such as the Renewable Energy Target and an increased uptake in small scale distributed generation (household PV), are setting the investment outlook for large scale non-renewable electricity generators over the remainder of the decade.


Figure 8: Annual investment in registered capacity, by fuel type

Notes: Q = Queensland; N = New South Wales; V = Victoria; S = South Australia; T= Tasmania; W = Western Australia; NT = Northern Territory;

The timing of the reported investment in additional capacity reflects the time of registration rather than when the plant was commissioned or operating at full capacity. In the NEM region, market capacity data is either 1) summer rating for scheduled/semi-scheduled generators, or 2) registered capacity for all non-scheduled generating units.

Source: BREE; ACCC; IMOWA; Power and Water.


Figure 9: Growth in installed generating capacity in the NEM region and demand for electricity (Index 1999–00=100)

Source: BREE; esaa; Global Roam, NEM Review database.


2 Background to the Electricity Generation Major Projects Report To better reflect the multiple stages of the investment pipeline, BREE has implemented a series of improvements to what is now called the Electricity Generation Major Projects report. Modifications have been made to key concepts that underpin the report, its analytical framework and the way in which data is presented in the associated list of major projects. All project data and analyses that were provided in previous reports are still available.The scope of the Electricity Generation Major Projects report remains unchanged. Namely, the focus is on electricity generation investment and reporting on additions to Australia’s installed capacity. The list of major projects covers all significant areas of electricity generation, including black and brown coal, oil, natural gas, coal seam gas and renewable energy sources (solar, wind, hydro, biomass, geothermal and ocean). The information draws predominantly on publicly available sources and information provided directly by companies.The BREE list provides details of each announced project where the expected capacity is more than 30 megawatts. Electricity power plants of 30 megawatts or more are defined as major projects for the purposes of this report. This threshold is consistent with the requirement in the National Electricity Rules for plants to be scheduled to the National Electricity Market. By setting a threshold of 30 megawatts, a number of electricity generation projects are not represented on the list, including small-scale solar and biomass facilities. While small-scale electricity generation units have an important role to play in Australia’s electricity supply, it is not feasible to obtain a comprehensive list of all these projects.This major electricity generation projects list contains information on 163 projects, with the following details: project name proponent company or joint venture state location type—expansion or new project estimated start up project status—publicly announced; feasibility stage; committed; or completed additional new capacity fuel type capital cost of the project in nominal terms additional employment at the construction and operating stages, where available.

Project classificationThe major improvement to the Electricity Generation Major Projects report is the project classification system. Previously, BREE used a binary classification system to identify an electricity generation project as being either ‘advanced’ or ‘less advanced’. A project that had received a FID from the project proponent was included on the advanced list. Under the revised classification, all projects that have received FID are defined as projects at the Committed Stage. The substantive change to classifying projects concerns the ‘less advanced’ list. This stage of the investment pipeline has been separated into projects at the Publicly Announced Stage and projects that have progressed to the Feasibility Stage. In addition, BREE has created an additional category, defined as the Completed Stage, for projects that have finished, or where initial production could commence. Collectively, the four stages of development (Publicly Announced, Feasibility, Committed, and Completed) represent the complete investment pipeline (see Figure 10).


Figure 10: The stages of the investment pipeline

Definitions and explanations of the four stages of the pipeline include:1. Publicly Announced Stage. Projects at this stage are either at a very early stage of planning or

have stalled or paused in their feasibility studies and may have an unclear development path. To include a project on the major projects list at this stage, preliminary information on project schedule, planned capacity or cost should be publicly available. These types of projects are, typically, at a very early stage of planning. As a result, not all projects will progress from the Publicly Announced Stage to become operational facilities.

2. Feasibility Stage. This stage of the project development cycle is where the initial feasibility studies have been completed and the results support further development. This stage is characterised by further studies being undertaken to finalise project scope, complete engineering designs, assess environmental impacts and develop commercial plans. BREE classifies such work as part of the Feasibility Stage until a FID is made. Typically, BREE is able to gather information on at least two aspects of the project —cost, schedule and planned capacity— as these have been defined in the completed pre-feasibility study. Projects at the Feasibility Stage are less uncertain than those at the Publicly Announced Stage, but are still not guaranteed to progress further as evaluations of commercial prospects and approvals have not yet been finalised.

3. Committed Stage. Projects at this stage of the development cycle have received a positive FID from the owner and a power purchase agreement (PPA) is typically in place. Projects at the Committed Stage are either under construction or preparing to commence construction. Typically, projects at the Committed Stage have cost estimates, schedules and plant capacities that are well defined and often publicly released. Nevertheless, plans are subject to change due to schedule delays, scope changes and cost overruns even after construction has commenced.

4. Completed Stage. Previously, when construction was substantially finished to the point where initial production could commence the electricity generation project was removed from the major projects list. From this point onwards these projects will remain on the BREE list and will be included at the Completed Stage for a period of up to ten years after construction so as to provide an on-going record of the investment pipeline.

There are earlier stages in developing electricity generation projects, such as concept and pre-development activities, which are not included in the BREE model of the investment pipeline. Concept and other pre-development activities are important for the commercial development of an electricity generation project but are beyond the scope of this report to include on a project basis. The new project classification system is broadly comparable to the previous classifications system used in the Major Electricity Generation Projects reports. The previous ‘less advanced’ projects would have included projects at the Publicly Announced Stage and Feasibility Stage. The definition and inclusion in the previous ‘advanced’ project listing remains unchanged and is equivalent to the revised category, Committed Stage.Projects at the Publicly Announced and Feasibility stages are potential capital investments. Not all of the projects in these first two development stages are expected to progress to the Committed Stage largely because of changing market conditions, cost pressures, and policy uncertainty.The major projects list that accompanies this report is provided as a Microsoft Excel workbook. Electricity Generation Major Projects • October 2013 22

Projects are now shown on separate worksheets based on the fuel type used in generation. Cost estimates and planned capacities for the projects listed are only reported depending on publicly available sources and information provided directly by the companies involved.


3 Projects at the Publicly Announced StageOverviewThe Publicly Announced Stage of project development is the first stage in the investment pipeline. It includes projects after concept and pre-development activities are completed, but have not yet completed an initial form of feasibility study to fully assess the commercial viability of the proposed plant. Projects at this stage face many challenges before they progress to FID. In some cases this progression through to the Feasibility Stage and to the Committed Stage can take several years. During this development and planning phase project costs and market conditions may prevent the project from going ahead or change the initial publicly announced project proposal.

Analysis of projects at the Publicly Announced StageBREE has identified 37 projects at the Publically Announced Stage with total capacity of 6 246 megawatts and total investment value for disclosed projects amounting to $7.9 billion (table 2). The total capacity of the projects at the Publically Announced Stage is equivalent to 11 per cent of Australia’s total generating capacity as at June 2012 (esaa 2013). The locations of projects are dispersed across all states except the Northern Territory and the Australian Capital Territory. The total disclosed value of the four gas and five wind powered projects located in New South Wales amounts to $1.7 billion with combined planned capacity of 1 355 megawatts. There are nine projects at the Publically Announced Stage in Victoria, including one gas-fired plant, six wind powered generation projects, and one solar and one ocean generation projects. The projects announced in Victoria have a planned total capacity of 1 704 megawatts and disclosed total value of $1.5 billion. In Queensland, there are two gas-fired plants, four wind powered generation projects, and one solar project at the Publically Announced Stage with planned capacity of 1 241 megawatts and total disclosed value amounting to $710 million. There is one gas project, six wind projects, and one solar generation project announced in South Australia. The total planned capacity of these eight projects amounts to 884 megawatts with a disclosed combined value of $2.0 billion. In Tasmania, one wind and one ocean projects are being developed at the Publically Announced Stage with total planned capacity of 902 megawatts and combined value of $2.0 billion. Figure 11 shows the share of additional capacity of projects at the Publicly Announced of development which consists of predominantly wind powered and gas-fired generation with the majority of these projects located in Victoria, New South Wales, South Australia and Queensland. Figure 11: Share of additional capacity of projects by energy source and by location– Publicly Announced Stage–as at September 2013


Non-renewable electricity projectsAt the end of August 2013, non-renewable electricity generation projects accounted for nine of the 37 projects at the Publically Announced Stage, and around 41 per cent (2 530 megawatts) of disclosed new capacity at the Publically Announced Stage. All of these non-renewable projects at the Publically Announced Stage are gas-fired projects with total disclosed value of $2.6 billion. There is increasing interest in the development of gas-fired generation because it is a relatively mature technology with lower emissions intensity than some other non-renewable options, and relatively quick to build.The largest non-renewable project at the Publically Announced stage in terms of capacity is EnergyAustralia’s Marulan power station project. The proposed gas-fired generation project has planned capacity of 700 megawatts and estimated capital expenditure of $450 million.Renewable electricity projectsThere are 28 renewable electricity generation projects with disclosed value of $5.2 billion, accounting for around 60 per cent (3 716 megawatts) of disclosed new capacity at the Publically Announced Stage. Twenty-three of these projects are wind-powered, representing 49 per cent of the disclosed new capacity for electricity projects at the Publically Announced Stage.

The large number of proposed wind-powered electricity projects largely reflects government policy measures to support the expansion of renewable energy sources and the cost competitiveness of wind relative to other, less mature renewable energy technologies. TasWind being developed by Hydro Tasmania in Tasmania is the largest wind renewable energy project reported at the Publically Announced Stage in terms of capacity and capital expenditure. The project has a planned capacity of 600 megawatts and an estimated capital cost of $2.0 billion. Ocean powered projects accounted for around a further 6 per cent of disclosed new capacity, and solar powered projects accounted for the remaining 5 per cent. Tenax Energy’s Banks Strait Tidal Energy Facility project in Tasmania has a planned capacity of 302 megawatts and is scheduled for completion in 2018.The Mildura Power Station, being developed by Solar Systems, comprises photovoltaic (PV) heliostat solar concentrator technology. The 154 megawatt solar power station is planned to be built at Carwarp, near Mildura, Victoria.

Table 2: Major electricity projects–Publically Announced Stage–as at September 2013

NSW Qld WA NT SA Vic * Tas Total **


energy source

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

non-renewable 4 940 890 2 750 250 1 90 na 0 0 0 1 300 1

500 1 450 na 0 0 0 9 2 530 2 640

Oil 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Gas 4 940 890 2 750 250 1 90 na 0 0 0 1 300 1 500 1 450 na 0 0 0 9 2 530 2

640

Brown coal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Brown coal gasification 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Black coal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

To be determined 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

renewable 5 415 762 5 491 460 1 70 na 0 0 0 7 584 530 8 1 254 1 475 2 902 2

000 28 3 716 5

227

Wind 5 415 762 4 391 160 1 70 na 0 0 0 6 544 300 6 1 066 1 475 1 600 2

000 23 3 086 4

697

Hydro 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Solar 0 0 0 1 100 300 0 0 0 0 0 0 1 40 230 1 154 na 0 0 0 3 294 530

Biomass 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Geothermal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Ocean 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 34 na 1 302 na 2 336 na

Total 9 1 355 1 652 7 1 241 710 2 160 na 0 0 0 8 884 2

030 9 1 704 1 475 2 902 2

000 37 6 246 7

867

Notes: * capital expenditure data for project costs is undisclosed for the gas, solar and ocean projects in Victoria;** capital expenditure data for project costs is undisclosed for 18 of the 37 projects at the Publically Announced Stage;na not available.

4 Projects at the Feasibility StageOverviewProjects at the Feasibility Stage have completed initial feasibility studies into their commercial viability and have an announced development path ahead of them. The Feasibility Stage represents the maximum possible investment that could be made in the Australian electricity generation sector (limited to plants of 30 megawatts or more) within the next few years.The uncertainty over the number of projects that are likely to receive a positive FID in the next five years indicates the value of the projects at the Feasibility Stage is only the potential for investment and not all of this will become committed. Consequently, a measure of the value of projects at the Feasibility Stage is not directly comparable to the value of the more certain projects at the Committed Stage.

Analysis of projects at the Feasibility StageBREE has identified 100 projects at the Feasibility Stage with combined capacity of 33 129 megawatts and total (disclosed) capital expenditure amounting to $42.8 billion (table 3). The total capacity of the projects at the Feasibility Stage is equivalent to 60 per cent of Australia’s total generating capacity as at June 2012 (ESAA 2013). The location of projects is widespread, with at least one project (with potential capacity of 30 megawatts or more) in each jurisdiction except the Australian Capital Territory (table 3). Around a third of the 100 projects at the Feasibility Stage are located in New South Wales, with 20 projects planned for South Australia, 19 located in Victoria, 15 projects in Queensland, 10 planed in Western Australia, two projects in Tasmania and one project planned in the Northern Territory.At the end of August 2013, non-renewable electricity generation projects accounted for 29 of the 100 projects at the Feasibility Stage, and 57 per cent (18 764 megawatts) of disclosed new capacity at the Feasibility Stage. The majority of these non-renewable projects at the Feasibility Stage are gas-fired projects with coal-fired generation projects representing 8 per cent of potential new capacity at


the Feasibility Stage. There is also an oil powered plant at the Feasibility Stage with capacity of 150 megawatts and two other non-renewable projects proposed for development with fuel type to be determined.There are 71 renewable electricity generation projects, accounting for around 43 per cent (14 365 megawatts) of disclosed new capacity at the Feasibility Stage. Fifty-five of these projects are windpowered, representing 37 per cent of the disclosed new capacity for electricity projects at the Feasibility Stage. Three geothermal and ten solar powered projects each accounted for around 2 per cent of disclosed new capacity at the Feasibility Stage of development. There is also a hydroelectric plant at the Feasibility Stage with capacity of 37 megawatts, a biomass generation facility with 83 megawatts of planned capacity, and one ocean powered project proposed for development with planned capacity of 450 megawatts.


Table 3: Major electricity projects–Feasibility Stage–as at September 2013

NSW Qld WA NT * SA Vic ** Tas Total ***

energy source

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value

$m

No.

capacity

MW

Value$m

non-renewable

10

7 390 5 940

4 3 050 4 150

5 1 814 1 800

0 0 0 5 2 860 5 050

5 3 650 2 925

0 0 0 29 18 764

19 865

Oil 1 150 110 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 150 110

Gas 7 3 240 2 030

4 3 050 4 150

2 568 200 0 0 0 3 2 020 1 550

4 3 050 1 825

0 0 0 20 11 928

9 755

Brown coal

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 600 1 100

0 0 0 1 600 1 100

Black coal

0 0 0 0 0 0 3 1 246 1600 0 0 0 2 840 3 500

0 0 0 0 0 0 5 2 086 5 100

To be determined

2 4 000 3 800

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 4 000 3 800

renewable

23

5 008 7 289

11

1 735 3 970

5 1 068 1 364

1 450 na 15 3 196 4 573

14 2 227 4 063

2 680 1 700

71 14 365

22 959

Wind 18

4 702 6 509

7 1 555 3 230

3 968 964 0 0 0 14 2 596 4 498

11 1 857 3 988

2 680 1 700

55 12 359

20 889

Hydro 0 0 na 1 37 na 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 37 na

Solar 5 306 780 2 60 240 2 100 400 0 0 0 0 0 0 1 180 na 0 0 0 10 646 1 420

Biomass 0 0 0 1 83 500 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 83 500

Geothermal

0 0 0 0 0 0 0 0 0 0 0 0 1 600 75 2 190 75 0 0 0 3 790 150

Ocean 0 0 0 0 0 0 0 0 0 1 450 na 0 0 0 0 0 0 0 0 0 1 450 na

Total 33

12 398 13 229

15

4 785 8 120 10

2 882 3 164 1 450 0 20 6 056 9 623 19 5 877 6 988 2 680 1 700 100

33 129 42 824

Notes:* capital expenditure data for project costs is undisclosed for the Northern Territory** capital expenditure data for project costs is undisclosed for the solar project in Victoria*** capital expenditure data for project costs is undisclosed for 29 of the 100 projects in the Feasibility Stagena not available


5 Projects at the Committed StageOverviewProjects at the Committed Stage of development have received a FID and have either started, or are about to start, construction. While these projects are more certain than projects at the Publicly Announced and Feasibility Stages, they are not immune to cost increases and schedule variations. There are currently 22 projects identified at the Committed Stage, an increase from 20 projects at an advanced stage of development reported in the November 2012 Major Electricity Generation Projects report. These committed projects have an estimated total investment value of $5.6 billion and planned additional capacity of 2 689 megawatts (Table 4 and 5).Table 4: Major electricity projects–Committed Stage–as at September 2013*

Australia

energy source number capacity Share of new capacity

cost *

MW % $m

non-renewable 4 588 22 1 217Oil 0 0 0 0Gas 4 588 22 1 217Brown coal 0 0 0 0Brown coal gasification

0 0 0 0

Black coal 0 0 0 0To be determined 0 0 0 0renewable 18 2 101 78 4 350Wind 14 1867 69 3 775Hydro 1 40 1 20Solar 3 194 7 555Biomass 0 0 0 0Geothermal 0 0 0 0Ocean 0 0 0 0total 22 2 689 100 5 567

Notes: * capital expenditure data for project costs is undisclosed for three of the 22 projects


Table 5: Major electricity projects–Committed Stage–as at September 2013 *

NSW Qld WA NT * SA Vic Tas Total

energy source

No. capacity

MW

Value

$m

No. capacity

MW

Value

$m

No. capacity

MW

Value

$m

No. capacity

MW

Value

$m

No. capacity

MW

Value

$m

No. capacity

MW

Value

$m

No. capacity

MW

Value

$m

No. capacity

MW

Value

$m

non-renewable

0 0 0 1 302 570 1 190 597 2 96 50 0 0 0 0 0 0 0 0 0 4 588 1 217

Oil 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Gas 0 0 0 1 302 570 1 190 597 2 96 50 0 0 0 0 0 0 0 0 0 4 588 1 217

Brown coal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0


0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Black coal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

To be determined

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

renewable 7 630 1 460

1 44 105 1 130 na 0 0 0 2 447 789 7 850 1 996

0 0 0 18 2 101 4 350

Wind 4 440 990 0 0 0 1 130 na 0 0 0 2 447 789 7 850 1 996

0 0 0 14 1 867 3 775

Hydro 1 40 20 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 na na

Solar 2 150 450 1 44 105 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 194 555

Biomass 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Geothermal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Ocean 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total 7 630 1 460

2 346 675 2 320 597 2 96 50 2 447 789 7 850 1 996

0 0 0 22 2 689 5 567

Notes: * capital expenditure data for project costs is undisclosed for three of the 22 projects.na not available

Analysis of projects at the Committed StageAs at end August 2013, there were 22 projects at the Committed Stage of development. These projects, using a range of energy sources have a total capacity of 2 689 megawatts and an estimated capital expenditure of $5.6 billion (table 4 and 5). The total capacity of projects at the Committed Stage is equivalent to 5 per cent of Australia’s total generating capacity as at June 2012 (ESAA 2013). Map 1 presents the location of the 22 projects at the Committed Stage of development. The location of projects is spread geographically, with at least one project of 30 megawatts or more in each jurisdiction except Tasmania and the Australian Capital Territory. Table 6 shows that the pipeline of investment in electricity generation in Australia is not evenly distributed across the jurisdictions with the bulk of the planned new capacity at the Committed Stage of development located in Victoria and New South Wales. Figure 12 shows the share of additional capacity of projects at the Committed Stage of development which consists of predominantly wind powered generation with the majority of these projects located in Victoria and New South Wales.


Figure 12: Share of additional capacity of projects by energy source and by location–Committed Stage–as at September 2013

At the end of August 2013, non-renewable electricity generation projects accounted for four of the 22 projects at the Committed Stage, and around 22 per cent (588 megawatts) of disclosed new capacity. All of the non-renewable projects at the Committed Stage are gas-fired projects with disclosed value of around $1.2 billion.There are 18 renewable electricity generation projects at the Committed Stage, accounting for around 78 per cent (2 101 megawatts) of disclosed new capacity. Fourteen of these projects are wind powered, representing 69 per cent of the disclosed new capacity for renewable electricity projects at the Committed Stage. Three solar powered projects account for around 7 per cent of disclosed new renewable capacity. There is also one hydroelectric plant at the Committed Stage proposed for development with planned capacity of 40 megawatts.


Table 6: Regional investment pipeline

Publicly Announced *

Feasibility Stage **

Committed Stage ***

Completed Stage Total

region No. capacity

MW

Value$m

No. capacity

MW

Value$m

No. capacity

MW

Value$m

No. capacity

MW

Value$m

No. capacity

MW

Value$m

New South Wales

9 1 355 1 652 33 12 398

13 229

7 630 1 460 1 240 600 50 14 623

16 941

Queensland 7 1 241 710 15 4 785 8 120 2 346 675 0 0 0 24 6 372 9 505

Western Australia

2 160 na 10 2 882 3 164 2 320 597 1 55 200 15 3 417 3 961

Northern Territory

0 0 0 1 450 0 2 96 50 0 0 0 3 546 50

South Australia 8 884 2 030 20 6 056 9 623 2 447 789 0 0 0 30 7 387 12 442

Victoria 9 1 704 1 475 19 5 877 6 988 7 850 1 996 1 420 1 000 36 8 851 11 459

Tasmania 2 902 2 000 2 680 1 700 0 0 0 1 168 400 5 1 750 4 100

Total 37 6 246 7 867 100 33 129

42 824

22 2 689 5 567 4 883 2 200 163 42 947

58 458

Notes: * capital expenditure data for project costs is undisclosed for 18 of the 37 projects at the Publically Announced Stage;** capital expenditure data for project costs is undisclosed for 25 of the 100 projects at the Feasibility Stage;*** capital expenditure data for project costs is undisclosed for three of the 22 projects at the Committed Stage;na not available.


Map 1: Electricity generation projects—Committed Stage—September 2013

Figure 13: Pipeline of investment in Australia’s electricity generation sector


Analysis of projects at the Committed Stage by regionNew South WalesRenewable electricity projectsAGL has committed to developing two large-scale solar PV power projects in regional New South Wales. The Nyngan Solar Plant is scheduled for completion in 2015 with estimated capital expenditure of $300 million and will consist of a 100 megawatt solar PV power station. The Broken Hill Solar Plant will consist of a 50 megawatt solar PV power station located approximately 5 kilometres southwest of Broken Hill. The estimated capital cost of the Broken Hill Solar Plant amounts to $150 million.Wind Prospect CWP, a joint venture company between the Wind Prospect Group and Continental Wind Partners, is developing the Boco Rock Wind Farm at an estimated capital cost of $350 million. The wind powered generation project near Nimmitabel is planned to add 113 megawatts to existing capacity.The Glen Innes WindPower Pty Ltd consortium led by National Power plans to develop the 62.5 megawatt Glen Innes Wind Farm at Waterloo Range. The wind powered project is scheduled for completion in 2014 at a capital cost of $150 million.The Gullen Range Wind Farm is under construction and is scheduled for completion in the first quarter of 2014. The wind powered project, being developed near Goulburn, New South Wales is planned to add 158.5 megawatts to existing capacity at a capital cost of $250 million.The Upper Tumut project that is being developed as part of Snowy Hydro’s $400 million Scheme Modernisation project is planned to expand capacity by 40 megawatts at a capital cost of $20 million and is expected to be commissioned in 2013.QueenslandNon-renewable electricity projectsThe largest non-renewable project at the Committed Stage of development is the Diamantina Power Station project that is being developed by APA Group and AGL Energy. The new power station is under construction and scheduled for completion in 2014. The gas-fired generation project comprises a 242 megawatt combined cycle gas turbine unit and a 60 MW open-cycle gas turbine unit. The project will expand existing capacity by 302 megawatts at a capital cost of $570 million. Renewable electricity projectsThe Kogan Creek Solar Boost Project expansion being developed by CS Energy near Chinchilla is scheduled to add 44 megawatts to existing capacity at a capital cost of $105 million. The solar powered project is under construction and is scheduled for completion in 2014.

Western AustraliaNon-renewable electricity projectsBHP Billiton’s Yarnima Power Station is under construction and expected to be completed in the first half of 2014. The 190 megawatt gas-fired project at Newman, Western Australia, is estimated to cost $597 million.Renewable electricity projectsConstruction of APA Group’s Badgingarra Wind Farm is planned to be completed by end of 2016 and is scheduled to add up to 130 megawatts to existing capacity.Northern TerritoryNon-renewable electricity projectsThe Weddell Stage 3 expansion, being undertaken by Power and Water Corporation in the Northern Territory, is scheduled to add 43 megawatts to existing capacity in 2013 at a capital cost of $50 million. The expansion project involves the addition of a third gas turbine at Weddell Power Station.


Energy Developments Ltd (EDL) is expanding power supply arrangements to Xstrata’s McArthur River Mine in the Northern Territory to meet the increased energy demands of the Phase 3 Development Project. The new project involves the construction of a new 53 megawatt gas-fired power station to be fuelled by natural gas supplied by Xstrata from the Daly Waters to McArthur River Pipeline. The project is expected to be completed in 2014.


South AustraliaRenewable electricity projectsThe Lincoln Gap Wind Farm Pty Ltd consortium led by National Power plans to develop the 177 megawatt Lincoln Gap Wind Farm near Port Augusta. The wind powered project is scheduled for completion in 2014 at a capital cost of $350 million.The expansion of TrustPower’s Snowtown wind farm (stage 2) in South Australia is scheduled to add 270 megawatts to existing capacity in 2013 at a capital cost of $439 million. VictoriaRenewable electricity projectsAcciona Energy has committed to developing two large windfarm projects in regional Victoria. The Mount Gellibrand Wind Farm is under construction and is scheduled for completion in 2015. The wind power project will add 189 megawatts to existing capacity with estimated capital expenditure of $696 million. Construction is expected to commence by October 2013 at Acciona Energy’s Mortlake South Wind Farm. The project will consist of a 76.5 megawatt wind power station located approximately 5 kilometres south of Mortlake. The estimated capital cost of the Mortlake South Wind Farm is $200 million.The Mount Mercer Wind Farm that is being developed by Meridian Energy near Ballarat, Victoria, is expected to add 131 megawatts to existing capacity at a capital cost of $270 million. The wind power project is under construction and is expected to be completed in 2013.The Bald Hills Wind Farm being developed by Mitsui & Co (Australia) Ltd is under construction with scheduled completion in 2015. The wind power project is planned to add 104 megawatts to existing capacity at a capital cost of $300 million.Pacific Hydro has committed to the construction of the Crowlands Wind Farm, near Ararat in Victoria. The wind power project is planned to add 84 megawatts to existing capacity. RES Australia Pty Ltd also proposes the development of the Ararat Windfarm project at Ararat. RES Australia Pty Ltd’s project is scheduled for completion in 2015 at a capital cost of $450 million, and is planned to add 225 megawatts to existing capacity.Wind Farm Developments are constructing the Woolsthorpe Wind Farm, located west of Woolsthorpe, with scheduled completion in 2013. The windfarm project is planned to add 40 megawatts to existing capacity at a capital cost in the range of $60-100 million.


6 Projects at the Completed StageOverviewProjects that have completed construction so as to be able to commence production since October 2012 are included at the Completed Stage of the investment pipeline. From October 2012 to August 2013, four electricity generation projects were completed (table 7). This compares with nine completed in the year to October 2012 and two in the year to October 2011. A number of projects scheduled to be commissioned over the past year were delayed, owing to several factors including difficulties in negotiating fuel inputs to generation and in finalising financing arrangements. The completed projects in 2013 have a total generation capacity of 883 megawatts and a total capital cost of around $2.2 billion. Table 7: Major electricity projects–Completed Stage–as at September 2013

energy source

project location company capacity MW

capital expenditure

A$mBlack coal

Eraring Power Station upgrade

NSW Eraring Energy 240 600

Wind Macarthur Wind Farm

Vic AGL Energy/ Meridian Energy

420 1000

Wind Musselroe Bay Wind Farm

Tas Hydro Tasmania

168 400

Wind Mumbida Wind Farm

WA Verve Energy/Infrastructure Capital Group

55 200

Analysis of projects progressing to the Completed StageThe expansion and upgrade of Eraring Energy’s Eraring Power Station in New South Wales was completed at the end of 2012. The expansion project comprised $600 million of capital expenditure for a life-extension of the plant and upgrade of the four generating units from 660 megawatts to 720 megawatts each, representing a total station increase of 240 megawatts. The life-extension and upgrade project involved the construction of a cooling water reservoir to enhance output of units over the summer period.The Macarthur Wind Farm being developed by AGL Energy and Meridian Energy in Victoria has been completed with capacity of 420 megawatts and a capital cost of $1 billion. The Musselroe Bay Wind Farm project being developed by Hydro Tasmania has been completed at a capital cost of $400 million. The wind power project contributes 168 megawatts of additional capacity to the electricity grid. The Mumbida Wind Farm being developed by joint partners Verve Energy and Infrastructure Capital Group has been completed in March 2013. The wind power project adds 55 megawatts to existing capacity at a capital cost of $200 million.


7 Outlook for investment in generation capacity OverviewThere are three electricity markets in Australian that are separated by geographical distance. In the eastern states, the National Electricity Market (NEM) forms an interconnected system that supplies electricity to customers in Queensland, New South Wales, the Australian Capital Territory, Victoria, South Australia and Tasmania. Western Australia’s electricity market consists of the South West Interconnected System (SWIS) including Perth and the North West Interconnected System (NWIS) for the mining areas in the north of Western Australia. In addition to the SWIS and the NWIS, 29 non-interconnected distribution systems also operate around towns in rural and remote areas across the state. The relatively smaller electricity market in the Northern Territory comprises three regulated systems: the Alice Springs system; the Darwin-Katherine system; and the Tennant Creek system. Requirements for investment in electricity generation in these three markets are largely autonomous. National Electricity MarketOpportunities for investment in generation capacity in the NEM are reported by the Australian Energy Market Operator (AEMO) in the Electricity Statement of Opportunities (ESOO). The ESOO identifies Low Reserve Condition (LRC) points that are used to indicate the required additional investment in generation or demand-side participation to maintain reliability of supply in the NEM over the next 10 years. In the 2013 ESOO, reserve deficits are only identified in Queensland with no reserve deficits identified in New South Wales, Victoria, South Australia or Tasmania. AEMO conclude that there is adequate generation capacity from existing and committed electricity capacity to meet demand in the NEM over the period 2013–14 to 2022–23 in all regions except Queensland.Western AustraliaThe Statement of Opportunities (SOO) published by the Independent Market Operator (IMOWA) of Western Australia, provides information to existing and potential industry participants on capacity which is planned to be built or under construction in Western Australia. The SOO highlights opportunities for investment in generation and Demand Side Management (DSM) in the Western Australian Wholesale Electricity Market (WEM) under the Reserve Capacity Mechanism (RCM); a process for setting capacity requirements to secure sufficient capacity to meet peak demand.

The 2013 SOO provides an assessment of the capacity requirement for the 2015–16 Capacity Year commencing on 1 October 2015. The IMO conclude that the additional capacity required to meet supply adequacy for 2015–16 is set at 5 119 megawatts.Northern TerritoryThe Utilities Commission publishes the annual Power System Review (the Review) reporting on prospective trends in the capacity and performance of the Northern Territory power system. The Review assesses generation adequacy in case of an N-2 event involving the loss of the two largest units of generation plant. A generation supply-demand balance is used to determine generation adequacy in each of the Alice Springs, Darwin-Katherine, and Tennant Creek systems relative to forecast electricity demand in the three regulated systems. The Utilities Commission conclude that there is sufficient generation capacity to maintain the supply-demand balance in the Darwin-Katherine system through to the summer of 2019-20, in the Alice Springs system from December 2012–13 to 2021–22, and in the Tennant Creek system to 2021–22.


ReferencesAustralian Energy Market Operator (AEMO) 2013a, 2013 Electricity Statement of Opportunities, August.Australian Energy Market Operator (AEMO) 2012, 2012 National Electricity Forecasting Report, June.Australian Energy Market Operator (AEMO) 2013b, 2013 National Electricity Forecasting Report, June.BREE 2013, 2013 Australian energy statistics, BREE, Canberra, July.Energy Supply Association Australia (esaa) 2013, Electricity Gas Australia 2013, Melbourne, July.Independent Market Operator (IMOWA) of Western Australia 2013, 2013 Statement of Opportunities, June.Utilities Commission 2013, Power System Review 2011-12, Northern Territory Government, April.


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