Stakeholder Briefing Presentation (April 2015)

Port Augusta Solar
Thermal Generation
Feasibility Study
Port Augusta
23 April, 2015
Presentation Preview
1. Background and Context
2. Milestone 1
3. Milestone 2
4. Milestone 3
5. Cost estimate assumptions/methodology
6. Preliminary Financial Modelling
7. Next steps – Milestone 4
8. Interim conclusions
6
Overview of Alinta Energy’s Portfolio
Port Hedland Station


175 MW gas fired
generator
66kV transmission lines
Braemar

Newman Station


150 MW gas fired
generator
Roy hill
transmission line
GGTP Pipeline


Northern
Territory
502 MW gas fired
generator
147km gas pipeline
Glenbrook
Queensland
Western
Australia

South
Australia
12% ownership of
pipeline
New
South
Wales
112 MW
co-generation plant
Victoria

Bairnsdale: 94 MW
gas fired generator
VIC
Alinta West



Pinjarra: 285 MW gas fired
Wagerup: 380 MW dual fuel
Retail: 630,000 customers
Renewable interests



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Walkaway windfarm (WA): 89 MW
Bald Hills windfarm (VIC): 106 MW
Port Augusta Solar thermal (SA);
feasibility study
Leigh Creek Coal Mine
Flinders

Coal-fired generators
– Northern: 544 MW
– Playford: 240 MW
East Coast Retail

150,000 retail electricity
customers in Vic and SA
Background & Context
The National Electricity Market
Background & Context
South Australia’s Energy Market
Background & Context
Study Timeline
Milestone 6
Stage 1 – Pre Feasibility
Milestone 5
Milestone 4
Milestone 3
Milestone 2
Milestone 1
Project
Definition
Report
10
Options Study
Siting Study
Draft Balance
of Study
Full Feasibility
Study
Full Feasibility
Study Scope
Final Balance
of Study
Stage 2 – Full Feasibility
Background & Context
Study Contributions
Two year study commencing December 2013
•
Pre Feasibility (Stage 1)
o +/- 30% cost estimate
o End May 2015
•
Full Feasibility (Stage 2)
o +/- 15% cost estimate
o End Jan 2016
•
$2.3M project budget
o Alinta
$1,240,000
o ARENA
$1,000,000
o SA Gov’t
$135,000
Milestone 1
Project Definition Report
Milestone 1 - Project Definition Report
•
Define project objectives
Undertake a feasibility and technological analysis of solar thermal power generation,
including hybridised and stand-alone options, over the Port Augusta Power Stations.
Improve the coordination and collaboration between governments, fossil fuel based
power generators, the solar thermal industry and broader renewable energy industry
through data collection, analysis, public engagement and knowledge sharing activities.
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•
Define scope of work to be undertaken during the study
•
Outline high level assumptions underpinning the study
•
State summary of intended project outputs
Milestone 1 - Study Assumptions
Initial Assumptions
The location of the Augusta Power Station, and in the vicinity of the facility, is suitable for the siting and
development of a solar thermal facility.
Alinta Energy understands the current arrangements for land tenure permit the siting and development of a
potential solar thermal facility on land within the control of Alinta Energy or adjacent to subject to the Sale /
Lease arrangements between Flinders Power Partnership and the Government of South Australia.
The life of the Leigh Creek Mine, which supplies coal to the Augusta Power Stations, will be extended through
further investment by Alinta Energy.
The Augusta Power Stations will remain in operation, in their current form supplied by the Leigh Creek Coal
Mine, until at least 2028 to 2032.
The useable life of the Augusta Power Stations, including re-use of facility components, extends beyond the
current expected life of the Leigh Creek Mine.
14
Milestone 1 - Study Assumptions con’t
Initial Assumptions
The pre-measure activities and studies relied upon in the development of this study which detail the potential
value and strength of the solar resource, the potential for hybrid solutions, and the potential utilisation of
components from the Playford B Power Station is the best estimate and advice of the respective experts.
The range of project benefits, fuel diversity opportunities for South Australia, dispatchable energy potential,
compatibility with South Australian energy system, network connection options, technology costs and
acceptable technology types do not materially deviate from those understood at the commencement of this
study.
Progress beyond the study will depend on a number of factors outside the scope of this piece of work which
have not been estimated or modelled at this point in time.
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Milestone 2
Options Study and Siting Study
Options Study Scope
•
Identify and compare currently available, commercial technologies (parabolic tough,
power tower, Fresnel) with a focus on power tower and Linear Fresnel.
•
Estimate energy production from each option based on currently available solar irradiation
(building on the concept study).
•
Evaluate energy storage options and capacity.
•
Estimate capital and operating costs of the options.
•
Calculate Long Run Marginal Cost (LRMC) (or Levelised Cost of Electricity – LCOE).
•
Identify any non-measurable factors, in addition to costs and generation output, that
should be considered in making a decision.
•
Develop a decision matrix.
•
Identify a preferred option with respect to the technology to be employed, storage capacity
and hybridization.
•
Refine the preferred option to the degree required for the study.
•
Update costs and performance of Northern Power Station (NPS) integration option.
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Parabolic Trough
18
Linear Fresnel
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Power Tower
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Study Assumptions
Changes to Assumptions
Initial Assumption
Changes to assumption
The useable life of the Augusta Power Stations, including
re-use of facility components, extends beyond the current
expected life of the Leigh Creek Mine.
There are significant technical challenges to
running NPS on only solar once the coal
resource has been exhausted which would
require extensive re-engineering of large
parts of the plant.
The pre-measure activities and studies relied upon in the
development of this study which detail the potential value
and strength of the solar resource, the potential for hybrid
solutions, and the potential utilisation of components from
the Playford B Power Station is the best estimate and
advice of the respective experts.
Use of components from Playford B was
determined to be infeasible. Procurement of
spares and replacement parts is extremely
difficult. The entire facility would require
upgrading in order to support the use of
usable components.
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Estimate of Energy Production
Available Datasets
Alinta Energy installed a solar data station and weather station at Northern Power Station
on 4 June 2014. Until there is a complete 12 month record of ground station data,
generation estimates are created using satellite or synthesised data.
Parsons Brinkerhoff investigated several options for the most relevant dataset:
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•
Bureau of Meteorology – Adelaide: 1995-1997 & 2003-2012
•
Australian Solar Thermal Energy Association – synthesised BOM data
•
Australian Climatic Data Bank – Woomera: 1967-2004
•
SOLEMI – German aerospace research centre: SA not covered
•
Meteonorm – Adelaide: dataset synthesised from satellite & ground stations
•
NASA – Port Augusta: 1983-2005, monthly & daily averages
•
3Tier – synthesised from satellite data for RenewablesSA 2010
Estimate of Energy Production
3Tier data – Port Augusta
23
Options Study Scope
•
Identify and compare currently available, commercial technologies (parabolic tough,
power tower, Fresnel) with a focus on power tower and Linear Fresnel.
•
Estimate energy production from each option based on currently available solar irradiation
(building on the concept study).
•
Evaluate energy storage options and capacity.
•
Estimate capital and operating costs of the options.
•
Calculate Long Run Marginal Cost (LRMC) (or Levelised Cost of Electricity – LCOE).
•
Identify any non-measurable factors, in addition to costs and generation output, that
should be considered in making a decision.
•
Develop a decision matrix.
•
Identify a preferred option with respect to the technology to be employed, storage capacity
and hybridization.
•
Refine the preferred option to the degree required for the study.
•
Update costs and performance of Northern Power Station (NPS) integration option.
24
Optimised Configurations
Solve for minimum LCOE
All 6 possible systems were optimised to find the configuration of key parameters which
gave the lowest possible LCOE over the lifetime of the plant. Ranking generation sources
by this variable is standard practice. and the lowest average cost to generate should
create the highest margin when selling electricity at a fixed cost.
The LCOE of a plant is determined by the relationship between the three key design
parameters:
•
Capacity of the power block;
•
Capacity of thermal storage;
•
Aperture area of the heliostat field.
The relationship between the power block and the heliostat field is known as the SOLAR
MULTIPLE.
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Stand Alone Parabolic Trough – LCOE Optimisation
Cost Estimate Assumptions
Starting point for capital cost estimates is 2013 NREL publication:
Molten Salt Power Tower Cost Assumptions for the System Advisor Model; Turchi & Heath
This report has $/unit benchmarks for major cost items such as: site improvements, heliostat
field, heat transfer system, thermal storage, power block, etc.
Factor
Value
Comments
Labour cost multiplier
1.14
Ratio of Australian union labour rates to Californian union labour
rated (from Thermoflow PEACE) further localised to Port
Augusta
Material cost multiplier
1.34
Ratio of Australian to Californian material cost multiplier (from
Thermoflow PEACE) further localised to Port Augusta
Currency exchange rate
1.1
AUD to USD
Optimised Configurations Outputs
Stand Alone Plants
Hybrid
Hybrid Plants
Decision Matrix
Multi Criteria Analysis (MCA)
Multi Criteria Analysis combines a quantitative and qualitative assessment of the critical
decision-making factors in a complex selection process. Alinta and PB developed a list of
8 critical factors which have a significant impact on the detailed design and construction of
any CSP plant which is carried forward in this study.
A weighting was then assigned to each of the 8 factors representing the relative
importance that each factor has to influence Alinta’s decision making processes.
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•
Each of the 6 optimised systems was given a score from 1-9 for each of the 8
categories, low scores being best.
•
Scores were agreed during a joint PB and Alinta workshop
•
Weightings were then applied to the 8 individual scores and the sum is the overall MCA
score with lower scores being better
Decision Matrix
MCA scores
Decision Matrix
Non measurable factors
Following the completion of the MCA ranking, Alinta undertook to analyse the possible
systems in the context of additional, non-measurable factors:
•
Potential for Commercialisation within Alinta asset fleet
•
•
Potential for Third Party Investment
•
•
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$/kWh is paramount in context of PPA, therefore lower LCOE is more important than lower
CAPEX – preferences Power Tower
Potential Industry Learning
•
•
Limited lifetime for Northern Power Station preferences a stand alone solution
Capital Cost vs. LCOE
•
•
Preference for newer technologies, Linear Fresnel and Power Tower, where costs are more
likely to drop further faster
Newer technologies likely to offer more learnings and potential for economic operation in shorter
timeframes
Practical Obstacles to Hybridisation
•
Existing infrastructure and geographic constraints
•
Lifetime of Northern Power Station
•
Unknown engineering challenges & risks
Final Technology Selection for Study
•
•
•
•
Molten salt power tower
50 MW power block
15 hours storage
3.5 solar multiple
Siting Study Scope
Siting Study was undertaken in parallel with Options Study in order to be part of the same
Milestone deliverable under the ARENA/Alinta Funding Agreement.
Scope of the Siting Study:
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•
The initial survey and site selection based on Geographic Information System (GIS) and
satellite data (with appropriate constraints) identifying a short listing of potential sites.
•
Consideration of environmental, infrastructure, community constraints issues with
respect to plant layout and future development approval process will follow.
•
Analyse site specific conditions including meteorological factors, proximity to local
communities and land acquisition costs.
•
Site topography, geology and geotechnical conditions.
•
Development of a siting matrix to identify the preferred site.
Siting Study Investigation Area
34
Constraints Map
35
Milestone 3
Balance of Study
Scope of Milestone 3
The scope of the Milestone 3 or Draft Balance of Study Report was defined to include:
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•
Details of the Plant and its operation
•
Capital and operations and maintenance cost estimates to +/- 30%
•
Energy yield and generation profile
•
Other infrastructure requirements
•
Identification of potential environmental issues
•
Requirements for Development Approval
•
Details on network connection
•
Preliminary financial evaluation
Study Assumptions
Changes to Assumptions
Milestone 1
Milestone 3
The location of the Augusta Power Station, and in the
vicinity of the facility, is suitable for the siting and
development of a solar thermal facility.
The site identified as optimal in the Siting
Study is now known to be the subject of a
Development Application by a third party.
The proximity of the CSP plant to the
Spencer Gulf raises potential corrosion
issues due to salt water spray/deposition.
The range of project benefits, fuel diversity opportunities for
South Australia, dispatchable energy potential, compatibility
with South Australian energy system, network connection
options, technology costs and acceptable technology types
do not materially deviate from those understood at the
commencement of this study.
Recent analysis by the Australian Energy
Market Operator suggests that the grid in
South Australia is oversupplied which
leads to a disincentive for adding
generation capacity of any kind.
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Details of Plant & Operation
39
CAPEX +/- 30%
Major Components Cost Estimates
OPEX +/- 30%
Potential Environmental Issues
Typical Development Issues
•
•
•
•
•
Loss of open space
Loss of habitat
Habitat fragmentation
Change to employment opportunities
Increased vehicle movements (primarily during construction)
CSP Specific Issues
•
Fauna Impacts
• Avian mortality due to concentrated heat corona near receiver
•
Proximity to population
• Air traffic disruption
• Visual impact
42
Preliminary Financial Model
Overview of Model Methodology
43
Preliminary Financial Model
Summary of Results
Metric
Value
Comments
Capital Cost
$577 M
--
Net Present Value
-$297.3M
Based on an assumed 12% post tax discount rate.
Internal Rate of Return
4%
Unlikely to achieve private sector investment return
requirements.
Levelised Cost of Energy
$201/MWh
Represents the revenue that would be required per MWh
for the project to achieve the required return metrics.
Realised revenue
$131/MWh
Represents the revenue that is forecast to be realised per
MWh produced.
[1]
[2]
Levelised Cost of Energy is calculated as [NPV of Capital Costs and Operating Costs] divided by the [NPV of Demand escalated CPI]
Realised Revenue is calculated as [NPV of Total Revenue] divided by the [NPV of Demand escalated CPI]
Preliminary Financial Model
Sensitivity Cases
Metric
Capital costs
CAPEX
+30%
$403.9
$750.1M
-$150.4M
-$448.8M
7%
3%
Levelised Cost of Energy
$149/MWh
$253/MWh
Realised revenue
$131/MWh
$131/MWh
Net Present Value (@ 12% IRR)
Internal Rate of Return
45
CAPEX
-30%
Next Steps – Milestone 4
Final Balance of Study
Milestone 4 Scope
47
•
Updated assumptions and cost estimates based on discussions with industry;
•
Assessment of solar thermal technologies with are not yet commercially available but
which may be viable within 3 years;
•
Analysis on the effect of a range of parameters on the financial viability of a project of
this type;
•
A set of minimum financial benchmarks which would be required for viability of a similar
project.
Discovery and Conclusions
•
Recent cost reductions and industry aspirational targets for $/unit rate decreases are
encouraging signs for industry development
•
CSP plants are capable of operating as baseload plants, however this may not be the
most economically attractive design.
•
Dispatch regime and plant design are inherently co-dependent and have a significant
impact on both capital cost and average value of electricity sent out.
There is currently a significant funding gap (>40%) preventing a baseload Power
Tower CSP plant from being an attractive, private sector investment in Port Augusta.
Final Balance of Study Report
Alinta is seeking specific industry feedback and information which may improve the
accuracy and/or currency of the cost estimate assumptions used in the Pre Feasibility stage
of this study.
The Draft Balance of Study Report can be found on the Alinta Energy website. Additional
Technical expertise and review is welcome and will be considered in revisions for the Final
Balance of Study Report.
Document available at:
https://alintaenergy.com.au/about-us/power-generation/port-augusta-solar-thermal
THANK YOU
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