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Investec plans 50MW solar PV plant near Kalgoorlie

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Global banking and asset management group Investec is working on a proposal to build a 50MW solar PV power plant near Kalgoorlie, in what is likely to be the first solar plant of its size in Australia.

Investec is hopeful of sealing land tenure at Mungari, about 26kms from Kalgoorlie, in the next month or so, and then will go to market to seek  a power purchase agreement and lock in project finance. Construction on the project could begin next year.

The Mungari project is one of two currently being studied by Investec in WA – the other being the Chapman solar PV project near Geraldton, which was originally billed as a solar hybrid but may emerge as a solar PV only project.

WA is emerging as one potentially of the hottest regions for the utility scale solar industry, thanks to its excellent solar resources and relatively high electricity prices.

Bloomberg New Energy Finance last week said that solar PV plants in WA would have an estimated levellised cost of energy of around $157/MWh, compared to more than $190/MWh for new coal-fired generation in the state, where the cost of coal is expensive. BNEF expects the LCOE of solar PV to fall below $100/MWh by 2020.

Despite this, and helping fund the country’s first utility scale solar plant, a 10MW facility near Geraldton, the conservative state government is focused on new coal-fired generators, and is currently restoring its ageing Muja coal fired generator near Collie (and facing a major cost blow-out).

Investec project manager Lynne Lagan said Kalgoorlie made sense because of its excellent solar resources and its location at the edge of the South-West Interconnected System – the grid that services the south west corner of the state.

Lagan said there was a single 220kW line going to Kalgoorlie, so a limited amount of generation could be brought in. “It makes sense to put some generation in this part of the network,” she told RenewEconomy by phone from Kalgoorlie on Tuesday.

“That’s why chosen this location. We been working on project for 18 months on land tenure and we are now looking to finalise those arrangements.”

Lagan said Investec’s numbers on the cost of the solar plant were about the same as Bloomberg New Energy Finance.  And she noted there was a huge amount of interest from miners, many who operate on remote locations but are forced to truck in gas or diesel at horrendous costs – often at around 400/MWh or even more. Building this plant could open up further opportunities.

“This sort of project makes sense regardless of whether it considered as a “renewables” project,” she said. “There is a lot of expensive diesel generation here and we are having discussions with some of mining  operations. They just want power that makes sense at a sensible price.”

Lagan said it was possible that Investec would sign a power purchase agreement directly with a local mining operation, given the limited options for a PPA with a utility.  Mining loads of around 30MW would suit the planned 50MW plant well.

Indeed, there were between 30 and 40 representatives from the mining community and other industrial groups at a special meeting convened in Kalgoorlie by the local council to discuss solar options in the region.  Speakers included Oliver Yates, beamed in via Skype from his offices at the Clean Energy Finance Corporation in Sydney, and the Greens Senator Scott Ludlam. Another 60 or 70 people attended a public meeting in the evening.

Among those at the closed morning meeting were representatives of Barrick Gold, Xstrata, Anglo American, KCGM (the owners of the Kalgoorlie Super Pit), Horizon Energy, Western Power, and several engineering companies.

The Greens this week unveiled a pathway to a 100 per cent renewable grid for the SWIS by 2029, and want Kalgoorlie to be one of the key solar hubs – including not just solar pV, but solar thermal power stations with storage.

Ludlam is hoping that institutions such as the Australian Renewable Energy Agency or the CEFC can help fund the installation of next generation technologies such as solar thermal and solar thermal and storage technologies in the region. “If we can get a project  here, that will make it easier” to demonstrate the attraction of solar thermal, he told RenewEconomy.

A report by consulting group Evans & Peck in 2011 found there was huge potential for solar power plants in the Pilbara and Mid West mining regions. The study it prepared for the Australian Centre for Renewable Energy said “there appears no better place for renewables to compete on cost,” but the biggest barrier was cultural. “The appetite for novelty is low,” the report noted, adding that there is little knowledge of renewable energy in the mining and industry sectors.

That is now changing. In Chile, where miners face similar problems with high grid prices, off-grid locations and excellent sun, miners are underwriting a series of large scale solar plants.

As we reported last month, one 10MW solar thermal energyplant has been commissioned by the Minera El Tesoro mine in Chile to reduce costs on the heating process used for extracting copper by 55 per cent. Even BHP has ordered a 1MW solar plant at its high-altitude copper plant. More are being constructed.

Ludlam said there was clearly a shift in attitude in the mining community.

City of Kalgoorlie Boulder CEO Don Burnett told ABC radio that  the region was a perfect and secure location for a large scale solar station because of the guaranteed sunshine.

“It’s a great location for a solar proposal and the benefits to the city and the region would be immense, but also it’s a great opportunity for the state and federal governments to be involved in innovation in sustainable energy.”

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  • John

    Giles,
    You have been reporting on large-scale PV for some time now. Don’t you think this statement is a tad optimistic?

    “Investec is hopeful of sealing land tenure at Mungari, about 26kms from Kalgoorlie, in the next month or so, and then will go to market to seek a power purchase agreement and lock in project finance. Construction on the project could begin later this year.”

    Even with a faultless run, the land, PPA, and finance processes won’t be complete in 10 months let alone being ready enough to begin construction.

    ActewAGL quote 12 months from receipt of network study to approval to connect! That’s just one bureaucratic task required to connect a large-scale generator. Do you think Horizon or Western Power will be any better?

    This type of cheerleading just provides fuel to the anti-renewables bonfire when things don’t happen the way you predict. This deal is so far away from reality it not even a 50% chance of being built let alone that “Construction on the project could begin later this year”

    I like your articles in general but I had to call this out.

    • Giles Parkinson

      You got me on the timing. Investec also said i was optimistic on that, so it is changed. I’m not sure we’ll ever match the mining and fossil fuel industry in cheer-leading though – $20 trillion shale oil discovery! Australian energy independence!. Massive copper deposits!!!! etc etc. These are real people making real plans to build stuff. I think 2013 is going to be an interesting year for big solar developments.

      • John

        I am excited as well for 2013 and I work on the coal face of large-scale PV development (sorry… old metaphors die hard). To a conservative mind, a project delay reported by the press is as good as admitting solar is an abject commercial failure when it is clearly not.

        Just look at the comments on this site when a nuke project collapses or is delayed (pretty common I know). It reinforces biased views sometimes unjustifiably.

        • Giles Parkinson

          You are going to have to change that metaphor!

    • http://ronaldbrak.blogspot.com.au/ Ronald Brak

      Can’t a private mining company give them a power purchase agreement in the time it takes to sign a piece of paper? It’s a gridless wonderland out there.

      • Eric

        Hi Ronald,
        the problem facing miners in terms of gridless electricity supply is that renewable energy generally requires 10 to 15 year PPA’s to achieve ROI, account for risk and to make a profit. Excluding large iron ore projects, most gold, nickel and base metal mines have an average 4-7 year life which makes it very hard to sign up to a renewable energy PPA. This is why diesel generation is generally the preferred option. However, PV and wind turbine prices are dropping and as diesel/wind/solar hybrids become more refined and cheaper, we are starting to see some serious consideration for renewables amongst the miners.

      • Warwick

        No they can’t. Most mines are worried about commodity prices and many won’t guarantee their annualised energy consumption as a result of being unsure how much mining they’ll do. You’ll need to come to a long term agreement requiring board approval of both businesses and the banks will need to be confident about the creditworthiness of the generator and mine, and the risk of the underlying PPA.

        It takes more than a signature….

  • Mart

    “WA is emerging as one potentially of the hottest regions for the utility scale solar industry, thanks to its excellent solar resources and relatively high electricity prices.”

    Wouldn’t peak demand on the East Coast largely coincide with peak PV production in WA, especially in Summer?

    The distance from Kalgoorlie to Port Augusta is a mere 1700km and the corridor for a HVDC line already exists along the Transcontinental Railway between the two towns.

    Has any study been done into the feasibility of such a solution?

    • Giles Parkinson

      I believe Beyond Zero Emissions have considered exactly that. Not cheap to build such transmission lines, although Europe considering it with their desertec initiative and the supergrid concept. Curiously enough, peak time in WA is around 4pm. In the eastern states, plants in the western parts of nsw and qld and Victoria would also help peak times in the capitals – and it will be interesting to see whether storage of 1, 2 or 3 hours or more hits the right economic number.

    • Eric

      Mart, thanks for your comments. I am a firm believer that the transcontinental rail route could emerge as an energy and water corridor, considering the Eucla basin has the possibilities of providing a water source. There are parallel 0.4 and 0.6MV DC power lines running in Europe and that could be feasible here. The Great Australian Bight also has a fantastic wind resource coming off the southern ocean that could be adapted to add to the generation capacity. The BZE Zero Carbon Australia Stationary Energy Report details some of the conceptual power generation and transmission installations which certainly include supplying early evening electricity consumers in the east with western generated solar power. As Giles points out, it is expensive. What we first need to consider as a nation is just how much energy we waste. Energy efficiency is and always will, provide the best return on investment as the benefits are generated from behavioural change, not capital investment.

  • http://energyinachangingclimate.info Martin Nicholson

    Remote mining sites are perfect locations for small modular reactors (SMR). BREE estimates a capital cost of around $5000/kW and an LCOE of $115/MWh.

    Dual axis tracking PV costs about the same but only delivers power during daylight.

    • Giles Parkinson

      BREE, as you know, did not include the cost of capital in its technology estimates. Ask the UK government about the cost of capital and you will get close to the real cost of nuclear. It’s a bit like saying housing is cheap if you didn’t take account of the mortgage.

      • http://energyinachangingclimate.info Martin Nicholson

        Presumably the cost of capital is missing for both nuclear and solar PV so my comparison still stands. To deliver 24 hour a day power at the mine site with solar will incur significant additional capital for batteries.

        • Tim

          If solar lead-in time is longer than a year, what would the nuclear lead-in time be?

    • MorinMoss

      The most optimistic projection I’ve yet seen for a Small Modular Reactor is 2018.
      A lot of sunshine will fall on Australia between now and then.

  • Eric

    I was fortunate enough to attend these events in Kalgoorlie and feel that the sentiment definitely has shifted from when this particular project was first mooted some years ago. Investec have been working tirelessly on this project to see it to fruition and I can only credit their persistence along with the community of Kalgoorlie-Boulder in trying to diversify the local economy while providing a cleaner and cheaper source of energy. Kalgoorlie were recipients of a project some 130 years ago that was groundbreaking and ahead of its time, in the freshwater pipeline from Mundaring to Kalgoorlie. The Mungari Solar Project has similar adversities that I believe can be overcome and I don’t think it insurmountable that a 1MV High Voltage Direct Current line link our regions together in the east and southwest.

  • http://Allthingssustainable.wordpress.com Jo Lewis

    Just hope they don’t bank on Origin for their Power Purchase Agreement.