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ERM Power signs PPA for 212MW wind farm in Port Augusta

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A $450 million wind farm being built in Port Augusta, South Australia, has secured a power purchase agreement with ERM Power, marking the second renewable energy off-take deal for the Australian energy company in a matter of weeks.

In a statement released on Tuesday, ERM Power said it had signed two long-term Large Scale Generation Certificate (LGC) agreements with Singapore-based independent power producer Nexif Energy to support construction of the 212MW Lincoln Gap Wind Farm, 15km west of the Spencer Gulf town.

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Construction of the project, which is being built by Senvion, is expected to start later this year with the project set to be generating electricity by mid-2018. The announcement came on the same day it was announced that the first two stages of a 300MW solar farm near Port Augusta began construction on Monday.

For Nexif, the PPA comes less than a month after the company bought the Lincoln Gap project from Sydney-based outfit OneWind Australia, in deal that also included the 75MW Glen Innes wind farm in NSW.

As we reported here, the wind farms, along with a 32 per cent share in RPVD Development, which owns the Walkaway II wind and solar projects in WA, were sold to Nexif for an undisclosed sum in early March.

For ERM Power, the Lincoln Gap PPA is part of a strategy that saw the company start the year as one of the industry “bad boys,” opting to pay a penalty to the Clean Energy Regulator rather than meet its development commitments under the federal Renewable Energy Target.

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View of the site for Lincoln’s Gap Wind Farm, in South Australia. Source: http://lincolngapwindfarm.com.au/

Since that decision – which sent ripples through the Australian renewable energy market and prompted the CER to issue another call for retailers to meet their RET obligations – ERM Power announced deals to underpin the construction of two renewable energy generation assets in Australia.

And three weeks ago it signed another deal for the output of the 57.5MW Hamilton Solar Farm, underlining ERM’s strategy of deciding to play with an “arbitrage” on large scale renewable energy certificates, using a three year “grace period” to bet that LGC prices will fall from their historic highs to more manageable levels.

Lincoln Gap, which will include up to 59 wind turbines, will feed into South Australia’s electricity grid via the Electranet transmission network and produce enough electricity to power around 111,000 homes. It also includes allowances for battery storage of power.

For the former coal town of Port Augusta, where South Australia’s last-coal fired generator closed last May, it signals the success of yet another major renewables project for the region.

Nearby, as we reported this morning, the first two stages (220MW) of the 300MW Bungala solar farm – Australia’s biggest – has begun construction about 12 km from Port Augusta after its developers last Friday reached financial close on the project.

Lincoln Gap, while not quite at financial close, is one step closer after the ERM Power PPA.

“It is a vote of confidence in the project, the town of Port Augusta and South Australia at a time when the need for innovative and reliable energy solutions in the State has never been higher,” said Nexif Energy Australia’s CEO Zeki Akbas on Tuesday.

“The project will also create a substantial number of jobs and stimulate economic activity in the region.”

ERM Power Managing Director & CEO Jon Stretch said it was gratifying to support a project which delivered new renewable sources of energy in Australia.

“ERM Power delivers 20 per cent of the energy fuelling business, government and industrials in Australia, enabling it to underpin the construction of new renewable infrastructure,” he said.  

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  • Craig Allen

    I beg the developers to do their utmost to minimise scarring of that exquisitely beautiful landscape by roads and construction activities.

    • Rod

      I can’t tell if you are serious.
      If you are, that photo doesn’t do it justice.
      My first thoughts were “desolate hole”

      • Craig Allen

        No, I really am serious. I grew up west of there and pass through Lincoln Gap on my way home to family, as I will do this Easter. The landscape around Port Augusta, between the Flinders Ranges and Lincoln Gap, and along the northern Spencers Gulf is gorgeous, harsh but beautiful non-the-less. I know of no other place like it. The vast open sky is breathtaking. I’m pro renewables, but I’m also under no illusions that renewable energy developers have any more sensitivity to landscapes and ecosystems than those of any other industry.

        • Rod

          Hard to tell the tone in text. The photo doesn’t do it justice then.

          Some of the places I have camped out that way (Gawler Ranges and Glass Gorge in the Flinders) look pretty desolate from afar but being up close and experiencing them for a week or so changes your perception.

  • Alistair Spong

    Wow – where is SA now with the all the projects committed and likely to go ahead in the last 12 months ?
    Will they hit 60% in 2 years?

  • Malcolm M

    What will another 212 MW of wind capacity do to the SA market at times of high wind and low demand, such as last weekend when spot prices briefly went to -$71/MWh even though nearly all but ~60 MW of gas-fired generation had been turned off ? There is still another ~200 MW of wind capacity to come on-line from the next 2 stages of Hornsdale.

    The proposed batteries and ~100 MW of pumped storage hydro won’t even make up for the proposed new wind capacity, let alone make a dent in current the excess of wind power at times of high wind and low demand.

    • BushAxe

      The need for a decent sized interconnector to NSW is becoming more obvious isn’t it?

      • Malcolm M

        There seem to have been inter-connector problems, because at the time of high wind output, export from SA was limited to ~290 MW from 11:35 until 15:00 on Sunday 9 April. This caused SA prices to crash to minus $45/MWh over most of this period. At other times of the day, export from SA was never more than 500 MW. Supposedly the inter-connector has an export capacity of 650 MW via Heywood and 200 MW via Murraylink, totalling 850 MW, under a project that finished in March 2017. This newly-upgraded link appears to be a particularly trouble-prone part of the transmission system. So perhaps once it’s working properly there would be room for another ~350 MW of wind.

        Sources:
        http://aemo.com.au/Media-Centre/Heywood-Interconnector-Update
        http://www.nemweb.com.au/REPORTS/CURRENT/Daily_Reports/

      • Jonathan Prendergast

        Interconnectors are a sizable investment that could go to new local renewables rather than poles and wires. Not to mention their disruption on landowners and the landscape.

        I would prefer an approach of strategically making the most of existing interconnectors by states having local energy, rather than building new ones.

    • Jonathan Prendergast

      I share your concern Malcolm. A typical SA day sees demand peak around 1,600MW, and SA already has around 1,600MW of wind farms. And they typically all generate or don’t at the same time.

      I wonder what electricity sales revenue this wind farm will earn, and how it will depress further the revenues of existing wind farms in SA.