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Pilbara Solar eyes NAIF funding for plan to export WA solar to Asia

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The case for Western Australia to become a major regional exporter of solar power will be presented to the federal government next week, as newly established company Pilbara Solar pitches for funding for its plans to supply renewable energy to Indonesia via a multi-billion dollar subsea cable.

Pilbara_Java_cable

The WA-based company, which is part owned by the Yamatji Marlpa Aboriginal Corporation, revealed this week it will have an audience with the federal government’s Northern Australia Infrastructure Facility in Cairns early next week, as well as with major international investors, to make the case for the ambitious project.

The meeting follows the findings of The Pilbara Solar Export Pre-Feasibilty Study, in August, which examined the possibility of developing a ‘pilot’ project to provide 3GW of Pilbara-generated solar to Indonesia’s Java grid.

As we reported at the time, the report found that a commercial case for the project could be established within five to 10 years time, including the multi-billion-dollar construction of a 1500km sub-sea cable from the Dampier Peninsula to east Java and three 1GW solar farms.

Pilbara Solar now seems determined to put those plans into action, starting with building medium-scale solar farms to supply local businesses and governments.

But this will not necessarily be easy. Despite the boom-time large-scale solar is experiencing in Australia’s eastern states, Western Australia is lagging well behind the rest of the nation in large-scale renewable energy development, not to mention the policy and funding to support it.

“It’s a whole new industry that WA doesn’t have, compared to the east coast,” said Simon Hawkins, who is CEO of the Yamatji Marlpa Aboriginal Corporation (YMAC), and who will be presenting Pilbara Solar’s case for NAIF funding.

And nor will it be cheap. The most recent cost estimates put capital costs at $5.8 billion for solar, $0.9 billion for AC interconnection of the solar farms, and $7.2 billion for the HVDC link and two converter stations to a landing point in east Java.

WA minister for regional development, Alannah MacTiernan, while fully supportive of the project, has been on the record saying that it would get no direct investment from the state.

But all of this is accounted for in Pilbara Solar’s plan – which is to start small and local, and build from there.

“It’s important to build up the local supply chain so that Pilbara solar projects are cost competitive with east-coast developments, and this explains our company’s strategy to build up solar capacity on the basis of local communities and industrial loads,” Hawkins told RenewEconomy.

“Once we open up and have examples in the Pilbara, we expect it should snowball from there,” he said.

As well as pitching to the NAIF, the company has lodged a funding proposal to the federal government’s Indigenous Advancement Strategy for a proposed three-year project, “Indigenous Ownership within the Pilbara Solar Industry: Building Capacity, Scaling Up and preparing for Export”.

If granted, Pilbara Solar said in a media release this week the funding would be used to kick-start development of in excess of 200MW of solar power capacity to supply local industry – particularly local miners in the region, who traditionally rely on diesel generators to power their operations.

“This is the first stage of a solar scale up that aims to establish a renewable energy export industry,” the release said. “The project will initiate potential export and commercial research relationships in the ASEAN region and complete an initial engineering design for a HVDC subsea cable and overland links.”

Another vital part of the proposal is the opportunity it presents for the traditional owners of the Pilbara region – a part of the plan that was highlighted in the pre-feasibility report. YMAC holds a 25 per cent stake in Pilbara Solar in trust for multiple traditional owner groups and wants to maintain or increase that equity as the business grows.

Meanwhile, Pilbara Solar’s pitch to NAIF will have to compete with renewed calls from Coalition party members – including the minister for Northern Australia, Matt Canavan – for the $5 billion facility to bankroll a new coal power plant in northern Queensland.

“I want to get a coal-fired power station in north Queensland (and there’s no reason) why that cannot be done through the NAIF,” Canavan told The Courier-Mail last month, within hours of having his potential dual nationality cleared by the High Court.

As we noted at the time, there are many, many reasons why the NAIF might not want to support new coal power – not least being that it is considered the least economically efficient and most technologically challenged source of new energy generation.

That said, NAIF has already demonstrated that it is not averse to using its funds to shore up fossil fuels, with its first loan issued to a shipping base that will service the oil and gas industry, in the Pilbara region.

But the Pilbara Solar project can at leas bank on the moral support of other businesses in the local mining industry, including lithium outfit Pilbara Minerals.

“NAIF should be thinking about Northern Australia as an amazing solar resource … long-standing, important economic infrastructure generating power, for all those reasons it is a logical space for NAIF to move into,” said Pilbara Minerals chief Ken Brinsden in comments to the AFR.

“We are a new mine, a greenfields site and we have come to the conclusion that if you are generating your own power, and especially if it is diesel power generation, then the economics now dictate that you should install hybrid solar solutions,” he said.

“Basically the sun replaces diesel during the day to some extent depending on the load. The cost of the renewables solution, especially with such a strong solar resource like that in the Pilbara, it has almost got to the point where it is a no-brainer.”  

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  • Joe

    Here’s a chance for The NAIF to invest in the future and not in soon to be ‘Stranded Assets’. That lazy $1 Billions for Adani that other $2-3 Billiions for Matteo Coalavan’s new Coaler….just send the moolah across the country to Pilbara Solar. The Great Barrier Reef will thank us all later.

    • Hettie

      Indeed, Joe.
      Besides which, if a solar project and undersea intereconnector costing billions is an economic proposition, what does that do to the fossil fools claims that coal is cheaper than RE?
      Er, Matt, Josh, have a look at these figures, will you?

  • tsport100

    FFS there’s no sun in Indonesia??? What a stupid idea!

    • Joe

      Did you read the article ?

      • Neville Bott

        Yes the article has the cost at 13.9 Billion for 3 MW. What would be the cost of the power required for a return on that investment ?

        This doesn’t appear to be the most cost effective use of that amount of money at this time.

        Though the people that are backing this may be thinking of the bigger picture. At some point in the future all fossil fuel use must stop and be replaced with non C02 emitting generation. (BTW The time that this needs to happen is closer than our policy makers are willing to accept as reality). Somewhere along this path this project will probably become financially viable.

    • Andy Saunders

      Not much unoccupied land in Java. Whereas the Pilbara…

      But don’t worry. With a length well beyond any previous cable, and the route possibly crossing the Timor Trench, I can predict it will never happen, simply won’t be economic.

      • JonathanMaddox

        Longer than previous undersea cables, yes. Not immeasurably so.

        • Andy Saunders

          I think Norned is still the longest at 580km. Eyeballing the Pilbara-Java distance, I think that would have to be around 1500km long. And cross the Timor/Java trough, considerably deeper than any previous HVDC cable.

          I can be comfortable knowing it’s not going to happen for a decade or more.

    • Hettie

      No, not no sun. No land to site such a project.
      Java has the highest population density in the world. All land is needed for food production.

      • JonathanMaddox

        And roofs. Plenty of scope for rooftop solar.

  • Tom

    $8.1 billion for transmission and $5.8 billion for generation?

    And to me, the generation looks expensive and the transmission looks cheap – I think the final transmission cost : generation cost ratio will be greater than 2:1

    At those sorts of cost inefficiencies they’d be better off building 3 times as much solar, converting the electricity to hydrogen or methanol (if they could find a source of carbon – carbon capture or extraction from the atmosphere), and ship this anywhere in the world that needs fuel rather than just to Java.

  • technerdx6000

    Australia could power the whole damn world with Pilbara solar! Build out HV transmission lines and connect up the entire worlds grid. Won’t even need storage as the sun is always shining somewhere

  • Ian

    Sourcing electrons via generators with no moving parts and sending energy through some wires tp the demand site..
    …seems a much better long term solution than
    …digging gigantic holes in the ground with gigantic machines, to shift vast amounts of coal via other massive machines on track, coal loader and ship etc
    And more efficient by far than converting sun into hydrogen. ..

  • Jules

    I have been following the development of this story with some amusement since last December, when it was announced that the plan was “viable”. I thought someone with some sense would nip this idea in the bud, but obviously it is still going. Back then it was harmless, but now it may end up wasting government’s money if they get this IAS funding.

    The assumptions on tariffs in the pre-feasibility study (http://www.pdc.wa.gov.au/application/files/2315/0405/7606/Prefeasibility_Study_Final_Version_030817.pdf) are a joke and it’s clear nobody ever bothered to talk to anyone in Indonesia about this.

    They are basing their whole study on a feed-in tariff of US$0.145/kWh (approx AU$193/MWh), with a low end sensitivity of AU$180/MWh. That particular feed-in tariff was from an Indonesian regulation from 2016 (MEMR regulation 19/2016), which actually also stipulates a maximum solar PV quota of 150 MWp. So strike 1 there for this plan since they are proposing >3GW.

    However, the real showstopper is that the 2016 feed-in tariff regulation was superseded by a new regulation from earlier this year (MEMR regulation 12/2017), which effectively caps the tariff in Java to US$0.059/kWh or approx AU$80/MWh. Given that the study says the LCOE is AU$180 – $250 per MWh, then this project is simply not viable.

    The study also suggests that Indonesia needs 80GW of new capacity by 2025. But the Indonesian government and state-owned utility PLN royally stuffed up their demand projections and due to an ill-conceived 35GW generation plan, Indonesia is now facing a massive oversupply of electricity, particularly in Java. For example, see this article from today’s Jakarta Post – http://www.thejakartapost.com/news/2017/11/16/indonesia-anticipates-electricity-oversupply.html). Or this article from 2 months ago – http://www.thejakartapost.com/news/2017/09/04/pln-caught-in-dilemma-as-demand-growth-slows.html – the opening line of which I will quote:

    “After predicting the demand for electricity would require 77.9 gigawatts
    (GW) of additional power capacity by 2026, state electricity firm PLN
    has found itself caught in a dilemma as the real demand has grown at a
    rate far below expectations, raising doubts about the government’s 35 GW
    target by 2019.”

    In any case, I’m sure nobody in project finance worth their salt would back a project as unhinged as this one.

    • JonathanMaddox

      Yep, it’s completely blue-sky thinking, not something that should be pursued at present on today’s prices and costs. Not completely out of the question in the long run – in a decade or three, perhaps.

  • Radbug

    The no-brainer is the PV array, not the transmission line. It would be MUCH cheaper to use the PV array to electrolyse water and combine the resultant hydrogen and fugitive carbon dioxide from Gorgon etc to create methanol, which could then be tankered to Asia.

    • aussiearnie

      Could you please back that up with some back of the envelope figures?

      • Radbug

        Try these links:
        http://www.sciencedaily.com/releases/2016/12/161207124105.htm
        http://www.sciencedaily.com/releases/2017/09/170907142734.htm &
        http://www.sciencedaily.com/releases/2017/06/170606095046.htm
        Aussiearnie, the processes disclosed (and these are just a few of the several available) above show that the technology to export methanol, either from hydrogen and carbon dioxide, or from methane (natural gas) is so close that it makes a nonsense of the capital cost of a high voltage transmission line. The energy cost of liquefying & returning the carbon dioxide generated by that methanol is 2.142% of the energy of combustion of that methanol – dirt cheap, compared with the energy cost of liquefying LNG. Ammonia has 75% of the energy density of methanol and the equivalent you-beaut nano-technology catalysts developed for methanol (see above) are not yet available for ammonia. In the consumer cities, a town gas reticulation network will have to be built to achieve an emissions-free outcome, but simply using fugitive carbon dioxide from natural gas wells (and at Gorgon, 25% of the gas out of the well is carbon dioxide) will put that carbon dioxide to good use, rather than simply venting it. A town gas reticulation network is not an impossible task, Melbourne has it.

  • joono

    State Grid of China (SGCC), one of the largest energy companies in the world, has a clear plan to install HVDC interconnections around the globe as part of China’s One Road One Belt strategy for global domination.
    This plan includes HVDC from SE Asia to the NT and down to Adelaide. You can see this plan on their website.You can also see this plan being developed on the ground here in Australia.
    State Grid now own a strategic corridor from Tennant Creek to Mt Isa, which they are currently using for a stupid (but profitable) gas pipeline, and its easy to see given their global plans and resources they will develop HVDC along that corridor at some point in the future.
    Tennant Creek has similar insolation to Pilbara, and it is not surprising that the NT government has not released its Roadmap To Renewables report which will probably be redundant when they do so. Territory Generation spends ~$300M on gas and diesel per year, so there are some vested interests in the NT energy market that do not want any GW scale production.
    The SGCC HVDC plan calls for an interconnector from Darwin to Malaysia or possibly even Hunan. The writing is on the wall that China will own, build, operate and profit from, GW scale energy plants in Australia.
    So it is great that this plan is actually looking outside the myopic vision of energy in this country and looking at HVDC as an enabler of export energy. You tell this is a good thing because of the lack of support it receives and the deafening silence coming from the energy incumbents.

    https://www.facebook.com/MassiveSolarNT/
    http://cleanandsecuregrid.org/2017/01/02/a-new-energy-network-hvdc-development-in-china/
    https://spectrum.ieee.org/energy/the-smarter-grid/lets-build-a-global-power-grid

  • aussiearnie

    The BETTER project in Europe looks at exporting solar power from North Africa, Turkey and the Western Balkans to demand areas in Europe. Of course that is exporting power from developing countries and have those countries reap the economical and social benefits of such a project. There are also plans to link Iceland’s (geothermal, hydro) power system with the UK. Technically this can all be done. If it is a question of economics alone, then maybe it will take a while before any of these comes to fruition. If broader questions such as habitability (including desalination in North Africa), developmental and environmental are considered then maybe sooner.
    http://www.better-project.net/content/action-better-brief