Ken Woolley and Michael Riches, Alinta Energy - Progress to date in delivering the East Pilbara Link project

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Information about Ken Woolley and Michael Riches, Alinta Energy - Progress to date in...
News & Politics

Published on March 17, 2014

Author: informaoz



Ken Woolley, Executive Director Power Generation, Alinta Energy and Michael Riches, General Counsel and Executive Director for Corporate Services, Alinta Energy delivered this presentation at the Mining the Pilbara 2013 conference. The conference aims to promote the sustainable development of mineral resources and the Pilbara region.

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Progress to Date in Delivering the East Pilbara Link Project Ken Woolley – Executive Director Power Generation Michael Riches – Executive Director Corporate Services 16 July 2013

Overview of Alinta • Alinta Energy is a vertically integrated energy company and is at its heart a Western Australian gas business • Comprised of 3 operating divisions: Power Generation, Wholesale Energy and Retail Energy • Alinta has been a major supplier of energy in the Pilbara since 1996 2 Power Generation Wholesale Energy Retail Energy - Over 2,400 MW - Over 400 employees - 10 Power Stations - Gas and Coal - OCGT / CGGT - Operating coal mine - > 200 TJ/day - Gas transportation services on multiple pipelines - Environmental products - Spot trading - Major customers - 700,000 customers - 5 states - Mass Market, C&I - Electricity and gas

3 Glenbrook  112 MW co-generation plant Braemar  502 MW gas fired generator  147km gas pipeline Bairnsdale  94 MW gas fired generator Port Hedland Station  210 MW gas fired generator  66kV transmission lines Newman Station  178 MW gas fired generator Alinta West  Pinjarra: 285 MW gas fired  Wagerup: 380 MW dual fuel  Retail: 600,000 customers  180 TJ/day gas portfolio Flinders  Coal-fired generators – Northern: 544 MW – Playford: 240 MW Western Australia Northern Territory South Australia Queensland New South Wales VIC East Coast Retail  100,000 retail electricity customers GGTP Pipeline  12% ownership of pipeline Overview of Alinta’s Portfolio Leigh Creek Coal Mine

Historical Energy Development in the Pilbara • Large scale development of the iron ore fields of Western Australia has generally followed the installation of linear infrastructure. • To date this development has predominantly followed gas pipeline investment which has resulted in generally small gas (or in some circumstances dual fuel) power stations. • These power solutions are capitally inefficient as a result of over investment in: • Capacity (generally [n-1] configuration of maximum expected load) • Substantial spinning reserve • In addition part load operation of power generation assets results in higher cost electricity production. • Alinta’s vision is to use 220kV high voltage overhead transmission lines rather than gas pipelines, to serve the electricity requirements of the miners along the East Pilbara iron ore fields. 4

Pilbara Linear Infrastructure Newman West Angeles Parabadoo Tom Price Yandi BHP Yandi Shay Gap Goldsworthy PORT HEDLAND Exmouth Onslow Pannawonica Millsteam Karratha WickhamDampier Mt Brockman Spinifex Ridge Marble Bar Nullagine 100 100050 Kilometres Wodgina Gas Pipeline Electrical Transmission PORT ANKETELL Power Station 5 East Pilbara Link Corridor

6 Proven Guyed Mast Designs

7 Proven Free Standing Tower Designs

Nature of Generation That can Utilise the System • The inherent flexibility of transmission lines lends them to wide utilisation • Existing Diesel • Connection of existing diesel facilities is relatively straight forward • Operators retain ultimate security of supply from their own plant • Operators can benefit from substantially lower cost gas and solar power • Existing Networks • Existing networks can interconnect • Increased security of supply • Higher power quality and reduction in overall losses • New Loads • Small loads will be able to source gas based electricity at a price that does not constitute a barrier to entry 8

Opportunity to Develop Solar Resources 9 • The Pilbara has a vast untapped solar resource. • Building on our transmission line investment Alinta could deploy solar power generation in the Pilbara. On a meaningful scale • Servicing both community and mining requirements. • Inland solar PV connected to coastal loads via transmission lines avoids cyclone impacts • Alinta has a multipronged strategy: – Government assistance in permitting and approval processes – ARENA for grants to develop and execute project – CEFC for loan assistance to make projects viable • Quotes suggesting solar technologies can achieve levelised costs of $150 to $300/MWh are based on projects which have been de-risked • Significant subsidies would be required in order for a private generator to commercialise solar technologies such as subsidies in construction or Feed in Tariffs.

Key Challenges in Project Delivery Route Alignment Selection •Competing Infrastructure - road, rail, gas pipelines, transmission lines and of course mines •Environmental requirements •Underlying tenure considerations •Physical landscape – topography, geotechnical, distances covered and access proximity for ease of construction; Nature of Tenure •Section 91 Licence for construction •Easement granted on an as completed basis •Interaction with mining and Land Act tenure •Native Title considerations

East Pilbara Link Project Financing • Long term offtake required • Strong focus on generation, and associated fuel, risk. Unlike transmission infrastructure connected to multiple generation sources, project is not financeable without proven and reliable generation • Failure to deliver electricity, whether caused by transmission or generation failure, ultimately can result in offtake contract termination and stranded assets. Fundamental therefore that generation and transmission assets are held in a single project financed vehicle • Tier one contractors are required with local expertise. Concern over cost overruns necessitates rigorous and prescriptive contract scoping with fixed price Approval process • Initial approval for ‘lightweight’ s91 licence for geotechnical and ground truthing work and aboriginal heritage surveys • Heavyweight s91 licence for construction and consents from underlying landholders • Native Vegetation Clearing Permits • Flora and fauna surveys and EPA approval requirements • Snap-back easement on completion of construction • Shire development approval • Licence under the Electricity Industry Act

East Pilbara Link Project ROLE OF GOVERNMENT AND INDUSTRY How has Government Assisted •Department of Lands ◦Early engagement allowed consideration of multiple different approaches on tenure ◦Positive interaction and constant communication with Department to notify them of project status and requirements enabled the right form of tenure to be adopted ◦Collaboration on timing of applications to ensure that timeframes are met •Department of State Development ◦Review of State Agreement ◦Facilitation in processes to ensure development of transmission line could be conducted through the same entity that owns and operates the power station •Economic Regulatory Authority ◦Process for Integrated Regional Licence application to allow for cutover from State Agreement exemption to new licence How can industry benefit from this Project •Intention is for this Project to be the start of a connected system. A connected system has the benefits of multiple generations sources and fuel types to ensure reliability of supply •For existing miners, diesel generation does not have to become obsolete. It can become an integral back up fuel source and therefore have value •Early discussions on demand loads, project scope and feasibility will allow for long term planning of the route to facilitate maximum delivery points

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