Australia’s Reverse Auction – the ACT renewable energy procurement programme

The ACT government has a target to meet 90% of its electricity requirements from renewable energy sources by 2020. As a means of achieving this target, the state has initiated a reverse auction system. This has captured my attention as it has a number of similarities with South Africa’s REIPPP Programme, and it involves moving away from a certification scheme towards a PPA arrangement.

Given that a number of people that I have spoken to have indicated that the RET large scale system does not provide any guarantee on the sale of electricity, and that investor confidence is a bit shakier than would be ideal (linked to federal government’s anti-renewable sentiment at the moment), the ACT’s programme seems to provide a stable and predictable procurement methodology for large scale renewables projects.

Below is a very brief overview of what has been procured to date, and the types of requests for proposals or expressions of interest have been issued.

Solar Reverse Auction:

The first round of procurement by the ACT government was for 40MW of solar generation potential. Issued in January 2012, this RFP has resulted in the selection of three solar projects, namely:

  • Royalla Solar Farm Pty Ltd (20MW)
  • Zhenfa Canberra Solar Farm One Pty Ltd (13MW)
  • OneSun Capital 10MW Operating Pty Ltd (7MW)

Royalla has been completed and was officially opened in September 2014. Zhenfa and OneSun are still to be constructed, and both have experienced planning delays.

More info on this can be found here.

Wind Reverse Auction

In 2014, a reverse auction for 200MW of wind was announced. Wind projects not exceeding 100MW could bid under this auction.

The programme had four key objectives, focusing on:

  • Local content/local economic development opportunities
  • Educational initiatives
  • Research & development initiatives
  • Global impact (i.e. the extent to which the project would influence the ACT being a centre of excellence or an export hub to the rest of the world)

Projects were assessed according to

  • local economic development contribution
  • price
  • community engagement processes
  • the extent to which the project developer or debt provider required guarantees on the sale of electricity at the listed feed in tariff

If projects were located outside of the ACT capital region, they needed to be within the top 20% of projects on price in order to be considered. If they met this threshold, they could be assessed according to the abovementioned criteria.

The three preferred bidders resulting from this programme were:

  • “Ararat Wind Farm Pty Ltd for a 80.5 MW proposal to be located north-west of Ballarat, Victoria. The project is being developed by RES Australia Pty Ltd, a subsidiary of RES UK, a global renewable energy company.
  • Coonooer Bridge Wind Farm Pty Ltd for a 19.4 MW proposal to be located north-west of Bendigo, Victoria. The project is being developed by Windlab Ltd, a Canberra based renewable energy company.
  • Hornsdale Wind Farm Pty Ltd for a 100 MW proposal to be located south-east of Port Augusta, South Australia. The project is being developed by Neoen, a French based renewable energy company.[Source]

All three of these are therefore outside of the ACT capital region.

Some of the initiatives supported by this programme include the establishment of a masters programme in wind at the Australian National University and a wind training course at the Canberra Institute of Technology.

Next Generation Solar Auction

A request for expressions of interest has recently been issued for up to 50MW of solar technologies which incorporate some form of storage. “Energy storage can be in many forms including chemical (e.g. batteries), thermal (e.g. molten salts) or potential energy (e.g. pump and store hydro).” [Source]

Submissions are due on the 8th July.

Thank you to Dr Nathan Steggel from Windlab, Leah Howell and Guy Raithby-Veall from Arup and Wendy Moloney from Aecom for their time and input on this topic.

Capital Wind Farm near Canberra

Capital Wind Farm

I drove past Capital Wind Farm yesterday, on my way from Sydney to Canberra.  The wind farms in South Africa that I’ve driven past have been very small in comparison, with the larger projects further out from Cape Town than I have travelled recently.  So seeing the scale of this project yesterday was really great.  I lost track when trying to count how many turbines there were marching over the hills.

Below are some facts and figures that I blatantly took from here.

Total capacity 140.7 MW

Annual Production Approx. 450,000 MWh/year

Offtake Renewable energy requirements for Sydney Desalination Plant

Turbine manufacturer Suzlon Energy Australia Pty Ltd

Grid operator TransGrid

Grid connection voltage: 330 kV transmission line

Australia’s renewable energy picture – a meetup with Muriel Watt, University of New South Wales

I met, this morning, with Muriel Watt, at the School of Photovoltaic and Renewable Energy Engineering, UNSW, for a quick discussion on some of the history of the renewable energy sector in Australia. She spoke of the road travelled by Australia, which has been vastly different to that in South Africa with very different drivers, and has helped me to get a better understanding of what the current energy picture in Australia looks like.

Renewables have been around in Australia for a while, with hydro in Tasmania and the snowy mountains and solar and wind systems installed in remote locations. It makes sense in a country this size, with towns and utilities so dispersed, for solar to be the preferred option for telecoms infrastructure, rail power etc. The concept of renewables is therefore not a new one.

In the early 1990’s, the only grid tied rules and regulations in place were for large scale power stations. Early on, effort was put into developing the necessary standards relating to grid connection and guidelines on contractual arrangements (taken up by most utilities). This helped, from early on, to reduce some of the softer, transactional costs associated with installing distributed renewables particularly when compared to other countries, like the USA.

Small scale solar

With this supportive policy in place, or under development, the initial solar PV priority was on building integrated PV, where it was foreseen that there would be the creation of a standardised module, suitable for local application. (For various reasons this has not been successful, and most systems installed are rooftop PV.)

Initially about an upfront grant was established for solar systems with a payment/MW for each system.  At up to A$8/MW, this represented a significant contribution for solar systems.  This was replaced by a ‘deemed’ energy payment for small scale systems, for an operational life of 15 years. For a specific location, dependent on the available solar irradiance, for each installation there would be a forecasted amount of energy that would be generated, and an upfront payment would be made accordingly, in an effective grant. This was implemented to reduce transactional costs associated with monitoring and verification.

Simultaneously, some states were implementing feed in tariffs. This meant that some systems were accessing the deemed energy payment and a feed in tariff.

It is within this context that the global financial crisis hit globally. Countries that had been previously investing in solar were no longer prioritising it, meaning that there was extra components/modules available. China also started to ramp up on module production. This, together with Australia’s currency being very strong against the dollar, meant that solar prices started to plummet locally, and there was a massive increase in demand for solar PV systems as a result.

This peaked in 2012, and state governments were the first to start to panic. Feed in tariff agreements represented commitments to pay a premium for each unit of energy generated by a solar PV system. Some of these agreements extended for 25 years. Others (like in New South Wales), had agreements which had a higher premium, but were for a shorter period (say 7 years).  Some are still offering feed in tariffs, but the scheme is being reviewed.

This massive boom in solar has resulted in a significant installation base, supporting local job creation.

Large scale renewables

In parallel to the small scale incentive scheme, the renewable energy target (RET) was established to promote the uptake of renewables. This mandated that utilities or retailers had to source a percentage of their overall generation from renewable energy sources. This would then be verified and they would be issued with a generation certificate for each MW of power generated. They could then sell these certificates on the open market. There is no guaranteed power for renewable energy and a lot of utilities have opted to generate their own renewable energy power. There is therefore a lot of risk on large scale project developers to invest in a project, where there is no guarantee that power will be purchased.

This target is also being reviewed.

The ACT government has initiated a reverse auction scheme, which guarantees the purchase of electricity from renewable energy generators, for a 20 year power purchase agreement. This has a cap of allocated capacity, which developers bid for, and projects are selected based on price. This means that the tariff payable for each kWh of electricity produced is lower, but the sale is certain. I’ll be meeting with people to discuss this programme specifically – more on this later, but it seems that this programme would have a lot of similarities with South Africa’s REIPPP Programme.

The political landscape in Australia is very interesting. Already I have had a number of indications that the coal lobby is incredibly strong and blatant, with heavy handed influence in government and vested interests at play. There is concern that a major shift in political commitments or priorities will impact the local market, and affect the number of viable local jobs. Given that Australia is a regional centre of excellence in small scale solar PV, it would seem a real waste if this sector was not seen as an asset.  As Muriel indicates, she is teaching capable, energetic and talented young people, who may not have a job to go to when they leave university.  She is confident, however, that the renewable energy sector will survive the ups and downs and changes in government.

I’ll also be looking into this more during my time here.

Thank you to Muriel for your time.

Muriel teaches in renewable energy policy and life cycle analysis of energy systems in the Centre for Photovoltaic Engineering at UNSW where she has worked since 1992. 

Australian PV Institute – live data portal

I went to a talk yesterday which focused on the future of solar in Australia (more on that to follow) but one of the incredible things that jumped out at me was that the speaker (Nigel Morris) referenced a live PV performance data portal.  This tracks PV energy being generated by state.  You can also see which areas have the highest PV penetration density, how much energy is generated annually, how many installations have been completed each month and year (to track market trends)  and it has a tool which allows you to zoom onto a building in your city to see how big the solar potential is there.

It’s a very interesting portal, and it’s clear that there is a lot of work that has gone into developing it.  The real value is that the generation data is available to allow these output graphics.  It’s really powerful when you can display the actual cumulative output for each state so well.

The portal can be found here: http://pv-map.apvi.org.au/

Here’s what was generated on the 11th June.  Isn’t information beautiful?

APVI 11 June Snap