Bald Hills Wind Farm – photos

A few weekends ago I took a drive along the coast to the south east of Melbourne, towards Wilsons Promontory.  It is such beautiful country out there, with rolling green hills and dramatic coastlines.  There are two wind farms out that way, and I saw the first from across the bay, and the other up close and personal.

From Duck Point (just north of Wilsons Prom), you can see Toora Wind Farm across the bay.  This is a 21MW facility, made up of 12 x 1.75MW turbines.

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Toora Wind Farm, near Agnes Falls, seen from Duck Point.

But from there it was back towards Melbourne, where the journey took me right past the foot of the Bald Hills turbines.

The Bald Hills Wind Farm [consists] of 52 wind turbines, each with an electricity generating capacity of 2.05 megawatts (MW) giving the project a total capacity of 106.6MW.

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Bald Hills Wind Farm

 

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Bald Hills Wind Farm. In retrospect, it seems pretty obvious that wind farms and panoramas don’t really go well together…

 

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Bald Hills Wind Farm, taken from a bumpy, muddy farm road. Nothing ventured nothing gained.

 

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Victoria’s new renewables policy, and why it could learn from South Africa

Original article posted on reneweconomy.com.au.

The Victorian government recently announced a policy to decisively increase the amount of renewable generation in Victoria. The rationale for this policy is that existing federal policies are failing to provide investment certainty in the expansion of renewable production capacity.

The government estimates that meeting its policy will require up to 5,400 MW of new renewable generation to be built over the next nine years. This is equivalent to about 60 per cent of Victoria’s peak demand on the power grid.

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Bald Hills wind farm, Victoria, Australia

Assuming an all-in capital outlay per MW of $2.5 million, meeting this policy could require $13.5 billion of new money. Some significant investment in transmission infrastructure is also likely to be needed. After residential rooftop solar, this will be, by far, the largest investment in new generation capacity in Australia since the creation of the National Electricity Market.

Last month a consultation paper from the Department of Environment, Land, Water and Planning sought responses on various issues (identity of the counter-party, specification of the payment instrument, technology selection, treatment of other subsidies, contract duration and auction design). The Department is currently focusing on the preparation of enabling legislation with a view to conducting its first tender next year.

South Africa’s Renewable Energy IPP Procurement Program (REIPPPP) is an interesting point of reference, of comparable scale, to the Victorian policy. Though there are many differences, many of the important issues are similar and much can be learned from the South African experience. At the least, a quick look at their program we might give a sense of what lies in store for Victoria.

Under the REIPPPP program 6,327MW (of which 3,357 MW of wind in 34 projects, 2,292 of PV in 45 projects, 600 MW of concentrated solar in 7 projects and several much smaller biomass and small hydro projects) have been awarded PPAs. Total capital outlays of around $19bn are expected, to complete these projects. As a result of this, since 2012, South Africa has ranked among the top ten countries globally in terms of renewable energy independent power producer investment.

In the first tender in November 2011, 28 projects offering 1,416 MW in total were selected. In the second round in May 2013, 19 projects offering 1,040 MW were selected. A third round in August 2013 selected 15 projects for 1,321 MW. A fourth round in August 2014 selected 26 projects for 2,207 MW. A fifth round is expected to commence shortly.

The bidders offer prices for 20 year Power Purchase Agreements with Eskom, the government owned national power monopoly. Two additional agreements with the Government underwrite Eskom default risks, provided step-in rights to lenders in the case of default and ensure contractual obligations for delivery of up to 17 economic and social development obligations. Community ownership (at not less than 2.5% of the total project cost) is mandatory and the developer have to come up with ways, such as community trusts, to comply with this. Contract evaluation is based 70% on price and 30% on socio-economic factors.

The contracts are not negotiable and bidders are required to submit bank letters to the effect that financing is locked-in. This effectively outsources due diligence to the lenders. The lenders in turned passed this on to developers but in a way that ensured the duty of care was to lenders.

The 64 successful projects in the first three rounds involved over a 100 different shareholder entities, 46 of these in more than one project. Banks, insurers, development banks, international utilities and direct foreign investors have all participated in the program. The most common financing structure has been project finance, although about a third of the projects in the third round used corporate finance.

The majority of debt funding has been from commercial banks with the balance from development banks, pension and insurance funds. Eighty-six percent of debt has been raised from within South Africa on 15-17 year loans (from Commercial Date of Operation). Debt risk premia in bank loans have been around 450 basis points on top of the South African equivalent to Australia’s 90 day bank bill swap rate.

Forty-nine Engineering, Procurement and Construction (EPC) contractors have been involved in the 64 projects during the first three rounds, the majority in more than one project either as the primary or secondary contractor.

Prominent EPC contractors with three or more projects include Vestas (Danish), Acciona (Spanish), Consolidated Power Projects (South African), Group Five Construction (South African), Juwi Renewable Energies (German), Murray and Roberts (South African), Abengoa (Spanish), ACS Cobra (Spanish), Iberdrola Engineering and Construction (Spanish), Nordex Energy (Germany), Scatec (Norwegian), Suzlon (India), and Temi Energia (Italian). Many of these EPC contractors have set up subsidiary companies in South Africa.

The main suppliers of wind turbines and PV equipment include Vestas, Siemens, Nordex, ABB, Guodian, Suzlon, Siemens, SMA Solar Tech, BYD Shanghai, Hanwha Solar, 3 Sun, AEG and ABB. A local wind tower manufacturing facility and at least five PV panel assembly plants have been established in South Africa.

Over the period of the four bidding rounds, offered prices per MWh halved for wind and concentrated solar and declined by 75% for solar PV. Global technology development, local economies of scale, improving investor confidence and lower transaction costs explain this stunning progress.

As the volume of renewable capacity has increased, transmission connection has been become an increasing concern. Bidders are responsible for connection to the nearest major substation, but augmentation of the shared network is lagging behind and this has become a particular issue for the most recently awarded projects.

The World Bank suggests the most important lesson to transfer from the REIPPPP is the benefits of a well-designed and transparent procurement process. They say that the Department of Energy recognised that it had little capacity to run a sophisticated multibillion-dollar competitive bidding process for renewable energy.

As a consequence, it sought the assistance of the National Treasury’s Public-Private Partnership (PPP) Unit to manage the process. A small team of technical staff from DOE and the PPP Unit established a project office which functioned effectively outside of the formal departmental structure of national government. It was led by a senior manager from the National Treasury PPP Unit and other legal and technical experts were brought on board to form a tightknit team.

This was viewed favorably by both the public and private sector as a professional unit with considerable expertise in closing PPP contracts and a reputation as problem solvers and facilitators rather than regulators. The credibility of this team with the bankers, lawyers, and consultants involved in such projects in South Africa generated enthusiastic participation by private sector players.

The World Bank reports that high standards were set and maintained throughout the bidding process, including security arrangements and transparent procurement procedures. Documentation was extensive, high quality, and readily available. Domestic and international advisers were extensively involved in the design and management of the program, in reviewing bids, and in incorporating lessons learned into the program as it progressed through the bid rounds.

To fund the procurement process, in 2011 the National Treasury provided R100 million (around $10m). The World Bank provided a further US$6m and various bi-lateral donor agencies from Denmark, Germany, Spain and the UK contributed funding for technical assistance. This funding saw the program through the first round and part of the second. Subsequent to that, the program relied on bidder registration fees and fees paid by successful IPP project companies.

Successful project companies must pay a project development fee of one percent of total project costs to a Project Development Fund for Renewable Energy projects managed by the Department of Energy. The fund covers current and future costs associated with procurement of renewable energy and oversight of the program. These funding arrangements have helped the program remain off the formal government budget in subsequent bidding rounds.

Coming back home again, the Victorian Government’s policy marks a major departure in the state’s energy policy. Since privatising the industry a little under twenty years ago, the Government has had a watching brief with some intervention around the edges – most significantly in smart meters. The Government is now getting back into the business of electricity production.

Even if it does not intend to own or operate generators, it is the Victorian Government that will under-write what will be a massive investment program. Surely every large new renewable generator developed in Victoria for the next nine years will be part of its program. If the Government legislates its policy as expected, the Victorian Government will become the most important player in the Victoria’s electricity generation sector.

We all, including the Government, have yet to discover how its policy will unfold in practice.

The South African experience can provide some feeling for what goes into the competitive procurement and development of 6,000 MW of renewable capacity. Their apparent success in this endeavor is encouraging. It would be good to learn from this what we can.

Bruce Mountain is an energy economist and Director of consultancy, CME. Vivienne Roberts is an engineer and accountant and was a technical advisor on a number of projects in South Africa.

The role of wind in addressing capacity constraints in the Philippines

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There is a constant and gentle hum of generators on Boracay island.  In Sabang, the hotel managers told me about the regularity of brownouts, and the need for backup generators.  While there, I experienced only short intervals of power-outages, where backup gensets kicked in.  It’s different on Boracay.  For the last two days the hotel staff where I’m staying have turned the generator off while I’ve been there, to give it a rest.  It had been running for the whole day.  It kicked on in the middle of the night, which was not ideal, since our room is right next door.  They’re running these generators hard, for long periods.

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This is a little island, with an increasing population.  Sandy white beaches, warm water, diving spots and gentle lapping waves make it a tourist’s dream.  It also makes it a power utility’s nightmare I assume.  It’s less than a kilometre from Caticlan by boat, and this is effectively the main land.  Nabas Wind Farm, a project by PetroWind Energy Inc commenced commercial operation on the 10th June 2015.  On a clear(ish) day it’s visible from Boracay and looks impressive standing on the hill.  It’s a 36MW facility, built to supplement the power to Boracay, and qualified for P8.53/kWh (USD0.182/kWh).  Initially it was approved to be a 50MW facility, and at 36MW it’s clearly not enough on its own to address the capacity constraints, or there would still not be brownouts taking place.

With over 7,000 islands in the Philippines, it’s also clear that distributed energy is essential here.  The way that this country addresses its electricity constraints may be a lesson in how embedded generation, distributed generation, micro-grids, hybrid solutions and storage systems are rolled out.

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Renewable Energy projects and targets in the Philippines

The Philippines has developed a roadmap or National Renewable Energy Program (NREP) to nearly triple their renewable energy installed capacity from its 2010 value of 5,438MW by 2030.  This will mean an installed capacity of 15,304MW by 2030.  To do this, they will focus on the following 6 steps:

  1. Increase geothermal capacity by 75%
  2. Increase hydropower capacity by 160%
  3. Deliver an addition 277MW of biomass power capacity
  4. Attain wind power grid parity through the commissioning of 2,345MW of additional wind capacity
  5. Mainstream solar through the addition of 284MW of solar capacity, and aim for an aspirational target of 1,528MW
  6. Develop the first ocean energy facility for the country
[SOURCE: NREP Renewable Energy Plans and Programs (2011-2030)]

The Department of Energy releases a summary of awarded projects every two months on their site.  I’ve taken some of this data to make the graphs below.

The four different categories that I’ve pulled out are only for grid connected projects.  There are some projects that have been awarded or that are pending for own-use, but I’ve left these out for the minute.  My reading of the reports that go along with the summary tables are that projects that have been ‘awarded’ still need to demonstrate compliance with various obligations.  Those that are listed as ‘awarded’ and ‘potential’ are not fully compliant with these obligations.  Obligations relate to the work programme, posting of performance bonds and something called “RESHERR,” which I can’t find an explanation for, but am guessing it relates to Health & Safety and Environmental obligations.  This is a total shot-in-the-dark guess.

Projects that have not been ‘awarded’ and are listed as ‘pending’ are still to have their status finalised under the Renewable Energy Law.  It seems that some of these projects awaiting this have been constructed.
Awarded installedAwarded potential
Pending installed
Pending potential

 

 

 

 

 

 

 

 

 

 

 

 

[Source: Department of Energy]

What also interests me is how this looks compared to the same time the previous year.  What jumps out at me from the below is that they seem to have some difficulty converting potential projects to installed projects, even when awarded.  The greatest movement seems to be in hydropower and solar, with wind and biomass projects moving in the wrong direction; possibly from a failure to comply with the above-mentioned obligations.

Change in awarded capacity

[SOURCE: DEPARTMENT OF ENERGY]

A summary from the DoE can be found in the presentation linked.
http://www.energy.gov.za/IPP/List-of-IPP-Preferred-Bidders-Window-three-04Nov2013.pdf

Some key items for me with regards to Bid Window 3:

– 93 bids have been received, amounting to 6,023MW whilst the available
MW for allocation was 1,473MW.
– 17 preferred bidders have been announced and there are 6 PV projects,
7 wind, 2 CSP, 1 landfill gas & 1 biomass
– The Northern Cape has the lion’s share of the jobs again, with 82% of
all the construction jobs. Gauteng has got six jobs in there out of over
7000… This seems to be largely driven by the CSP facilities, both of
which will be in the northern cape. The PV plants are split between four
provinces.
– 50.4% of equity across the projects is from foreign investors as is
25% of the debt
– PV, wind and CSP had a dip in Round 2 in operational jobs/MW, but they
have all increased in Round 3 (wind & PV most notably… where there is the
most competition) Not sure if this is a response to socio-econ drivers.
– The bidding tariffs for each facility has been provided. Not sure
this was available before, but it is quite interesting that this is
available now. The rumoured cheapest PV price is 86.41c/kWh from Adams
Solar PV2 (Enel?)
– Welcome to the party landfill gas & biomass.

Delay of REIPPPP Round 3 preferred bidder announcement but hints of outcomes out already

There are still some things to be gleaned from the notice on the IPP
website today…

– If your PV facility was not 75MW you’re not yet listed as a preferred
bidder, as they’ll be awarding 6 projects at the 75MW cap = 450MW
– Landfill gas and Biomass have joined the party
– It is likely that we’ll be seeing 200MW of CSP with storage coming
online soon as the tariffs were only really favourable for CSP with storage
– Wind and Solar PV may have additional capacity made available, and
this should be announced before the 20th November.

The info below is found here .

The Department received 93 Bid Responses on the Third Bid Submission Date.

The Department has today, 29 October 2013, sent letters of appointment as
Preferred Bidders to 17 Bidders who submitted Bid Responses on the Third
Bid Submission Date. The number of appointments, and the total MW of
Contracted Capacity awarded to date, is as follows:

Onshore Wind – 7 Preferred Bidders totalling 787MW
Solar Photovolatic – 6 Preferred Bidders totalling 450MW
Biomass – 1 Preferred Bidder of 16,5MW
Landfill Gas – 1 Preferred Bidder of 18MW
Concentrated Solar – 2 Preferred Bidders totalling 200MW

The Honourable Minister of Energy and the Director-General of the
Department of Energy are currently not available to address the media and
interested parties about the outcome to date of the procurement in respect
of the Third Bid Submission Phase, and appropriate arrangements will be
made in due course for a detailed announcement regarding the Preferred
Bidders and the benefits to South Africa in respect of their projects.

The Department has today also sent letters of non-appointment as Preferred
Bidders to 18 Bidders. Those letters were sent to Bidders whose Bid
Responses were Non-Compliant with the requirements of Part B (Qualification
Criteria) of the RFP.

The Department has taken note of the fact that a large number of very
competitive Bid Responses were submitted for the Third Bid Submission Date
in the Onshore Wind and Solar Photovoltaic Technologies, and the Department
is considering the appointment of additional Preferred Bidders for those
Technologies from the remaining Compliant Bidders. As such, the Preferred
Bidders that have been appointed in those Technologies may not be the only
Preferred Bidders that are appointed in those Technologies for the Third
Bid Submission Date, and no final decision on this has been taken at this
time. The Department will make a further announcement regarding its
decision in this regard in due course, and is intending to do so by not
later than 20 November 2013.”

Delay of REIPPPP Round 3 preferred bidder announcement but hints of outcomes out already