Angaston, Lonsdale & Hunter Power Stations
Frequently Asked Questions
What are the key characteristics of the stations?
The stations comprise 1.1 & 1.6MW reciprocating diesel engines. The total capacity of the three stations is approximately 100MW.
Importantly, the power stations meet stringent environmental standards with regard to noise levels and gas emissions. The catalytic reduction units reduce NOx emission levels to less than the minimum requirement of the South Australian Environment Protection Authority.
All units can start within the 5 minutes required to meet a dispatch instruction from the electricity market manager.
Plant life expectancy is over 25 years, annual operating costs are low, as a consequence of the small number of expected operating hours.
Why has Infratil invested in these the power stations?
The power stations provide a respectable rate of return over the short term. More importantly in the medium to long term, they provide strategic optionality in supporting Infratil's retail growth ambitions. Power station ownership will enable IEA to broaden its purchasing options over time. This may be of particular value if the ongoing consolidation and vertical integration of the Australia power market threatens the current ready supply of wholesale contracts.
Currently, the electricity market provides good access to wholesale hedge cover at competitive prices; though this may be under threat in South Australia, it is expected to remain the case in the short to medium term. In the medium to longer term IEA is aiming to build resilience to its retail position through ownership of generation and, more strategically, through short lead time options for self build which may be exercised if market conditions change. Once permitted, these stations can be built and operational in less than 9 months.
Angaston Power Station has an off take contract in place until the end of 2011 with a quality counterparty. The contract provides for revenue certainty while Infrail’s builds its retail position.
Without electricity retailing, would IEA have invested in these power stations?
Yes, the power stations earn their keep as a standalone investments. However, the business scale from being an active participant in the Australian wholesale market has without doubt facilitated the business case. The strategic optionality of ownership is seen as a supportive aspect rather than as a primary driver for this investment.How will the power stations be operated?
Infratil has entered into an operations and maintenance agreement with the vendor, Cummins (http://www.cummins.com/). Cummins designed and constructed the plants and have been operating them since commissioning.
Lonsdale and Hunter are dispatched automatically in repsonse to the price signal published by the market operator (NEMMCO) or remotely from IEA's office in Melbourne. Angaston will be dispatched remotely by the counterparty to the off-take agreement.
Why diesel fuelled?
The Australian electricity market, in particular South Australia, is one of the most "peaky" markets in the world. Prices can spike very quickly from less than $50/MWh to over $1,000 /MWh. Though the marginal operating (fuel) cost is high relative to coal and gas, it can still earn substantial income during these prices spikes.
Diesel reciprocating plant has a significant advantage over coal and gas power stations through flexibility and greater reliability (enhanced by the numerous units) and a very rapid response time enabling it to capture these price spikes.
And if there are no price spikes?
Peaking plants can earn income through entering capacity contracts with, typically, retailers to provide them "insurance" against high prices. The premium received provides a stable income stream. Alternatively, its vaule is derived from saving Victoria Electricity having to purcahse these contracts.
Go to top
Print Page
Smaller
