Owns four peaking power stations totalling165MW at Angaston, Port Stanvac and Lonsdale in South Australia and in the Hunter Valley, New South Wales.
In 2011, IEA acquired the Bamarang gas-fired power station development site from the New South Wales government. Whilst the site near Nowra is capable of accommodating a gas-fired power station of up to 450MW, Infratil has no intention in the near term of building a power station there given the significant surplus of generation capacity that currently exists in the National Electricity Market (NEM).
Lumo Energy's generation team manage IEA's power station assets and when necessary call upon the substantial experience Morrison & Co has in the peak generation sector of the Australian electricity market. This has been gained through the operational experience in trading Southern Hydro's peaking generation, its governance over listed Australian companies and specialist advisory assignments with Australian industry players over a sixteen year period.
Recent restructuring of Infratil’s Australian energy businesses has seen IEA become an asset holding company with all previous functions and employees transferred across to sister company Lumo Energy.
The power stations provide a respectable rate of return over the short term. More importantly in the medium to long term, they provide strategic support for 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 much less so in South Australia. 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.
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.
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