After years in planning, construction on the Silverton windfarm in western New South Wales is finally set to begin after the sale of the project from AGL to its Powering Australian Renewables Fund (PARF).
The deal will see AGL pay just $65 a megawatt hour for the first five years of the windfarm’s operation, effectively undercutting current prices for coal-generated electricity.
“It’s a very low price, which demonstrates the amazing innovation and cost curve that renewable energy is on,” says Alicia Webb, director of large-scale energy at the Clean Energy Council, the clean energy industry’s peak body.
A joint venture between GE and the civil engineering construction company Catcon will see 58 GE wind turbines installed in the Barrier Ranges, 5km north of the town of Silverton and 25km north-west of Broken Hill. The 3.4MW turbines will be the largest in Australia, with rotor blades spanning 130 metres sitting atop 110-metre towers.
“The larger wind turbine rotors provide an increased area to better capture the lower wind speeds and generate more energy,” says Adam Mackett, AGL Silverton’s wind farm project manager.
The 200MW capacity windfarm – the sixth largest in Australia – will cost $450m to build, generate about 150 local jobs during construction and should be fully operational by mid-2018.
With a capacity factor of 44.5% – at the high end for onshore windfarms – and an energy conversion guarantee built into the GE-CATCON contract, it is expected to generate 780,000MW hours of electricity a year. That’s enough to power 137,000 Australian homes and is equivalent to taking 192,000 cars off the road.
The guarantee “is a key commercial feature of the contract that was well received by the financiers”, says Mackett. Extensive wind turbine data will be used to track performance against the guarantee.
Renewable energy produced by the Silverton windfarm will be fed into the national energy market (NEM), which supplies electricity to Queensland, NSW, Victoria, Tasmania and South Australia. Less than 13% of the NEM’s electricity is generated from renewables now.
The Silverton windfarm – acquired by PARF for $36m – is the first project to be built from scratch by the fund. AGL established PARF in early 2016 as a way to attract investment for renewable energy projects that will help it meet its obligations under Australia’s renewable energy target.
PARF acquired AGL’s 102MW Nyngan and 53MW Broken Hill solar plants as seed assets in November 2016 and will probably acquire AGL’s proposed 350MW windfarm at Coopers Gap, 180km north-west of Brisbane.
“The momentum we’re experiencing with PARF is pleasing and proves that investor support exists for large-scale renewables development. However, further comprehensive policy changes are required to facilitate Australia’s transition to a low-carbon economy,” says AGL’s managing director and chief executive, Andy Vesey, in a statement.
The fund’s goal is to invest $2bn to 3bn in 1,000MW of large-scale renewable energy projects. As well as AGL’s contribution of $200m, the investment fund QIC is providing $800m to PARF on behalf of the Future Fund and clients investing in QIC’s global infrastructure fund. The balance will comprise debt raised on a project-to-project basis.
Silverton will contribute about 2.4% to Australia’s renewable energy target. The target is to generate 33,000 gigawatt hours of electricity a year from large-scale renewable energy projects by 2020, enough electricity to power about five million houses and meet about 23.5% of Australia’s electricity needs.
In May 2016, the clean energy regulator reported that Australia needed to build 6,000MW of renewable energy capacity – in addition to the 13,652MW already in the system – to meet the target, which was cut from 41,000 gigawatt hours in 2015 after a 15-month review.
Webb says the lengthy review and the short policy time frame for the target have made attracting investment for renewable energy projects difficult.
“[PARF is] stepping in to bridge the gap in an environment where there’s not a lot of long term certainty,” she says.
Nonetheless, she is confident the 2020 target can be met, thanks to technological advances in the industry. Whereas typical wind turbines a decade ago generated just 1.5MW a turbine, newer models generate upwards of 3MW. “The target is continually getting easier to meet as time goes on, even though our deadline is getting closer,” she says.
State-based renewable energy targets and the lowering cost of renewable energy are also encouraging signs that the 2020 target will be met, says Webb.
However, she argues that an updated policy taking into account greenhouse gas emissions targets is needed. “We’ve been saying for a long time now that Australia badly needs some sort of aligned energy and emissions policy that goes beyond 2020 and we await its announcement,” she says.
Australia’s commitment to the Paris climate agreement is to reduce emissions to 26–28% of 2005 levels by 2030. But greenhouse gas emissions data released by the government in late 2016 forecast that Australia will miss that target.
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