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MARKET OVERVIEW AND THE CASE FOR OFF-GRID RENEWABLES Prepared for Remote Area Power Supply Conference March 2014

Heading goes here Where is the Off-Grid Energy Market?

•  Off-Grid •  Not the NEM or SWIS

•  Fringe-of-grid •  Remote NEM and SWIS

areas •  Remote or Very Remote

•  ABS definition

Heading goes here Remote Energy Market Overview

• 2%  of  Australia’s  popula0on  live  in  remote  regions  yet  they  consume                      

6%  of  energy  demand  

•  Currently  supplied  by;  

•  Natural  Gas  (72%)  

•  Liquid  Fuels  (25%)  

•  Renewables  (1%)  in  comparison  to  

  NEM  (13%)  or  SWIS  (6%)  

86%  

8%  5%  

1%  

NEM  

SWIS  

Off-­‐Grid  Industrials  

Off-­‐Grid  Communi0es  

Heading goes here Remote Energy Market Overview

15,857  GWh  was  produced  by  almost  5GW  of  remote  installed  capacity  (Source:  BREE  2013)  

South  Australia   Queensland  Northern  Territory  

Western  Australia  

Total  

Renewables   2     1     3     47     56    

Liquid  Fuels   35     146     327     705     1,222    

Natural  Gas   40     545     602     2,410     3,614    

 -­‐        

 1,000    

 2,000    

 3,000    

 4,000    

 5,000    

 6,000    

MWs  

Heading goes here Remote Energy Demand

Source:  AECOM,  BREE,  Geoscience  Australia  2013  Data  may  have  anomalies,  esAmates  are  arbitrary  &  AECOM  does  not  accept  any  liability  for  any  decisions  made  on  the  basis  of  this  informaAon.  

Off-­‐Grid  Western  Australia  

Off-­‐Grid  Northern  Territory  

Off-­‐Grid  Queensland  

Off-­‐Grid  Australia  

Industrial;  79%  

Community,  21%  

Industrial;  89%  

Community,  11%  

Industrial;  41%  

Community;  59%  

Industrial;  89%  

Community;  11%  

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Renewable  Energy  Target  (RET)  

Carbon  Price,  ARENA  and  CEFC  

RAR  Program  $400m  (target  150MW)  

FaHCSIA  

Remote  Indigenous  Energy  Program  &  

Bushlight    

Community  Service  ObligaTon  

>$700m  

Diesel  Rebate  Fuel  Scheme  

$5bn    

(~$2bn  Miners)  

Remote  Renewables  Support    Remote  Energy  Subsidies  

Current Programs Supporting Remote Energy

Heading goes here Off-Grid Market Research Observations

•  Technical  •  Immaturity:  Remoteness  factor  is  not  well  

understood  and  backing  of  the  supplier  and  maturity  of  the  technology  differ  

•  No  out  of  the  box  soluTon:    

•  System  integra0on  challenges  vary  in  complexity    

•  Scale  and  penetra0on  is  generally  low.    

•  Credible  data  to  analyse  op0ons  is  limited  

•  Storage  not  considered  or  understood  but  recognised  as  expensive  

•  Reliability  is  paramount  !!!  

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Technology Potential

Hybridisable  technologies  will  be  the  early  movers…  

Wind  • Commercial  • High  Poten0al  

Hydro  • Commercial  • Limited  Poten0al    

Solar  PV  (&  CSP)  • Commercial  • High  Poten0al  

Wave  &  Tidal  • Pre-­‐commercial  • Limited  Poten0al  

Bioenergy  • Commercial  • Moderate  Poten0al  

Geothermal  • (Pre)Commercial  • Limited  Poten0al  

Heading goes here Off-Grid Market Research Observations

•  IntegraTon  •  Knowledge  gap  exists  &  niche  

companies  are  dominate  on  smaller  projects  

•  Intermiiency  and  reliability  concerns  has  limited  ‘penetra0on’  

•  Loca0on,  weather,  access,  resources  and  transporta0on  are  a  challenge  

•  Market  is  inquisi0ve  yet  cau0ous    

•  Economic  downturn  has  affected  aktude  to  risk,  investment  and  non-­‐core  ac0vi0es  

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Heading goes here Mining Process and Energy Intensity

Primary  energy  consumpTon  in  the  mining  sector  

Source: BREE 2012

Source:  BREE  2012  

Trends  in  intensity  by  sector  

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Exploration

Extraction • Blasting • Drilling • Digging • Ventilation • Dewatering

Materials Handling • Diesel • Electric

Beneficiation & Processing • Crushing • Grinding • Seperation

Transportation

Hour  of  Day  

The Industrial Hybrid Challenge

 -­‐    

 2    

 4    

 6    

 8    

 10    

 -­‐    

 5    

 10    

 15    

 20    

 25    

 30    

 35    

1   2   3   4   5   6   7   8   9   10   11   12  

GWh  

Globa

l  Mean  Solar  Expo

sure  Mj  

Heading goes here Hybrid Integration and Reliability

Reliability  Probability  

Scale  

ConfiguraTon  &  PenetraTon  

Use  of  Storage  OpTmised  Control  System  

PredicTon  

Cost  /  Benefit  

Define

1

Optimise

3 Analyse & Re-

Analyse

2 Execute

4 Early Evaluation Examine Options Optimise the Solution Inform the Decision

Heading goes here Balancing Intermittency

Flow    Baieries  

Lithium    Ion  

Advanced  Lead  Acid  

Fly-­‐Wheels  

1kW    10kW      100kW              1MW          10MW            100MW  1GW  

Month  

Day  

Hour  

Minute  

Second  

Sodium  Sulphur  

Discharge  Tim

eframe  

Graph  Source:  EPRI  (2010),  “Electricity  Energy  Storage  Technology  Op0ons”,  Bradbury  (2010),  “Energy  Storage  Technology  Review”  

Power  Quality   Grid  Support  /  Balancing  

Bulk  Power  

CAES  

Super-­‐capacitors  

85-­‐100%   70-­‐85%   45-­‐70%  Efficiency  

Pumped  Storage  

Op0ons  include;  

•  Energy  Storage  (see  graphic)  

•  Load  or  Demand  Side  Management  of  non-­‐cri0cal  loads  

•  Curtailing  the  renewable  genera0on  to  maintain  redundancy  and/or  spinning  reserve  

•  Load  dump  

•  Reduce  renewable  penetra0on  level  

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 -­‐        

 20    

 40    

 60    

 80    

 100    

 120    

 140    

 160    

 180    

 200    

30   28   26   24   22   20   18   16   14   12   10   8   6   4  

Solar  CAPEX  of  $3200/kW  

ConTnue  using  diesel  (Diesel  SRMC  <  Renewable  LCOE  )  

CleanOpt Hybrid Analysis – Diesel + Solar

Carbon  price  

Delivered

 diesel  price  (cen

ts  per  litre)  

Project  lifeTme  (years)  

100cpl  &    10yr  Mine  Life  or  Payback  

$3.2m/MW  

1MW  PV  installa0on  equates  to  ~  $5m  Fuel  

Cost  Savings  over  10years  

100cpl  &    6yr  Mine  Life  or  Payback  

$2.2m/MW  

AECOM  does  not  take  any  responsibility  for  investment  decisions  made  from  this  analysis  

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Off-­‐Grid  Australia  

213  

 1,067    

0   200   400   600   800   1000   1200  

MW's  

Source:  AECOM,  BREE,  Geoscience  Australia  2013  Data  may  have  anomalies,  esAmates  are  arbitrary  &  AECOM  does  not  accept  any  liability  for  any  decisions  made  on  the  basis  of  this  informaAon.  Market  Poten0al:  Low  Penetra0on  equates  to  50%  feasible,  20%diesel  &  5%gas  of  exis0ng  capacity  and  High  Penetra0on  equates  to  80%  feasible,  50%diesel  &  20%gas)    of  exis0ng  Capacity  

Remote Renewable Market Potential

~$2Bn  Market  

~$600m  

Heading goes here Heading goes here Conclusion

•  Integra0ng  renewables  with  exis0ng  energy  sources  makes  sense  

•  Mining  &  industry  is  a  natural  fit  for  renewables  

•  Focus  on  opera0ng  cost  

•  Fuels  costs  are  vola0le    

•  Business  case  is  viable  in  some  cases  without  a  subsidy  

•  Currently  low  penetra0on  

•  Technical  challenges  can  be  overcome  whilst  maintaining  reliability

•  Funding  is  now  available    

Heading goes here Contact Details

Craig  Chambers  Market  Sector  Director  –  Power  Genera0on  

D  +61  2  8934  1060        

M  +61  419  992  380  

Craig.Chambers@aecom.com