OVERCOMING BARRIERS TO GEOTHERMAL ENERGY PROJECTS FOR QUEENSLAND COUNCILS

Transcription

1 OVERCOMING BARRIERS TO GEOTHERMAL ENERGY PROJECTS FOR QUEENSLAND COUNCILS DANIEL WESTALL DIRECTOR, ENERGY PROJECTS ALL-ENERGY 2015

2 AGENDA Introduction to LGIS Geothermal energy projects Overcoming the barriers Accessing hot water Connecting power plants to consumers Funding local government projects Summary

3 About LGIS Established 2005 now wholly owned by Local Government Association of Queensland We work with local government and have strong links with State Government and industry in three key areas: Addressing market failure, as found within the Energy industry, with a range of solutions including Geothermal, Solar, Energy from Waste and Energy Efficiency Providing Advisory Services across a range of key areas including Asset Management and Project Management of works programs Supporting the introduction of Innovation, such as the use of Drones and Smart Technology

4 GEOTHERMAL ENERGY PROJECTS

5 How Can Geothermal Energy Benefit Councils? Capacity to substantially reduce annual energy costs Protects against future power price rises Proven and reliable technology to improve supply efficiency and reliability Scalable solution allowing design flexibility and staging Not weather dependent: runs 24/7 Reduces need to cool bore water Environmentally sustainable with no emissions Huge potential for future revenue generation

6 Australian Geothermal Energy Potential Remains Untapped with only 80 kw of current production (Geothermal Power Generation in the World Update Report, Ruggero Bertani, World Geothermal Congress 2015)

7 Geothermal Resources and Applications Direct Use <75 o C water for spas, space heating, aquaculture Binary Systems o C temp water from sedimentary aquifers used for energy generation Flash systems >160 o C water makes steam for energy generation Enhanced Geothermal Systems (EGS) Water heated by hot fractured rock for energy generation

8 Opportunities on the Great Artesian Basin DNRM Bore Reports confirm availability of artesian water of suitable temperatures and flow rates for geothermal energy throughout Qld LGIS holds geothermal exploration permits for numerous Qld towns across the GAB LGIS in discussion with ARENA for funding to off-set costs and reduce risk for councils currently part of the LGIS geothermal program

9 LGIS Geothermal Energy Program Procurement of Winton geothermal power plant to commence October with construction to be completed by September $19M savings over 20 years Concept design studies underway for Charleville and Longreach Feasibility reviews completed or in progress for 10 other towns Potential projects for another 8 councils, with 20 year savings between $5M and $15M each Total potential program savings approximately $150M

10 BARRIER 1 AVAILABLE BORE WATER TEMPERATURE

11 Water Temperature Increases With Depth

12 Organic Rankine Cycle Geothermal Energy Plant Low temp organic refrigerant can operate with bore temperature as low as 75 deg C Increased water temperature = improved efficiency Sealed binary system guarantees water supply safety Heat removed from water supply

13 Solutions for Increasing Bore Water Temperature Water from current bores <75 o C in all except two towns Drill to access deeper, hotter aquifers new bores (cost now about $350/m) extend existing Hybrid renewable energy systems solar thermal pre-heating bore water solar PV powered pre-heating bore water solar PV powered chillers for cooling water Project specific solutions required

14 Geothermal System With Enhanced Operational Efficiency

15 BARRIER 2 POWER DISTRIBUTION

16 Distribution Network Challenges Regional Qld power distributed by Ergon Energy Using Ergon network for distribution options not supported by current legislation: charge for carrying geothermal power (tolling), deduct power generated from power used (virtual net metering) reduced tariffs to account for power supplied (network charges) Renting space on Ergon network - available but highly expensive and carries unacceptable risk Feed-in tariff - available but not economically viable at 4c/kWh offered by Ergon

17 Winton Private Network Solution Private 4.4 km underground network solution connects major Council assets to power plant Low maintenance and reliable distribution Retain Ergon connection to assets as back-up and top-up Potential to use Ergon assets where Council is the only customer (blue and green lines) Economically viable

18 Private Network Connection Behind the meter connection to assets Zero Export Device prevents power flowing into Ergon network No interference with Ergon activities or private network

19 Expansion to Additional Consumers Communities need sustainable, reliable and potentially low-cost energy for development/survival Extension of private network to all consumers not practical or economically viable Current University of Technology Sydney virtual trials of network charges and VNM include Ergon as a project partner LGIS working with Ergon and Qld Government to facilitate supply to community through connection to the Ergon network

20 BARRIER 3 PROJECT FUNDING

21 Example Preliminary Cost Benefit Analysis Costs and benefits forecast by Qld Treasury Corp model 1,000 MWh annual consumption $300,000 annual electricity usage charges Cumulative 20 year electricity cost $13 million (excluding infrastructure charges) Geothermal power plant operating costs are annual maintenance and 5 yearly refurbishment Income from large scale energy certificates (LGC) available for 15 years (average $54,000 pa) Total electricity cost savings over 20 years of $12 million Capital investment est. $2-3 million including 250 kw power generation plant and 4 km private underground network Payback period of 6-8 Years

22 Funding Option 1 Council Owned Infrastructure Project fully funded by Council Council savings of $12 million over 20 years Project is scalable and can be staged, with base load power only in initial stage (approx $150,000 pa saving) Council receives all LGC income Council may qualify for additional grant funding (eg ARENA) Council can control cash-flow through debt funding Extending plant life will increase returns to Council (20 years minimum life)

23 Funding Option 2 Joint Venture Investment Project funded by JV between Council and LGIS (and possible third party) Council executes a PPA with the JV entity at agreed discount rate JV entity responsible for all O&M costs Council funding is reduced - prorata equity contribution only Grant funding and LGC income are shared Council receives additional lease income from JV entity Council receives additional income from shareholder dividend Council may use financing to further reduce equity exposure

24 Funding Option 3 Power Purchase Agreement (PPA) LGIS owns and operates geothermal plant LGIS supplies power to Council under 20 year PPA Council receives guaranteed discount (eg 10%) on energy charges for 20 years Council receives additional lease income from LGIS Council carries no risk No upfront capital contribution required by Council No additional O&M costs for council

25 Summary LGIS working with councils to develop geothermal energy solutions that will provide reliable, renewable energy supplies and save councils tens of millions. Technical, regulatory and financial barriers to uptake of the program are being overcome through developing drilling and hybrid renewable energy solutions to increase available bore water temperatures designing private underground networks and electrical connections to provide cost effective alternative to Ergon distribution network offering alternative means of funding to reduce council capital costs and risk where required