Diversity to shore up power supply

Business News
Thursday 13/3/2008 Page: 22

MORE than $6 billion is likely to be invested in Western Australia's energy infrastructure over the next four years to meet growing demand for electricity and improve reliability. The biggest investment will be the progressive upgrade of Western Power's electricity distribution and transmission network. Western Power is currently spending $686 million on electricity upgrades across the South West Interconnected System, and has committed to spending a further $2.63 billion over the next four years.

Dampier Bunbury Pipeline (DBP), which owns the Dampier to Bunbury natural gas pipeline, has been another big investor in energy infrastructure. During the past three years, it has committed to spending $1.35 billion expanding the pipeline's capacity, and is planning to proceed with further staged expansions. In the power generation sector, Griffin Group, NewGen Power and aspiring new players such as Aviva Corporation and Eneabba Gas are aiming to expand their operations in WA.

Government-owned power generator Verve Energy will also be making substantial investments in its existing infrastructure, but is constrained at the moment from pursuing any expansion opportunities. The state government requires Verve to cap its generating capacity at 3,000 megawatts to allow private sector competitors to get established in the WA market.

The power generation sector has witnessed profound change since the year 2000, and more change is expected. A total of 12 new power stations have been committed to be built since 2000, with 11 of these privately owned. Seven of the 12 are powered by gas or gas-and-oil, two by wind, two by coal, and one by biomass (forest waste products). The 12 new power stations will add 2,390 megawatts to WA's electricity grid, partly offset by last year's retirement of old units at Muja and the planned retirement of units at kWinana.

NewGen Power, a joint venture between Queensland company ERM Power and investment group Babcock and Brown, is planning to build a 330MW gas-fired plant at Neerabup. This follows its construction, currently under way, of a 320MW gas-fired plant at Kwinana. Gas has been the preferred fuel for new power stations but that is likely to change, in light of the tripling in gas prices over the past three years and the difficulty in obtaining firm, long-term supply contracts.

That has favoured Griffin Group, which is close to completing its first 200MW coal-fired power station at Collie, is proceeding with a second 200MW unit after signing a longterm supply contract with electricity retailer Synergy in December, and has plans for a third unit. Another group hoping to take advantage of high gas prices is Aviva Corporation, which is aiming to build a 400MW coal-fired power station in the Mid West.

Aviva is designing its coal-fired power station so that it can utilise `clean coal' technology that is still in development. Also in the Mid West is Eneabba Gas, which has plans for a 168MW gas-fired power station. Aviva and Eneabba Gas are aiming to supply some of the large iron ore projects planned for the Mid West region. The first of these, Gindalbie Metals' Karara iron ore project, selected Verve Energy as its electricity supplier after a competitive tender last year.

Several renewable energy projects, including biomass plants and wind farms, are also planned. WA Biomass is hoping to develop its 40MW biomass unit at Manjimup, after community opposition drove it away from its preferred site at Bridgetown, while SpiritWest BioEnergy is planning a 46MW biomass plant at Neerabup.