Origin mulls its green energy options
Origin Energy says it is weighing numerous options to extend its energy portfolio, with significant gas and wind opportunities in Australia, along with geothermal projects in New Zealand, Indonesia and Chile, and its proposed massive hydro-electric scheme in PNG.
Origin is one of the big three electricity retailers whose reactions to the federal government’s carbon pricing regime and clean energy package – whether to invest in new baseload gas plants to substitute for coal, or in renewable energy projects to meet the 20 per cent renewable energy target, or both - will be closely watched, not just by politicians, but also those in the clean energy industry, who are wondering whether the company will develop its own projects or sign purchase agreements with third parties.
According to documents released with its annual results on Tuesday, Origin says it has a pipeline of 3,670MW of gas fired generation, and around 3,400MW in its wind farm portfolio.
The gas options include the expansion of current sites, developing new sites, and converting open cycle plants (peaking power stations) to baseload power (combined cycle). These sites include Mortlake in Victoria, Spring Gully and Darling Downs in Queensland, Kerrawary in NSWand Quarantine in South Australia.
Origin has a portfolio of up to 587 MW of wind farm generation that has already been approved, with a further 300MW in advance planning and permitting stage. A further 1,200 MW of wind farms are in the planning and permitting stage and around 1,300 MW are undergoing feasibility studies.
One of its most advanced projects is Stockland Hill, near Ballarat in Victoria, which will have a capacity of at least 300MW and up to 450MW and a capacity factor of 43 per cent. (Its recently completed Cullerin Hill project near Yass is operating at a 41 per cent capacity). Origin says it is still working on optimizing the wind farm design given the constraints of the planning permit, which allows for up to 157 turbines.
In other technologies, Origin says it is continuing to investigate geothermal development options within Australia and internationally. It says it is still assessing the results of the fracture stimulation achieved at its Jolokia 1 well in the Cooper Basin, and the potential for use as an underground heat exchange. Habanero 4, another appraisal well, will be drilled this financial year. Origin announced in February that it would write $206 million off the value of its joint venture with Geodynamics because of delays in development.
It is also evaluating the results from the nearby “shallows” venture, which was targeting geothermal resources in shallower sedimentary aquifers. The partners found plenty of heat, but the “permeability”, which governs how easily that heat can be extracted, was not as good as expected.
However, Origin says the first well in its joint venture in Indonesia are likely to be drilled this year. Origin is partnering India’s Tata Power Co in a project in northern Sumatra which could have a capacity of 300MW, and favourable tariffs offered by the Indonesian government. It said development could begin late in 2012.
It is also pursuing projects in Chile, where it has a 40 per cent interest in Energia Andina, which it describes as the country’s leading geothermal exploration company with a portfolio of eight geothermal exploration projects.
And it is continuing discussions with the PNG, Australian and Queensland governments over its proposed 1,800MW run-of-river hydro project at Wabo I PNG. It says a comprehensive review of environmental, sociological and engineering aspects is expected to be completed in 2012 with a final investment decision on the project expected to be made in 2013.
Elsewhere, Origin says its Transform Solar joint venture with Micron, which is looking at the development of solar PV modules based around the Sliver technology is acquired several years ago, is progressing, with the first 20MW production line at Micron’s US facilities due to be completed soon, with a decision to expand capacity to 50MW or more expected in the current financial year. The first sales of the product in Australia are expected by the end of this year.
Origin says its rooftop solar business has surged in the past year, and underpinned growth in its “non commodity business” which more than doubled revenue to $445 million. It added 36,840 rooftop PV installations during the fiscal year, compared to 6,449 a year earlier, and its cumulative installed capacity since 2009 is now more than 70MW.
Origin is considered to be the biggest installer of rooftop solar PV in the country. “Despite regulatory uncertainty surrounding the industry,” it says. “ the increasingly competitive cost of solar compared to grid power will ensure strong ongoing contribution from this business. “ However, it said in its notes to accounts that the tariffs in NSW and Queensland did not reflect the costs associated with the Small-Scale Renewable Energy Scheme.
Mild weather caused an overall slump in electricity demand, down 8 per cent on a like for like basis. Tariffs rose, primarily because of increased network charges, although wholesale prices were considering lower, averaging around $32/MWh in fiscal 2011, continuing a steady decline in recent years.
In 2007 and 2008, average wholesale prices on the National Electricity Market were more than $50/MWh. According to Origin, the NEM prices for the latest year averaged between $20/MWh and $30/MWh in all months except for January and February, when average wholesale prices jumped to between $60 and 80/MWh because of floods and cyclones in Queensland, and hot weather in southern states.
Comments on this article
energy
I just love Google, apart from the huge profits it makes, it invests billions in providing free services to the consumer like google maps or youtube. And they also invest a lot in a greener future from solar panels to marine generators for sale the research they fund is essential.
Clean Energy Jobs in the USA
Peter and Rod, it is curious that you both strive to dismiss the employment potential of new industries. Are you also both anti-mining which employs 200,000 but is destroying the manufacting base ( employing 1,000,000 ) in Australia ?
This is a snapshot of "green jobs and prospects in the USA:
http://www.fastcodesign.com/1664826/infographic-of-the-day-do-green-jobs...
Clean Energy Jobs .. Ohhh Yeahhh
Michael, this is of course all about definition. Given that gas generation already exists and much is planned with or without a carbon tax, it is diificult to count any of these as new clean energy jobs.
To get to the 34,000 one has to assume that the estimates include the 4 new federal government bureaucracies, the associated state bureaucrats, the media consultants used at a federal level in driving the message in this area, the people in the finance industry who will be involved with the carbon trading scheme, the teams of planners/lawyers/administrators who will need to fight to get every project through the planning/approval/resident backlash/NIMBY processes, the new customs staff who will be handling the importation of just about every component of new renewables projects, etc etc.
What we won't see is anything in manufacturing or any real design inputs. Off the shelf equipment requires very little of this.
Real jobs will be few and far between in the clean energy sector.
Origin will win because they are now one of three key players and will have enormous potential to improve their profits as generation costs continue to explode with the move to renewables.
Renewables may need gas, but not an equal amount
The following report from the Aus Energy Market Operator, AEMO, indicates that South Australia now gets 21% of its energy requirements from Wind Power. That's up from 6% just 5 years ago.
http://www.aemo.com.au/planning/SASDO2011/sasdo.html
That's come about due to an increase of 762MW in installed capacity of wind. During that same time, they've only built about 200MW more of Open Cycle Gas Turbines, which are used as peaking plant. During this same time, peak demand has also increased by 368MW. So while it isn't clear how much of the extra gas generation is due to increased wind penetration, or how much is due to an increase in peak electicity demand, one thing that is clear is the amount of OCGT required to supplement the intermittant nature of wind is far less than installed wind capacity.
It should be noted that as a result of all this wind generation, the emission intensity of South Australia's electricity generation has reduced by 23%.
It's hard to see why anyone would call this wind generation capacity a liability.
Green jobs and contradictions
@ Peter Winch: Firstly, there are plenty of analyses and estimates confirming future employment. Why, you even nominated one yourself: cleaning mirrors.
Secondly, you are using a false economy to assess renewable energy. For a fiar comparission ALL the costs should be included. The biggest problem with coal and gas, is that the largest component ( health costs from air polluton ), water pollution, water overuse, agricultural damage and loss and also climate change / ocean acidification are currently externalised from most analyses.As are the fossil fuel subsidies.
When the FULL cost of energy generation is compared, coal is the most expensive ( mid range ~ 25c / Kwh in th USA ) wind is the cheapest with solar PV rapidly also much cheaper.
It is also clear that a mix of renewable energy including solar thermal generation with storage, can supply round the clock electricity without fossil fuels.
Renewables the way forward
Roger Clifton,
While wind and solar require back up, so does conventional coal and gas fired generators. All systems are subject to availability limits due to maintenance or break down. While wind and solar are generating, they are displacing gas consumption and reducing emissions. Your final sentence is a nonsense.
Peter Winch,
Why wouldn't renewables provide comparable job opportunities to coal/gas in the operation and maintenance activities? And what about the transition to a 'smart' power grid and all the technology opportunities that go with that?
The climate Institute estimates 34000 clean energy jobs by 2030.
http://www.climateinstitute.org.au/images/cleanenergyjobs/cleanenergyjob...
... because renewables needs gas
Gas needs renewables because renewables needs gas. Sure, wind or solar can provide electricity intermittently. But it can only save the cost of the gas unused by the backup generators. When you are also the gas wholesaler, that isnt much saving.
However, once some renewables have been mandated by a political process, practicality requires that they must be backed up by gas generation of equal or greater capacity. Once the gas infrastructure and plant is permanently in place, the renewables supply has served its purpose and is then a liabilty.
Wholesale Australian Electricity prices -40% since 2008?!
Giles
You write that Origin's wholesale electricity prices are considerably lower in 2010/11, averaging $32/MWh. This is half the wholesale cost of electricity in Europe. Further, Origin states this is down 40% on Australian wholesale prices 3 years ago. So why are Australian retail electricity prices rising some 20% this year? The gouging of Australian consumers reflects mismanagement of the grid and an ineffective regulatory framework.
not BIG jump to figure future energy cost increaes
At $32/MWh for generation, it is easy to understand what will happen when renewable anything turns up wanting more than $100/MWh, and depending upon your poison, multiple hundreds /MWh.
Its not only the climate at risk its the Australian economy and quality of life if "not economically ready" technologies are chosen. Its that simple.
Nowhere has anyone explained where the so called jobs are in renewables. Other than a year or two construction and a huge amount of foreign equipment purchase, and a little bit of metal bashing here, its all over. The idea that many people will work in the renewable energy operations is a sad joke. The capital costs are bad enough already, and expected teams of glass washers to be gainfully employed washing mirrors is nonsensical.
The jobs need to come from benefits elsewhere in the economy - but how is that possible if you have huge energy bills?
Origin's role is to supply energy and like banks, the economy is more than just finance or energy, everything must grow in a balanced way. Raises my dander when I hear the renewables market is booming as if its a panacea for a two speed economy. Good luck to Origin, its what they do and are just responding to the cultural and political luncay and doing it as well as they can, Doesn't make the lunacy right though and cagily they have plenty of irons in the fire -solar, wind, rocks and good ole tried and true ..gas.