bob graham-queensland government owned generators comparative study

12th Annual Queensland State Energy Outlook Conference

Queensland Government-owned Generators

– A comparative study

18 September 2008

12TH ANNUAL QUEENSLAND STATE ENERGY OUTLOOK CONFERENCE

, 18 September 2008 McLennan Magasanik Associates

Acknowledgements

The author, Bob Graham, would like to acknowledge the assistance of Grethe Casson

of MMA, and several reviewers within MMA and in other corporations for their

comments.

Melbourne Office Brisbane Office Canberra Office 242 Ferrars Street GPO Box 2421 Tel: +61 2 6257 5423 South Melbourne Vic 3205 Brisbane Qld 4001 Tel: +61 3 9699 3977 Tel: +61 7 3100 8064 Fax: +61 3 9690 9881 Fax: +61 7 3100 8067 Email: [email protected] ACN: 004 765 235

Website: www.mmassociates.com.au ABN: 33 579 847 254


18 September 2008 McLennan Magasanik Associates i

TABLE OF CONTENTS

EXECUTIVE SUMMARY _________________________________________________________I

1 INTRODUCTION_________________________________________________________ 1

2 CS ENERGY ______________________________________________________________ 2

2.1 Current Portfolio _____________________________________________________ 2

2.2 Future Projects_______________________________________________________ 2

2.3 Historical financial performance________________________________________ 3

2.4 Market position ______________________________________________________ 3

2.5 Market access________________________________________________________ 7

2.6 Fuel _______________________________________________________________ 13

2.7 Water supply _______________________________________________________ 14

2.8 Greenhouse Intensity ________________________________________________ 14

3 STANWELL _____________________________________________________________ 17

3.1 Current Portfolio ____________________________________________________ 17

3.2 Future Projects______________________________________________________ 17

3.3 Historical financial performance_______________________________________ 18

3.4 Market position _____________________________________________________ 18

3.5 Market access_______________________________________________________ 19

3.6 Fuel _______________________________________________________________ 22

3.7 Water supply _______________________________________________________ 22


4 TARONG ENERGY ______________________________________________________ 24

4.1 Current Portfolio ____________________________________________________ 24

4.2 Future Projects______________________________________________________ 24

4.3 Historical financial performance_______________________________________ 24

4.4 Market position _____________________________________________________ 24

4.5 Market access_______________________________________________________ 26

4.6 Fuel _______________________________________________________________ 29

4.7 Water supply _______________________________________________________ 29


5 CONCLUSIONS _________________________________________________________ 31


18 September 2008 McLennan Magasanik Associates ii

LIST OF TABLES

Table 1-1 Government-owned generator plant ____________________________________ i

Table 2-1 CS Energy plant_____________________________________________________ 2

Table 2-2 Historical financial performance_______________________________________ 3

Table 2-3 Selected CS Energy coal suppliers ____________________________________ 13

Table 2-4 Greenhouse gas emissions factors for combustion of fuels________________ 14

Table 2-5 Emissions intensity of CS Energy NEM plant___________________________ 15

Table 3-1 Stanwell plant _____________________________________________________ 17

Table 3-2 Emissions intensity of Stanwell plant__________________________________ 22

Table 4-1 Tarong Energy plant________________________________________________ 24

Table 4-2 Tarong power stations’ fuel supply options ____________________________ 29

Table 4-3 Emissions intensity of Tarong Energy plant ____________________________ 30

LIST OF FIGURES

Figure 1-1 Return on assets ____________________________________________________ ii

Figure 1-2 Return on equity ____________________________________________________ ii

Figure 1-3 Cost-based merit order curve _________________________________________iii

Figure 1-4 Cost-based merit order curve @ $20/tonne CO2-e ________________________iii

Figure 1-5 Cost-based merit order curve @ $50/tonne CO2-e ________________________iv

Figure 1-6 Long term dispatch trends of major Queensland power stations ___________iv

Figure 1-7 Generation-weighted pool price vs capacity factor _______________________ v

Figure 1-8 Location of major plant in transmission network_________________________vi

Figure 1-9 Collinsville MLF (North Queensland) _________________________________ vii

Figure 1-10 Stanwell MLF (Central Queensland) __________________________________ vii

Figure 1-11 Swanbank B MLF (South-east Queensland) ____________________________viii

Figure 1-12 Tarong MLF (South-west Queensland) ________________________________viii

Figure 1-13 Greenhouse intensity 2007/08_________________________________________ ix

Figure 2-1 Cost-based merit order curve _________________________________________ 4

Figure 2-2 Typical weekly dispatch pattern of Callide B (from 20 Jan 2008)____________ 5

Figure 2-3 Typical weekly dispatch pattern of Callide Power Plant (from 23 Mar 2008) _ 5


18 September 2008 McLennan Magasanik Associates iii

Figure 2-4 Long term dispatch trends of major Queensland power stations ___________ 6

Figure 2-5 Generation-weighted pool price vs capacity factor _______________________ 6

Figure 2-6 CS Energy plant in transmission network _______________________________ 8

Figure 2-7 Collinsville MLF ____________________________________________________ 9

Figure 2-8 Callide B MLF _____________________________________________________ 10

Figure 2-9 Callide Power Plant MLF____________________________________________ 10

Figure 2-10 Swanbank B MLF __________________________________________________ 11

Figure 2-11 Swanbank E MLF __________________________________________________ 11

Figure 2-12 Kogan Creek MLF__________________________________________________ 12

Figure 2-13 Cost-based merit order curve @ $20/tonne CO2-e _______________________ 15

Figure 2-14 Cost-based merit order curve @ $50/tonne CO2-e _______________________ 16

Figure 3-1 Typical weekly dispatch pattern of Stanwell (from 17 Feb 2008)___________ 18

Figure 3-2 Typical weekly dispatch pattern of Gladstone (from 20 Jan 2008)__________ 19

Figure 3-3 Stanwell plant in transmission network _______________________________ 20

Figure 3-4 Stanwell MLF______________________________________________________ 21

Figure 3-5 Gladstone MLF ____________________________________________________ 21

Figure 4-1 Typical weekly dispatch pattern of Tarong (from 20 Jan 2008) ____________ 25

Figure 4-2 Typical weekly dispatch pattern of Tarong North (from 20 Jan 2008) ______ 25

Figure 4-3 Tarong Energy plant in transmission network __________________________ 26

Figure 4-4 Wivenhoe MLF ____________________________________________________ 27

Figure 4-5 Tarong MLF_______________________________________________________ 28

Figure 4-6 Tarong North MLF _________________________________________________ 28


, 18 September 2008 McLennan Magasanik Associates i

EXECUTIVE SUMMARY

This report summarises key features of the Queensland Government-owned generators

with an emphasis on commercial and market aspects, including the plant dispatched

through Power Purchase Agreements.

Details of the plant are shown in Table 1-1.

Table 1-1 Government-owned generator plant

CS Energy-controlled plant MWMarket

Share Region Fuel

Fuel

Ownership Fuel Supply

Callide B 700 Central Qld Coal 3rd party Conveyor 2km

50% Callide Power Plant 450 Central Qld Coal 3rd party Conveyor 2km

Kogan Creek 724 SW Qld Coal Own fuel Conveyor 4km

Collinsville PPA 187 North Qld Coal 3rd party Conveyor 1km

Swanbank B 480 SE Qld Coal 3rd party Truck/Rail 5-200km

Swanbank E 350 SE Qld Gas 3rd party Pipeline 500km

NEM Total 2,891 26%Mica Creek 325 NW Qld Gas 3rd party Pipeline 700km

Total 3,216

Stanwell-controlled plant MWMarket

Share Region Fuel

Fuel


Barron Gorge 60 North Qld Hydro 3rd party River

Gladstone PPA 1,680 Central Qld Coal 3rd party Rail 500km

Kareeya 88 North Qld Hydro River

Koombooloomba 7 North Qld Hydro River

Wivenhoe small hydro 5 SE Qld Hydro River

Mackay GT 34 North Qld Liquid 3rd party Truck 400km

Stanwell 1,440 Central Qld Coal 3rd party Rail 400km

Total 3,314 30%

Tarong Energy-controlled plant MWMarket

Share Region Fuel

Fuel


Tarong 1,400 SW Qld Coal Own fuel 1-16 km Conveyor

Tarong North 50% PPA 443 SW Qld Coal Own fuel 1-16 km Conveyor

Wivenhoe 500 SE Qld PS Hydro Local

Total 2,343 21%

All are pursuing development projects, but CS Energy is considered most likely to lower

their carbon intensity in the near term.

Financial performance is summarised in Figure 1-1 and Figure 1-2 with the effects of the

drought on Tarong clearly shown.


, 18 September 2008 McLennan Magasanik Associates ii

Figure 1-1 Return on assets

Return on assets

-5%

0%

5%

10%

15%

20%

25%

2004/05 2005/06 2006/07

CS Energy Stanwell Tarong Energy

Figure 1-2 Return on equity

Return on equity

-5%

0%

5%

10%

15%

20%

25%

2004/05 2005/06 2006/07


The market position based on publicly reported generating costs is shown in Figure 1-3,

which shows Tarong and Kogan Creek in strong base-load positions, with Stanwell

having significant pricing power.


, 18 September 2008 McLennan Magasanik Associates iii

Figure 1-3 Cost-based merit order curve

Queensland Thermal Merit Order including GEC, NGAC & MLF effects

$-

$10

$20

$30

$40

$50

$60

$70

$80

- 2,000 4,000 6,000 8,000 10,000 12,000

Cumulative MW

$/MWh sent out

Tarong CS Energy

Privately-controlled

Stanwell

Ergon

Swanbank E

Using a very approximate analysis, this curve would change as per Figure 1-4 and Figure

1-5 under two carbon price scenarios.

Figure 1-4 Cost-based merit order curve @ $20/tonne CO2-e

Queensland Thermal Merit Order including GEC, NGAC* & MLF effects

@$20/tonne CO2-e

$-

$10

$20

$30

$40

$50

$60

$70

$80

- 2,000 4,000 6,000 8,000 10,000 12,000

Cumulative MW

$/MWh sent out

Tarong

CS Energy

Privately-controlled Stanwell

SRMC NE CCGT SEQ

LRMC NE CCGT SEQ

Swanbank E

*NGAC to be discontinued


, 18 September 2008 McLennan Magasanik Associates iv



@$50/tonne CO2-e

$-

$10

$20

$30

$40

$50

$60

$70

$80

- 2,000 4,000 6,000 8,000 10,000 12,000

Cumulative MW

$/MWh sent out

Tarong

CS EnergyPrivately-controlled

Stanwell

SRMC NE CCGT SEQ

LRMC NE CCGT SEQ

Swanbank E


The long term capacity factors of Tarong and Gladstone have increased over time, while

Callide B has fallen as shown in Figure 1-6.

Figure 1-6 Long term dispatch trends of major Queensland power stations

Dispatch of major Queensland power stations

before and after the NEM

40%

50%

60%

70%

80%

90%

100%

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Financial Years

CF

Tarong

Callide B

Stanwell

Gladstone

NEM from 1999 onwardsMerit Order Dispatch prior to 1998Tarong drought effect notincluded

Stanwell being

commissioned


, 18 September 2008 McLennan Magasanik Associates v

The generation-weighted pool price1 of major stations vs capacity factor for the last three

years is shown in Figure 1-7.

Figure 1-7 Generation-weighted pool price vs capacity factor

2005-06, 2006-07 and 2007-08 Financial Years

$25

$30

$35

$40

$45

$50

$55

$60

30% 40% 50% 60% 70% 80% 90% 100%

Capacity Factor

Generator Weighted Average Price

Callide Pow er Plant Callide B Gladstone Stanw ell Tarong Tarong North Average prices

$52.34 $52.14

$28.12

Average Prices

(2007-08)(2006-07)

(2005-06)

While lower capacity factors may ideally be offset by higher pool prices, this trend is

really only seen in 2005/06. The drought and other forced outages have affected this

outcome.

As shown in Figure 1-8, from a network point of view, Barron Gorge, Kareeya and

Collinsville are well located in North Queensland, and Swanbank and Wivenhoe in south-

east Queensland.

1 This is similar to price received, except for the effects of parasitic load and MLF, which have not been applied.


, 18 September 2008 McLennan Magasanik Associates vi

Figure 1-8 Location of major plant in transmission network

•

Collinsville

Stanwell

Callide B

Callide Power

Kogan Creek

Swanbank B & E

Wivenhoe

Barron Gorge

Kareeya

Gladstone

Tarong

Tarong North


, 18 September 2008 McLennan Magasanik Associates vii

Trends in selected but indicative marginal loss factors are shown in Figure 1-9 to Figure

1-12. Higher marginal loss factors show more favourable locations.

Figure 1-9 Collinsville MLF (North Queensland)

Collinsville PS MLF

0.900

0.950

1.000

1.050

1.100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Financial Year Ending June

MLF

Linear Trend

Figure 1-10 Stanwell MLF (Central Queensland)

Stanwell PS MLF

0.900

0.950

1.000

1.050

1.100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend


, 18 September 2008 McLennan Magasanik Associates viii

Figure 1-11 Swanbank B MLF (South-east Queensland)

Swanbank B PS MLF

0.900

0.950

1.000

1.050

1.100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend

Figure 1-12 Tarong MLF (South-west Queensland)

Tarong PS MLF

0.9

0.95

1

1.05

1.1

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend

While south-west Queensland marginal loss factors are not too unfavourable, increasing

generation capacity in this area is likely to make future marginal loss factors somewhat

volatile.


, 18 September 2008 McLennan Magasanik Associates ix

By purchasing its own fuel supply, Tarong Energy has reduced its fuel supply risk and

dispatch risk to the lowest risk position compared to the other generators. Others have

partially implemented this strategy.

Stanwell is in the lowest risk position concerning water supply.

CS Energy has achieved the lowest greenhouse intensity thanks to its gas-fired generation

from Swanbank E, while Stanwell has had some benefit from its hydro plant. This does

not include any carbon off-sets.

Figure 1-13 Greenhouse intensity 2007/08

Portfolio Greenhouse Intensity

0.80

0.81

0.82

0.83

0.84

0.85

0.86

0.87

0.88

0.89

0.90


t CO2-e /MWh so

To sum up the commercial and market strengths of the three portfolios, CS Energy would

be the lowest risk, Stanwell the largest market position, and Tarong the lowest marginal

cost.


, 18 September 2008 1 McLennan Magasanik Associates

1 INTRODUCTION

This paper summarises key features of the Queensland Government-owned Corporations

whose primary business is power generation (GOGs). These organisations control 77% of

the generating capacity in the Queensland Region of the NEM. The focus is on

commercial and market aspects of the organisations rather than on engineering assets or

human resources. Plant which a GOG does not own, but has the right to dispatch through

a Power Purchase Agreement (PPA), are therefore included in its portfolio and this

analysis.

Information has been sourced from their web-sites1 and annual reports, unless referenced

otherwise. Any opinions and judgements are those of the author. The author has worked

extensively for NRG Energy Inc., the part-owner and operator of Gladstone power station,

as an employee and now as a consultant, and in the state-owned electricity industry

before that.

1 http://csenergy.com.au/ , http://www.stanwell.com/ , http://www.tarongenergy.com.au/


18 September 2008 2 McLennan Magasanik Associates

2 CS ENERGY

2.1 Current Portfolio

CS Energy has a widely dispersed portfolio of 3,216 MW of plant across Northern, Central

and Southern Queensland, providing a strong locational diversity for physical risks. It

has fuel diversity across coal and gas.

Characteristics of its plant are summarised in Table 2-1.

Table 2-1 CS Energy plant

CS Energy-controlled plant MWMarket

Share Region Fuel

Fuel


Callide B 700 Central Qld Coal 3rd party Conveyor 2km

50% Callide Power Plant 450 Central Qld Coal 3rd party Conveyor 2km

Kogan Creek 724 SW Qld Coal Own fuel Conveyor 4km

Collinsville PPA 187 North Qld Coal 3rd party Conveyor 1km

Swanbank B 480 SE Qld Coal 3rd party Truck/Rail 5-200km

Swanbank E 350 SE Qld Gas 3rd party Pipeline 500km

NEM Total 2,891 26%Mica Creek 325 NW Qld Gas 3rd party Pipeline 700km

Total 3,216

CS Energy trades the output of Collinsville into the NEM under a PPA which lasts until

20162.

2.2 Future Projects

In the past, CS Energy has successfully developed and constructed Kogan Creek power

station, the Swanbank E Combined Cycle Gas Turbine (CCGT) power station and the

Callide Power Project as part of a joint venture.

Currently it “is completing technical and economic feasibility work for Swanbank F”, another

CCGT unit. It has also executed a farm-in agreement with Metgasco3 for future gas

supplies from New South Wales.

In conjunction with AGL, CS Energy is reviewing expansion opportunities for Mica Creek.

From 2009, CS Energy intends to trial an oxy-firing demonstration plant at its de-

commissioned Callide A site. This is an option for increasing the concentration of CO2 in

power station waste gases to make it more cost-effective to extract, by burning the coal in

“a mixture of oxygen and recirculated flue gas” instead of air. There are many parties

involved as partners, and the project is partially federally funded. It is not public what

rights to any new intellectual property would accrue to CS Energy.

Both the Swanbank and Kogan Creek sites are understood to have the potential for further

greenfield expansion.

2 NRG Energy Inc. Annual Report 2000, www.NRGEnergy.com 3 http://www.csenergy.com.au/_cmsimages/csenergy/pdfs/2006/061213%20metgasco%20farmin.pdf



2.3 Historical financial performance

According to a study by the Productivity Commission4, CS Energy has made a return on

assets of 5.5% over three recent years, and a return on total equity of 11.9%. This equity

return was the highest of the three GOGs. Details are shown in Table 2-2.

Table 2-2 Historical financial performance

Return on assets

2004/05 2005/06 2006/07 Average

Qld Pool Price 28.96$ 28.12$ 52.14$ 36.41$

CS Energy 4.5% 5.2% 6.9% 5.5%

Stanwell 3.6% 7.6% 13.6% 8.3%

Tarong Energy 9.0% 7.3% -0.1% 5.4%

Average 5.7% 6.7% 6.8% 6.4%

Return on total equity

2004/05 2005/06 2006/07 Average

Qld Pool Price 28.96$ 28.12$ 52.14$ 36.41$

CS Energy 8.3% 8.1% 19.2% 11.9%

Stanwell 4.1% 8.4% 21.8% 11.4%

Tarong Energy 12.1% 9.7% 2.4% 8.1%

Average 8.2% 8.7% 14.5% 10.5%

2.4 Market position

CS Energy has some of the lowest variable cost plant in Queensland in Kogan Creek,

Callide B and 50% of the Callide Power Project. Other CS Energy plants are relatively

higher cost.

As seen in Figure 2-1, this results in CS Energy having plant spread intermittently across

the cost-based merit order curve.

4 Financial Performance of Government Trading Enterprises 2004–05 to 2006–07, July 2008,

http://www.pc.gov.au/__data/assets/pdf_file/0003/82227/gte-2006-07.pdf



Figure 2-1 Cost-based merit order curve

Queensland Thermal Merit Order including GEC, NGAC & MLF effects

$-

$10

$20

$30

$40

$50

$60

$70

$80

- 2,000 4,000 6,000 8,000 10,000 12,000

Cumulative MW

$/MWh sent out

Tarong CS Energy

Privately-controlled

Stanwell

Ergon

Swanbank E

The above costs are based on NEMMCO’s 2008 transmission planning assumptions5, and

are adjusted for transmission Marginal Loss Factors (MLF). These costs are used because

they are publicly available and have been consulted on. MMA has its own views on

generator costs which may differ in some cases from those above.

A typical week’s dispatch pattern for Callide B power station and the Callide Power Plant

are shown in Figure 2-2 and Figure 2-3.

5 2008 ANTS Consultation: Final Report, http://www.nemmco.com.au/psplanning/410-0099.pdf Table 46, adjusted for

MLF



Figure 2-2 Typical weekly dispatch pattern of Callide B (from 20 Jan 2008)

Callide B

-

100

200

300

400

500

600

700

1 49 97 145 193 241 289

Half-hours of the week starting Sunday

MW

$-

$20

$40

$60

$80

$100

$120

$140

$/MWh

MW Generated

Price

Figure 2-3 Typical weekly dispatch pattern of Callide Power Plant (from 23 Mar 2008)

Callide Power Plant

-

100

200

300

400

500

600

700

800

900

1 49 97 145 193 241 289


MW

$-

$20

$40

$60

$80

$100

$120

$140

$/MWh

MW Generated

Price

Over the long term, Callide B has fallen from capacity factors in excess of 90% to closer to

80% in recent years, as shown in Figure 2-4.



Figure 2-4 Long term dispatch trends of major Queensland power stations

Dispatch of major Queensland power stations

before and after the NEM

40%

50%

60%

70%

80%

90%

100%

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Financial Years

CF

Tarong

Callide B

Stanwell

Gladstone

NEM from 1999 onwardsMerit Order Dispatch prior to 1998Tarong drought effect notincluded

Stanwell being

commissioned

The generation-weighted pool price6 of major stations vs capacity factor for the last three

years is shown in Figure 2-5.

Figure 2-5 Generation-weighted pool price vs capacity factor

2005-06, 2006-07 and 2007-08 Financial Years

$25

$30

$35

$40

$45

$50

$55

$60

30% 40% 50% 60% 70% 80% 90% 100%

Capacity Factor

Generator Weighted Average Price

Callide Pow er Plant Callide B Gladstone Stanw ell Tarong Tarong North Average prices

$52.34 $52.14

$28.12

Average Prices

(2007-08)(2006-07)

(2005-06)

6 This is similar to pool price received, except for the effects of parasitic load and MLF, which have not been applied.



Three general observations can be made. Average prices were significantly higher in the

last two years, compared to before the drought. Kogan Creek’s generation has had the

effect of reducing the capacity factor of all other plant in 2007/08. If a generator can

choose the timing of its outages, for a given year, a lower capacity factor would be

expected to result in a higher generation-weighted price, which is most clearly seen in

2005/06. Forced outages and contract positions would affect this pattern.

Callide Power Plant recovered from a low dispatch year in 2005/06. While 2006/07 seems

more normal between these two plants, in 2007/08, Callide Power Plant had a lower

capacity factor and price than Callide B.

2.5 Market access

2.5.1 Location in network

The location of CS Energy’s plant in the Queensland transmission network is shown in

Figure 2-6, courtesy of Powerlink7. This flow diagram is of the summer of 2010/11 after

some years of load growth. Collinsville and Swanbank are well located in power

importing areas and are unlikely to be constrained down in their generation. The larger

Callide stations and Kogan Creek are less well located from a market access viewpoint.

7 Powerlink 2008 Annual Planning Report,

http://www.powerlink.com.au/data/portal/00005056/content/56727001214541091625.pdf



Figure 2-6 CS Energy plant in transmission network

2.5.2 Marginal loss factors

Transmission Marginal Loss Factors in the NEM affect the pool revenue of a power station

and its ability to trade contracts at the regional reference node. The more local supply

exceeds local demand, the lower the MLF will be and the lower the energy market

revenue available to the plant. Local supply includes local generation and imports by

transmission.

CS Energy has a widely varying exposure to this issue because of the varying location of

its NEM power stations in Queensland, Collinsville, Callide B, Callide C, Swanbank B and

E, and Kogan Creek.

•

Collinsville

Callide B

Callide Power

Kogan Creek

Swanbank B & E



2.5.3 North Queensland

Figure 2-7 shows the historical trend in MLF for its north Queensland power station,

Collinsville, as published by NEMMCO since 1998/99.

Figure 2-7 Collinsville MLF

Collinsville PS MLF

0.900

0.950

1.000

1.050

1.100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend

Historically, this has generally been above 1.00 and quite favourable. However while

north Queensland’s load is growing strongly, more generation has also been locating

there, bringing MLFs down. Transmission reinforcement from central Queensland is also

lowering MLFs. However further reductions are considered less likely without a fuel

source for new high capacity factor plant.

2.5.4 Central Queensland

Figure 2-8 and Figure 2-9 show the historical trend in MLF for its central Queensland

power stations, Callide B and Callide Power Plant.



Figure 2-8 Callide B MLF

Callide B PS MLF

0.900

0.950

1.000

1.050

1.100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend

Figure 2-9 Callide Power Plant MLF

Callide Power Plant MLF

0.900

0.950

1.000

1.050

1.100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend

These values are low and trending worse. Given the ample coal reserves in Central

Queensland the long-term trend may remain unfavourable, but may also be mitigated by

the commissioning of new stations in South-West Queensland.



2.5.5 South-east Queensland

Figure 2-10 and Figure 2-11 show the historical trend in MLF for its south-east

Queensland power stations, Swanbank B and Swanbank E.

Figure 2-10 Swanbank B MLF

Swanbank B PS MLF

0.900

0.950

1.000

1.050

1.100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend

Figure 2-11 Swanbank E MLF

Swanbank E PS MLF

0.900

0.950

1.000

1.050

1.100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend



These are stable, favourable values representing their relative proximity to Queensland’s

regional reference node at South Pine.

2.5.6 South-west Queensland

Figure 2-12 shows the recent MLFs for its new south-west Queensland power station,

Kogan Creek.

Figure 2-12 Kogan Creek MLF

Kogan Creek PS MLF

0.900

0.950

1.000

1.050

1.100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

The MLF is currently not too unfavourable. In the future, a high volatility is considered

likely for MLFs in this region. For some future time periods, MLFs are likely to decrease

due to the following factors:

• The commissioning of Braemar 2 and Darling Downs power stations will further

increase power flows from south-west Queensland to the Brisbane region, reducing

these MLFs.

• Any further development of gas fired intermediate generation in south-west

Queensland would also reduce MLFs. While it is possible that intermediate gas fired

generation will be sited closer to Brisbane or in central Queensland, south-west

Queensland remains a favourable area for generation development.

There are also some factors which may cause MLFs to increase. These are:

• The augmentation of transmission capacity from Millmerran and Tarong to Brisbane

and the Gold Coast should reduce losses for a given power flow and provide some

MLF relief for a period until transmission flows build up to rated levels again.



• Any augmentation of the QNI capacity to increase power flows south may also

enhance the MLF for south-west Queensland as the power flow from Tarong to

Brisbane is reduced. This would also mitigate the impact of additional capacity built

in the Bulli Creek/Braemar area.

A likely future for this region is regular decreases in MLF with increasing generation,

relieved from time to time with increases resulting from augmented transmission

capacity, leading to a volatile future for south-west Queensland MLFs.

2.6 Fuel

2.6.1 Coal

Collinsville is supplied from an adjacent mine owned by Xstrata coal. Except for local

physical supply issues, this will ensure fuel supply security. The terms of Collinsville’s

PPA are not public concerning energy pricing or fuel pricing from the mine to Collinsville

power station.

The Callide stations are supplied with 5.8 – 6.0 million tpa8 from an adjacent mine owned

by Anglo Coal. Except for local physical supply issues, this also ensures fuel supply

security. The terms of the fuel pricing from the mine to the Callide power stations are not

public.

Swanbank B’s coal supply of approximately 1 million tpa is trucked “and railed from mines

in South-east Queensland, including Oakleigh, Jeebropilly and Acland.”

Kogan Creek power station is supplied with 2.8 million tpa from its adjacent mine also

owned by CS Energy. Except for local physical supply issues, this will ensure fuel supply

security, and relative security of fuel pricing.

Some details of CS Energy’s coal suppliers are shown in Table 2-3.

Table 2-3 Selected CS Energy coal suppliers9

Distance

(km) Delivery Ownership

Size

(Measured

Open cut

Thermal Mt)

Gross

Specific

Energy

(MJ/kg ad)

%

Moisture

(ad) % Ash

Ash Fusion-

Deformation

C

Hardgrove

Grindability

Callide Mine

Callide

Southern 2 Conveyor Anglo Coal 225 20.8 10.9 18.9 1,334 85

Kogan Creek mine

Raw coal 4 Conveyor CS Energy 310 21.1 8.4 26.6 1,320 40

Except for Kogan Creek CS Energy remains exposed to future long term volatility in coal

prices.

8 Terms of reference for an Environmental Impact Statement Boundary Hill Mine Extension Project, Part A,

http://www.epa.qld.gov.au/register/p02396aa 9 Coal specifications from Queensland Coals 2003



2.6.2 Gas

Swanbank E’s gas requirements of approximately 18 PJpa are initially being “supplied from

the Scotia gas field near Wandoan via the Roma to Brisbane Pipeline”. Other gas supply deals

have been done with Arrow Energy10 for the Kogan North field, Santos, QGC, BHPBilliton

and the Metgasco deal metioned in Section 2.2.

Mica Creek’s gas requirements of approximately 21 PJpa are “conveyed from the southwest

Queensland gas fields, via the Carpentaria gas pipeline”.

Except for any gas farm-in arrangements, CS Energy is exposed to future long term

volatility in gas prices.

2.7 Water supply

Swanbank power stations are supplied from Wivenhoe dam, the Warrill Scheme and

recycled water. The last option was developed in response to the recent drought, and has

been operational since August 200711. Wivenhoe supplies most of south-east

Queensland’s water. As a combined cycle plant, Swanbank E has a lower water usage

than conventional coal-fired plant.

The Callide stations are supplied from Awoonga dam. Awoonga dam has been affected

by drought previously.

Kogan Creek is supplied from local bores, and being dry-cooled has very low water usage.

2.8 Greenhouse Intensity

2.8.1 Greenhouse intensity of fuel burnt

The following emissions factors were used from the National Greenhouse and Energy Reporting (Measurement) Technical Guidelines 2008 v1.012 published by the Department of Climate Change.

Table 2-4 Greenhouse gas emissions factors for combustion of fuels

Combustion of fuels only

Method 1, All gases

kg Co2-e/GJ Reference

Black coal 88.43 Table 2.2.2

Natural gas 51.33 Table 2.3.2

Diesel fuel 69.50 Table 2.4.2A

Emissions from production of fuels were not addressed, and hydro is assumed to produce negligible emissions.

10 http://www.csenergy.com.au/_cmsimages/csenergy/pdfs/pre2005/0412csearrowrelease_001.pdf 11 http://www.westerncorridor.com.au/Media/media_releases/Purified_recycled_water_read_for_swanbank.pdf 12 http://www.climatechange.gov.au/reporting/guidelines/pubs/nger-technical-guidelines.pdf



2.8.2 Emissions from NEM power stations

The greenhouse intensity of CS Energy’s NEM power stations and portfolio was derived

for the 2007/08 year. The Heat Rates are based on NEMMCO’s 2008 transmission

planning assumptions13. These Heat Rates are used because they are publicly available

and have been consulted on. MMA has its own views on generator Heat Rates which may

differ in some cases from those below.

Table 2-5 Emissions intensity of CS Energy NEM plant

CS Energy-controlled plant MW Fuel

Emissions

Intensity kg

CO2-e/GJ

Heat Rate

GJ/MWh

so

Emissions

Intensity t CO2-

e/MWh so

2007/08

Capacity

Factor

Callide B 700 Coal 88.43 9.97 0.882 75%

50% Callide Power Plant 450 Coal 88.43 9.23 0.816 72%

Kogan Creek 724 Coal 88.43 9.47 0.838 71%

Collinsville 187 Coal 88.43 13.00 1.149 47%

Swanbank B 480 Coal 88.43 11.50 1.017 49%

Swanbank E 350 Gas 51.33 7.06 0.362 63%

NEM Total 2,891 0.83

At 0.83 t CO2-e / MWh, the portfolio has the lowest intensity of any of the GOGs. This ignores any carbon off-set activities, and will be even lower if Swanbank F proceeds.

Figure 2-13 shows the impact of a carbon cost of $20/t CO2-e on the cost-based merit order curve. This is simply added to current costs and does not include considerations such as the removal of NGACs, increasing gas and other costs, changes in Tarong’s marginal costs and peak/off-peak roles.



@$20/tonne CO2-e

$-

$10

$20

$30

$40

$50

$60

$70

$80

- 2,000 4,000 6,000 8,000 10,000 12,000

Cumulative MW

$/MWh sent out

Tarong

CS Energy

Privately-controlled Stanwell

SRMC NE CCGT SEQ

LRMC NE CCGT SEQ

Swanbank E


13 2008 ANTS Consultation: Final Report, http://www.nemmco.com.au/psplanning/410-0099.pdf Table 46, Thermal

efficiencies converted to Heat Rates



As its costs rise less than other plant, Swanbank E’s position improves to third position. The short-run marginal cost of a new entrant CCGT plant in South-east Queensland, based on NEMMCO’s assumptions, is also shown. Such a new entrant plant would be dispatched before most plant in Queensland at this carbon price.

For such a new entrant plant, NEMMCO assume fixed costs of $115 / kWpa. At a conservatively assumed capacity factor of 60%, this translates to an additional $22/MWh in fixed costs, and a long run marginal cost of $46/MWh. Most plants would still be returning significant contributions to fixed costs in this scenario.

MMA has its own views on generator costs which may differ in some cases from those above.

Figure 2-14 similarly shows the impact of a carbon cost of $50/t CO2-e on the cost-based merit order curve.



@$50/tonne CO2-e

$-

$10

$20

$30

$40

$50

$60

$70

$80

- 2,000 4,000 6,000 8,000 10,000 12,000

Cumulative MW

$/MWh sent out

Tarong

CS EnergyPrivately-controlled

Stanwell

SRMC NE CCGT SEQ

LRMC NE CCGT SEQ

Swanbank E


Swanbank E moves to be the lowest cost thermal plant and only highly efficient coal-fired plant would make any contributions to fixed costs from a long run marginal cost of $57/MWh. Some plant may still be viable with reduced dispatch.

This is intended to be a simple illustration and detailed market modelling would provide more useful analysis.



3 STANWELL


Stanwell has the largest portfolio of 3,314 MW in a widely dispersed portfolio of plant,

although its major plant is all located in Central Queensland. It has fuel diversity across

coal and hydro, although once again its major plant is all coal-fired. Since 2007 it controls

the dispatch of the Gladstone power station, which is owned by a consortium of private

owners including NRG Energy, Inc., Rio Tinto Alcan and several Japanese companies.

This power purchase agreement ends in 202914.


Table 3-1 Stanwell plant

Stanwell-controlled plant MWMarket

Share Region Fuel

Fuel


Barron Gorge 60 North Qld Hydro 3rd party River

Gladstone PPA 1,680 Central Qld Coal 3rd party Rail 500km

Kareeya 88 North Qld Hydro River

Koombooloomba 7 North Qld Hydro River

Wivenhoe small hydro 5 SE Qld Hydro River

Mackay GT 34 North Qld Liquid 3rd party Truck 400km

Stanwell 1,440 Central Qld Coal 3rd party Rail 400km

Total 3,314 30%

3.2 Future Projects

In the past Stanwell has developed various renewable energy projects, which have since

been sold off. It also initiated the ZeroGen clean coal project, which was then sold to the

Queensland government, although Stanwell remains as a major service provider to the

project.

Stanwell are seeking to secure “access to a coal resource in the Central Queensland region for

the development (in conjunction with joint venture partners) of a new baseload power station.”

Stanwell has an “energy park” adjacent to the power station, where they wish to attract

customers for off-grid energy supply, steam and other utilities.

Its recent purchase of a stake in Blueenergy15, an oil and gas development company, is in

line with a stated initiative of pursuing gas-based opportunities.

The Stanwell site may offer some greenfield expansion potential.

14 1994 Australian Trade Practices Reporter, Comalco Limited and Comalco Aluminium Limited (1994) ATPR (Com) 50-142

s4.32 15 http://www.blueenergy.com.au/




According to the Productivity Commission study, Stanwell has made a return on assets of

8.3% over three recent years, and a return on total equity of 11.4%. This return on assets

was the highest of the three GOGs. Details are shown in Table 2-2.

3.4 Market position

3.4.1 Merit order cost curve

As seen in Figure 2-1, Stanwell controls the relatively high cost coal-fired plant in

Queensland in the Stanwell and Gladstone power stations. While this is not a low cost

base for a portfolio, the large combined capacity gives Stanwell significant control over

prices for a large section of the daily price curve.

3.4.2 Weekly Dispatch

A typical week’s dispatch pattern for Stanwell power station is shown in Figure 3-1.

Figure 3-1 Typical weekly dispatch pattern of Stanwell (from 17 Feb 2008)

Stanwell

-

200

400

600

800

1,000

1,200

1,400

1 49 97 145 193 241 289


MW

$-

$20

$40

$60

$80

$100

$120

$140

$/MWh

MW Generated

Price

A typical week’s dispatch pattern for Gladstone power station is shown in Figure 3-2.



Figure 3-2 Typical weekly dispatch pattern of Gladstone (from 20 Jan 2008)

Gladstone

-

200

400

600

800

1,000

1,200

1,400

1,600

1 49 97 145 193 241 289


MW

$-

$20

$40

$60

$80

$100

$120

$140

$/MWh

MW Generated

Price

3.4.3 Capacity Factors

Stanwell power station often had units in commissioning phases until the NEM was

introduced, but as shown in Figure 2-4 has maintained approximately 80% capacity factor

since.

The privately-owned Gladstone power station’s dispatch has been controlled by Enertrade

from 1994 until 2007, and by Stanwell since then. As seen in Figure 2-4, the introduction

of the NEM in 1998 has seen an increase in long term average dispatch from Gladstone

power station from the low 50% region to 60% since, while the average capacity factors of

the State-owned major generators have actually fallen slightly.

As shown in Figure 2-5, for each year, Gladstone has lower capacity factors and higher

prices than Stanwell.

3.5 Market access


The location of Stanwell’s major plant in the Queensland transmission network is shown

in Figure 3-3.



Figure 3-3 Stanwell plant in transmission network


Figure 3-4 and Figure 3-5 show the historical trend in MLF for Stanwell’s central

Queensland power stations, Stanwell and Gladstone.

Barron Gorge

Kareeya

Stanwell

Gladstone



Figure 3-4 Stanwell MLF

Stanwell PS MLF

0.900

0.950

1.000

1.050

1.100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend

Figure 3-5 Gladstone MLF

Gladstone PS 275 kV MLF

0.900

0.950

1.000

1.050

1.100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend

These values are low but stable. Further discussion of central Queensland MLFs is in

Section 2.5.4.



The north Queensland hydro stations have higher values but have a smaller revenue

impact than these two.

3.6 Fuel

Stanwell’s coal requirements of three to four million tpa are delivered by rail from several

mines in Central Queensland, including some ownership and on-sale arrangements.

Curragh North is often mentioned however other suppliers have not been outlined

recently. In 2003, suppliers were Blackwater, Burton, Cook, Curragh and Ensham16.

Gladstone’s coal requirements are similarly delivered by rail from several mines in

Central Queensland, but current details are not public. From the same source in 2003,

suppliers were Blackwater, Callide, Curragh, Ensham, Gregory-Crinum, Jellinbah East

and Rolleston.

Except for Curragh North and any other coal ownership arrangements, Stanwell remains

exposed to future long term volatility in coal prices.

3.7 Water supply

Gladstone’s cooling water supply is from the ocean, and process water is supplied from

Awoonga dam. Awoonga dam has been affected by drought previously, but a proposed

link to the Fitzroy river would improve this significantly.

Stanwell’s water supply is from a barrier on the Fitzroy river. Due to its large catchment,

the Fitzroy river represents a very secure water supply. Stanwell’s coal-fired stations

therefore have the most secure water supply of GOG coal-fired power stations.


The greenhouse intensity of Stanwell’s NEM power stations and portfolio was derived for

the 2007/08 year, although long term average capacity factors were used for

Koombooloomba and Wivenhoe small hydro.

Table 3-2 Emissions intensity of Stanwell plant

Stanwell-controlled plant MW Fuel

Emissions

Intensity kg

CO2-e/GJ

Heat Rate

GJ/MWh

so

Emissions

Intensity t CO2-

e/MWh so

2007/08

Capacity

Factor

Barron Gorge 60 Hydro 0 50%

Gladstone 1,680 Coal 88.43 10.23 0.904 57%

Kareeya 88 Hydro 0 64%

Koombooloomba 7 Hydro 0 27%

Wivenhoe small hydro 5 Hydro 0 30%

Mackay GT 34 Liquid 69.50 12.86 0.894 0%

Stanwell 1,440 Coal 88.43 9.89 0.875 77%

Total 3,314 0.85

At 0.85 t CO2-e / MWh, the portfolio benefits significantly from the hydro generation. This ignores any carbon off-set activities.

16 The Queensland Coal Industry Review 2002-2003



As seen in Figure 2-13 and Figure 2-14, Stanwell’s major thermal plant still seem viable at $20 /t CO2-e, but are very marginal at $50 /t CO2-e. The hydro plants experience a windfall gain.



4 TARONG ENERGY


Tarong has a concentrated presence in southern Queensland with its major plant all on the

one site. This proved vulnerable in the recent drought. It has fuel diversity across coal

and hydro, although its major plant is all coal-fired and the hydro plant is pumped-

storage.


Table 4-1 Tarong Energy plant

Tarong Energy-controlled plant MWMarket

Share Region Fuel

Fuel


Tarong 1,400 SW Qld Coal Own fuel 1-16 km Conveyor

Tarong North 50% PPA 443 SW Qld Coal Own fuel 1-16 km Conveyor

Wivenhoe 500 SE Qld PS Hydro Local

Total 2,343 21%

4.2 Future Projects

In the past, Tarong Energy has successfully developed the Tarong North project, and also

various renewable energy projects which have since been sold off. Recent business

development has concentrated on securing its fuel supply in purchasing the Meandu mine

and Kunioon deposit. Other future plans are not clear.

The Tarong site could offer greenfield expansion potential to a sixth unit.


According the Productivity Commission study, Tarong Energy has made a return on

assets of 5.4% over three recent years, and a return on total equity of 8.1%. These returns

were heavily adversely affected by the recent drought. Tarong Energy had the highest

returns of the three GOGs on both measures prior to the drought. Details are shown in

Table 2-2.

4.4 Market position

As seen in Figure 2-1, Tarong Energy has its thermal plant concentrated in a low cost

portion of the cost-based merit order curve. Wivenhoe is available for short term back-up

to the limit of its pumped storage capacity which is reportedly 10 hours17.

A typical week’s dispatch pattern for Tarong power station and the Tarong North power

station are shown in Figure 2-2 and Figure 2-3. Tarong’s capacity was effectively limited

by water restrictions to 700 MW during this time.

17 http://seqwater.com.au/content/standard.asp?name=WivenhoePowerStation



Figure 4-1 Typical weekly dispatch pattern of Tarong (from 20 Jan 2008)

Tarong

-

200

400

600

800

1,000

1,200

1,400

1 49 97 145 193 241 289


MW

$-

$20

$40

$60

$80

$100

$120

$140

$/MWh

MW Generated

Price

Figure 4-2 Typical weekly dispatch pattern of Tarong North (from 20 Jan 2008)

Tarong North

-

50

100

150

200

250

300

350

400

450

500

1 49 97 145 193 241 289


MW

$-

$20

$40

$60

$80

$100

$120

$140

$/MWh

MW Generated

Price

Excluding the effect of the drought, over the long term, Tarong has actually increased its

capacity factors to in excess of 90% in recent years, as shown in Figure 2-4.

As shown in Figure 2-5, this was seriously reversed for the last two years, with capacity

factors falling both years for both stations. In 2006/07 for Tarong, the generation-

weighted price was well below the year’s average price. This appears to be due to high



generation early in the year and reduced generation due to water restrictions during the

higher priced periods later in the year.

4.5 Market access


The location of Tarong Energy’s major plant in the Queensland transmission network is

shown in Figure 4-3.

Figure 4-3 Tarong Energy plant in transmission network

Wivenhoe is well located in south-east Queensland, however the Tarong site in south-

west Queensland has previously been subject to constrained access to the node. Recent

Tarong

Tarong North

Wivenhoe



transmission upgrades as well as the presence in the portfolio of Wivenhoe close to the

node, help to mitigate this risk.


4.5.2.1 South-east Queensland

Figure 4-4 shows the historical trend in MLF for Tarong Energy’s south-east Queensland

power station, Wivenhoe.

Figure 4-4 Wivenhoe MLF

Wivenhoe PS MLF

0.9

0.95

1

1.05

1.1

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend

These are stable, favourable values representing Wivenhoe’s relative proximity to

Queensland’s regional reference node at South Pine.

4.5.2.2 South-west Queensland

Figure 4-5 and Figure 4-6 show the historical trend in MLF for Tarong Energy’s south-

west Queensland power stations, Tarong and Tarong North.



Figure 4-5 Tarong MLF

Tarong PS MLF

0.9

0.95

1

1.05

1.1

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend

Figure 4-6 Tarong North MLF

Tarong North PS MLF

0.9

0.95

1

1.05

1.1

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


MLF

Linear Trend

These values are somewhat low but relatively stable. Further discussion of factors

affecting south-west Queensland MLFs is in Section 2.5.6.



4.6 Fuel

Tarong, and latterly Tarong North, have historically been supplied with 6.5 to 7.2 Mtpa18

of coal from the Meandu Creek mine previously owned by Rio Tinto Coal Australia. To

fuel both these power stations well into the future (“at least 20 years”), a new source of coal

was required.

Three sources were assessed over a long period and recently Tarong Energy chose to

purchase the existing Meandu Creek mine, and the Kunioon deposit from Rio Tinto Coal

Australia, and develop the Kunioon deposit for its new fuel source. Details of these and

the other two major contenders are detailed in Table 4-2.

Table 4-2 Tarong power stations’ fuel supply options19

Distance

(km) Delivery Ownership

Size

(Measured

Open cut

Thermal Mt)

Gross

Specific

Energy

(MJ/kg ad)

%

Moisture

(ad) % Ash

Ash Fusion-

Deformation

C

Hardgrove

Grindability

Meandu

Creek

(existing) 1 Conveyor

Previously

Rio Tinto

now Tarong

Energy 364 21.1 5.5 30.1 1,485 53

Kunioon

(selected)

(Specifi-

cations

inferred) 16

New

conveyor

Previously

Rio Tinto

now Tarong

Energy 214 19.30 35.0

New

Acland 71

New

conveyor New Hope 242 28.90 3.7 13.0 1,572 40

Glen Wilga 150 New rail

Tarong

Energy 132 25.60 5.6 14.8 1,387 35

This decision provides Tarong Energy with full control and pricing security over its fuel

supply in the long term. Ownership of the mines also reduces the stations’ marginal costs

to that required to extract and ship each tonne of coal, plus royalties. This will increase

dispatch, and the security of dispatch planning. Whether it proves a low cost strategy

depends on the price paid, coal available and further mine development and operating

costs.

4.7 Water supply

Tarong’s water supply is from the Boondooma and Wivenhoe dams, which have recently

been heavily affected by drought. Boondooma also supplies local graziers, and Wivenhoe

supplies most of south-east Queensland. Since June 2008, Tarong has received recycled

water from the Western Corridor Recycled Water Project20. The Wivenhoe power station

is also supplied by Wivenhoe dam.

18 Initial Advice Statement, Kunioon Project, April 2007

http://www.epa.qld.gov.au/publications/p02408aa.pdf/Initial_Advice_Statement_Kunioon_Project_/_Parsons_Brinckerhoff_Australia_Pty_Limited.pdf

19 Coal specifications from Queensland Coals 2003, except for Kunioon from Metallica Minerals website: http://www.metallicaminerals.com.au/pdf/04_july_06_metallica_kingaroy_coal_resource_upgrade_asx_release.pdf

20 http://www.westerncorridor.com.au/Media/media_releases/DP_release_-_Water_to_Tarong.pdf




The greenhouse intensity of Tarong Energy’s power stations and portfolio was derived for

the 2007/08 year. Wivenhoe was assumed to use a weighted average supply from the

Tarong Energy thermal plant, and have an 80% energy efficiency in its

pumping/generation cycle.

Table 4-3 Emissions intensity of Tarong Energy plant

Tarong Energy-controlled plant MW Fuel

Emissions

Intensity kg

CO2-e/GJ

Heat Rate

GJ/MWh

so

Emissions

Intensity t CO2-

e/MWh so

2007/08

Capacity

Factor

Tarong 1,400 Coal 88.43 9.94 0.879 39%

Tarong North 443 Coal 88.43 9.11 0.806 72%

Wivenhoe 500 PS Hydro 1.065 3%

Total 2,343 0.86

At 0.86 t CO2-e / MWh, the portfolio has the highest emissions intensity of the GOGs. This ignores any carbon off-set activities.

As seen in Figure 2-13 and Figure 2-14, Tarong Energy’s thermal plant still seem viable at $20 /t CO2-e, but Tarong is very marginal at $50 /t CO2-e.



5 CONCLUSIONS

CS Energy has a diversified and lower risk portfolio of plant from all three perspectives of

physical location, fuel options and cost curve. It has partially secured its fuel risk, has

significant transmission risk exposure, but has the best portfolio and most proven

development capabilities for gas-fired generation. This will be valuable in a high carbon

cost environment.

Stanwell has the largest portfolio, but its portfolio is largely based on central Queensland

coal-fired generation. It has partially secured its fuel risk, but has significant transmission

risk exposure. It has proven development capabilities for renewable energy projects. In a

high carbon cost environment, these projects will become more economically viable.

Tarong Energy has a low marginal cost advantage but is largely concentrated on the one

site, and based on south-west Queensland coal-fired generation. It has secured its fuel

risk and dispatch risk but still has some transmission risk exposure. Its future strategy for

a high carbon cost environment is currently unclear.

bob graham-queensland government owned generators comparative study

Documents

cs energy plant

v figure

greenhouse intensity

tarong mlf

market position

market access

location of major plant

water supply