Planning a renewable energy journey in the Pacific
Like many stories of island journeys, the pursuit of high levels of renewable energy in the Pacific involves good planning and skilled navigation to stay safe and on course, and holds the promise of rich rewards.
Throughout the Pacific, island communities are embracing ambitious renewable energy targets , many as high as 100% renewables over the next decade or two. This isn’t surprising, given that these islands are already experiencing significant impacts of climate change, and recognise the environmental benefits of reducing or replacing carbon-intensive diesel power generation.
There are also sound economic benefits to reducing reliance on expensive diesel fuel, which remains the single largest expense to generate power in these remote locations.
The answer to meeting targets, while also reducing carbon emissions and costs, lies in power systems that use only renewable energy. However, transitioning to higher levels of renewable energy in power systems requires confidence that the renewables can provide the energy security, self-sufficiency and system stability required by these remote communities.
Renewable energy technologies may pose some challenges for reliability and quality of power supply, but remedies can be found in enabling technologies. In an isolated power system, matching the renewable technologies with the right enabling technologies at the right moment needs detailed planning.
Every journey needs a map
As each island community’s renewable energy journey is different, careful strategic planning is needed to choose the right solution, to integrate it in the right way, and to be able to scale it up effectively to meet increasing renewable targets and electricity demands.
Click image to view infographic.
Entura has been helping a number of Pacific island communities embark on their renewable energy journeys. Through this experience, we’ve developed a map of the key stages of the journey:
Stage 1: Planning – In this stage, we explore the status of the current power generation assets, determine what needs to be improved, understand the renewable resource, and investigate the cost of the renewable energy journey and options for funding it.
Stage 2: Introduction of renewables – In this stage, we begin by harvesting the ‘low-hanging fruit’ – introducing the renewables that we can without enablers or network upgrades, and without changing the control philosophy. At this stage, the renewables are perceived as mostly load offset, and could reach up to 15–20% of the island’s total energy demand. Few enabling technologies are necessary at this stage.
Stage 3: Expansion of renewables and introduction of enablers – As we progress beyond 15 to 20% renewable penetration, we need to stop, review and adjust course if necessary. To progress towards 35% renewable energy contribution to the power system demand, we need to adjust the system’s operating philosophy to integrate large-scale renewables, and introduce the appropriate enabling technologies.
Stage 4: Expansion of renewables and enablers – This stage marks the largest change in how an island power system is operated. As we move beyond 50% renewables, again we should stop, review and adjust course where needed. At this stage, power systems become very complex to operate and maintain as high renewable penetration can only be achieved through a delicate balance of multiple new enabling technologies working in perfect sync. The island community could find itself investing more in enabling technologies than in renewable energy at this stage, but this could result in a higher renewable energy contribution. It is also crucial at this point to consider changes to energy delivery, relationships with customers and to the utility’s procedures, and to building its personnel capabilities.
Stage 5: Approaching 100% renewables – As most of the major changes to the power system are introduced in the earlier stages, Stage 5 is about finishing off the journey. The ‘last renewable mile’ is usually the most expensive one, so this last stage is all about identifying enabling technologies and techniques that can bridge the gap between 70–80% and 100% renewable contribution, without significant increases in the cost of electricity.
Yap’s journey to 25% renewables
Entura has helped several island communities plan and begin their renewable journeys. One example is the island of Yap in the North Pacific.
We’ve been working with the Yap State Public Service Corporation to reduce Yap’s heavy reliance on imported diesel for power generation, and to enable the island to rely as much as possible on indigenous, renewable resources through an integrated high-penetration renewable energy remote area power system (RAPS).
After decades of operating on diesel fuel only, the system will soon reach 25% renewable energy contribution. Once completed, the project aims to enable Yap to experience up to 70% instantaneous renewable penetration when conditions allow, and to deliver an annual fuel saving of up to US$500 000.
Back in 2014, Entura helped the Yap community plan their renewable journey by embarking on Stage 1. Since then, Entura has helped the Yap utility to reach Stage 2 by integrating small amounts of solar and by building its capability to install and maintain solar arrays.
The Yap renewable energy development project is now entering Stage 3, in which a new breed of high-renewable-supporting diesel generators are being installed, major works are being carried out to install three 275 kW cyclone-proof wind turbines, an island-wide solar-controlling communications network for 500 kW distributed solar PV is being rolled out, and a centralised control system is being installed.
Once these activities are completed, the Yap power system will be firmly in Stage 3, and ready for future stages in Yap’s renewable journey.
On course for 100% renewables in the Cook Islands
The Cook Islands is a group of 15 small islands in the South Pacific, to the north-east of New Zealand. Entura is helping the Cook Islands on its journey to reduce reliance on diesel fuel and achieve greater energy security, self-sufficiency and sustainability through developing renewable power systems on six islands. The country’s goal is to generate electricity from renewable energy sources on all islands by 2020.
The islands of Mauke, Mitiaro, Mangaia and Atiu have small average loads of around 100kW each. After careful planning, upgrades to the distribution grid and programs to train and build local capacity, these islands will quickly reach Stage 5 of their journeys, operating at almost 100% renewable energy using solar PV and batteries, with diesel providing backup during longer periods of renewable energy resource deficiency.
A fifth island, Aitutaki, is currently at Stage 1, finalising the planning of its renewable journey. It will rapidly jump to Stage 3 as 1 MW of solar PV, a 0.5 MW power battery, new diesel generator and centralised control system start working together to deliver a power system with a renewable contribution of up to 25%.
Rarotonga is the largest, main island in the Cook Islands and operates a complex power system requiring meticulous strategic planning. This power system is already at Stage 2, with a renewable contribution surpassing 10% due to the contribution of residential and commercial solar. Entura is helping the Rarotongan utility to move towards Stage 3 by introducing an additional 1 MW of solar PV and enabling technologies such as energy storage, which will help the system absorb even more renewable energy.
The journey continues
It is often said that the end of one journey is the beginning of another. After a community has reached 100% renewable energy, it needs to continue its journey to maintain that status through proper operation, maintenance and asset management, to secure the system for years to come. This long-term asset management challenge involves attention to both physical and human assets, including capacity building, training and skills development for individuals and organisations.
Entura is bringing practical maintenance know-how to island communities such as Yap and the Cook Islands. And, through the Entura clean energy and water institute, we are helping to boost the skills of technicians and managers. By doing so, Entura is offering island communities a guiding hand from the start of the renewable journey right through to its destination, and beyond.
If you would like to discuss how Entura can support your renewable energy journey, please contact Silke Schwartz on +61 407 886 872 or Shekhar Prince on +61 412 402 110.
A version of this article has been previously published by RenewableEnergyWorld.com
MORE THOUGHT LEADERSHIP ARTICLES
Is pumped storage hydro the key to increasing renewables in Australia?
Recent electricity price spikes and a state-wide blackout in South Australia have highlighted the need for reliable power to balance the potential volatility of some renewable power sources.
Pumped storage hydropower projects are a natural fit in an energy market with high penetration of renewable energy as they help to maximise the use of the renewables that are subject to the vagaries of the weather. Pumped storage provides a load when the wind is blowing and the sun is shining, and it also provides a reliable and immediate source of energy when the sun has set and the wind has dropped.
The recent completion of the feasibility study for Genex Power’s Kidston Pumped Storage Hydro Project in North Queensland shows this approach is now technically and commercially feasible.
Pumped storage hydro offers utility-scale storage and system stability
As the proportion of renewable energy in an energy market increases, the need grows for the stability and consistency provided by utility-scale energy storage. For example, South Australia needs system-wide storage of 500 MW for a period of 10 hours to improve the flexibility of wind farm operators, according to the Melbourne Energy Institute.
At the smaller scale of energy storage, the buzz about various types of batteries continues – but the only storage option with a proven track record at the utility scale is pumped storage hydropower.
Pumped storage hydropower works by pumping the water stored in a lower reservoir into a more elevated reservoir. The water stored at height can be passed through a turbine on its path back to the lower reservoir, creating electricity as and when needed, and making the best use of the water resource without waste.
Click image to view infographic.
In a recent article, my colleague Donald Vaughan stated that a functioning AC power system needs inertia, fault level, frequency and voltage control as well as energy sources to function to an acceptable standard. Pumped-storage assets can provide all of these important contributions to a stable and successful power system, levelling out the fluctuations in availability of wind and solar energy, and helping to regulate voltage and frequency.
New opportunities for pumped storage hydro in Australia
Despite the significant potential and benefits of pumped storage hydro projects, only three projects currently exist in Australia (two in New South Wales and one in Queensland). These schemes were built in markets in which generation was mainly thermal, where the pumped storage could supplement supply at times of peak demand.
A number of possible sites have been identified for new opportunities for pumped storage hydro, but so far very few have been developed beyond concept level. This means that opportunities exist for developers in states such as South Australia and Queensland that have set ambitious renewables targets and must maintain energy security.
Three factors for pumped storage hydro success
For successful pumped storage hydro projects, developers need to identify a viable site, achieve a technically and commercially feasible design, and make the most of the economics of the energy market.
1 – Identifying a viable site
For a pumped storage project, what’s needed is a source of water, and two reservoirs separated by a significant change in elevation. The water could come from a nearby river, an existing reservoir, or the sea. With many thousands of potential sites across the country, a developer needs smart methods of filtering to reduce the many possibilities to just a few ideal sites.
An important consideration is the effect on the viability of pumped storage projects of the relative remoteness of sites, through both the efficiency of the power’s round trip and the marginal loss factors (factors applied to a generator or a load, and calculated based on the size and distance of the generator or load from a central point).
As for any development, the process of identifying sites must also consider topography, land use and environmental constraints. Pumped storage projects generally present similar but reduced environmental risks as conventional hydropower projects as they tend to have smaller footprints.
2 – Achieving a technically and commercially feasible design
Entura’s experience on Genex Power’s Kidston pumped storage hydro project has shown that it is possible to construct low-cost pumped storage projects in Australia through careful site identification and clever project design. Where a pair of suitable reservoirs don’t already exist, constructing a turkey’s nest dam may offer a solution.
A turkey’s nest dam is a reservoir built by excavating earth from the centre of the reservoir and moving it to the edge to help form a continuous embankment. Turkey’s nest dams have been used successfully around the world in pumped storage hydropower projects, providing opportunities to build projects where elevation changes significantly over a short distance.
Additionally, turkey’s nest dams can help to minimise capital costs by reducing conduit lengths and maximising head (the difference in elevation between the upper and lower reservoirs).
3 – Making the most of the economics of the energy market
Understanding the opportunities and constraints in the energy market is critical to a pumped storage project’s financial viability.
When you can store energy, you can dispatch electricity at peak times, gaining the highest price point in the market. Conversely, water is pumped to the upper reservoir in off-peak periods or when supply from renewable sources is high and market prices are low. This ‘energy arbitrage’ makes the most of the price difference in the electricity market.
Selecting the optimum installed capacity of a pumped storage project also requires detailed understanding of energy markets. It is possible that a pumped storage project can act to flatten peak prices to the point where the returns on a project are insufficient to meet financiers’ hurdles, so detailed revenue modelling is essential to determine the tipping point between enough and too much installed capacity.
With careful selection of sites, clever design, and the right mix of capacity and costs, pumped storage hydro holds an important key to unlocking the full potential of renewables in Australia’s electricity market.
If you would like to discuss how Entura can help you explore potential opportunities for pumped storage hydropower projects, please contact Nick West on +61 408 952 315 or Richard Herweynen on +61 3 6245 4130.
About the author
Nick West is a civil engineer at Entura with 15 years’ experience, primarily in hydraulics and hydropower. Nick’s skills range from the technical analysis of the layout of hydropower projects to the preparation of contractual project documents and computational hydraulic modelling. Nick was a key team member of the Kidston Pumped Storage Project Technical Feasibility Study and was involved throughout the recently completed Neusberg Hydroelectric Project in South Africa. Nick has successfully completed projects ranging from hydraulic design for small residential developments to the feasibility study of a cascade of four large hydroelectric projects in Malaysia.
MORE THOUGHT LEADERSHIP ARTICLES
Eight principles for successful investment in renewable energy projects
When you are considering investing in a renewable energy project, a thorough due diligence investigation can identify the costs, benefits and risks, and lead to well-informed decisions.
In practical terms, this is about asking the right questions about the project, distinguishing when an issue is important and when it is not, and prioritising your efforts.
Why prioritise your efforts? Because the unfortunate reality is that most due diligence investigations don’t result in an investment. As consultants, we are aware of this reality, but as part of a larger business that acquires, develops and owns renewable energy assets, we understand that effort and expenditure must produce results.
When we lead renewable energy due diligence investigations, we often start with a quick assessment to establish as soon as possible if there are any ‘show stoppers’. No matter how preliminary or comprehensive the assessment, these eight principles guide our considerations:
1 – Identify the motivation to invest
A thorough due diligence investigation will identify high-level issues such as sovereign risk, right down to detailed technical issues associated with the particular investment opportunity.
Your motivations as the investor will influence the assessment of these risks. It may not simply be all about financial return, but also a desire to limit carbon exposure or to increase corporate social responsibility. And if we understand your business, we can bring a clearer perspective to the assessment.
Traditionally, investors have relied on consultants to assess the technical issues in detail, but have preferred to assess high-level risks ‘in-house’. This approach is understandable, but it may not be making the most of your consultant’s knowledge. Most renewable energy consultants these days have been in the game a long time, and you will find them keen to provide a more holistic assessment of risk.
2 – Understand the business case
As with any investment decision, investors interested in renewable energy projects need to understand the level of investment of financial and human resources required for the project, and the likely returns for that investment – the business case.
Each project will have its own set of issues and risks to identify and potentially mitigate as part of a robust business case. Risks will affect the revenue stream, the cost of the project, and/or the social acceptability of the project.
An experienced due diligence provider can provide value by recognising the difference between issues that will materially affect the project business case and those that will not, or by identifying opportunities where others might only see risks.
3 – Understand the relevant markets, policies and regulatory frameworks
Renewable energy projects are often supported by government policies that recognise the environmental benefits of clean generation and support the revenue stream for the project. It is essential to understand both the commercial market for your energy and this policy environment.
You also need to understand the relevant regulatory frameworks – planning, environmental, electricity grid, corporate governance, taxation, financial, employment, or occupational health and safety. All these factors need to be considered when assessing the cost of the project and the risks associated with the investment.
4 – Understand the impacts of the variability of renewables
Renewable resources such as solar, wind or small run-of-river hydropower schemes generate power with a variable output that can be forecast, but is not necessarily available on demand. This feature of renewable energy can lead to quarterly or annual variations in generation and in revenue that are beyond the control of the owner.
However, renewable projects do not have variable fuel costs. So by weathering the short-term fluctuations of renewable generation through prudent technical and financial risk management, you can achieve greater long-term certainty in your business case than with non-renewable generation projects.
The variability also means that when the resource is available (for example, the sun is shining), you want your project to export energy to the electricity grid without constraint. Therefore, for renewable energy projects, the grid connection arrangements can mean the success or failure of your project.
5 – Minimise uncertainty of revenue
The variable nature of renewable generation can create short-term uncertainty in revenue; however, long-term certainty in revenue is generally a must-have for a renewable energy project looking to sell its power output.
In some markets, set tariffs may be offered from government bodies for renewable projects. In markets with a floating electricity price, long-term power purchase agreements are often sought with counterparties such as retailers or large-scale energy consumers.
There may not be much assistance a consultant can provide on this issue – except to remind you to read the fine print of any agreements and, if the project does not have a confirmed buyer for the power, make sure you know the risks!
In terms of what the project is technically capable of generating, an operational project has more certainty than a development site, and may be more attractive for some investors.
6 – Manage capital and operational expenditure
Renewable energy projects require a large upfront capital expenditure. Depending on your risk appetite as an investor, exposure to risk can be managed through the contractual arrangements with the developer, equipment suppliers and the construction contractor. Comprehensive long-term operations and maintenance agreements are often available, which reduce your risk, but at a cost.
One issue worthy of particular note is construction delays. Investments that are otherwise sound can suffer due to delays in construction, which can have significant impacts on the expenditure and revenue profiles, and the terms of any debt provision.
7 – Develop and maintain community relationships and acceptance
Renewable energy projects operate within communities. There will be a range of attitudes towards your project and relationships to manage, and it will be up to you to develop and maintain a healthy relationship with the community.
Your community may see your project as a major contributor to the local economy through direct employment and indirectly through contracting. The community may even expect you to play a leading role in supporting local community activities through sponsorship and other activities.
8 – Ensure right action and compliance
An opportunity to invest in a renewable energy project might occur at any stage of the project. Regardless, the nature of the due diligence is usually very similar – have the right actions have been undertaken, does the project comply with its commitments, and will it continue to comply into the future?
Because Entura is part of Hydro Tasmania, Australia’s largest renewable energy producer, we understand what it means to live with the full consequences of investment decisions and risks. So we approach due diligence for our clients in the same way we would if the investment opportunity was our own.
That means developing a full understanding of the proposed project, discovering any risks that could prevent its success, and finding the best ways to make the most of the project’s strengths and avoid any possible weaknesses.
If you are seeking to invest in renewable energy, Entura can assist you with practical, expert due diligence services for proposed or operational projects in the Asia-Pacific region. Please contact Patrick Pease or Silke Schwartz on +61 407 886 872.
About the author
Seth Langford is a specialist renewable energy engineer at Entura and has been working in the wind industry for more than ten years. Seth has been involved with major wind farm projects as a technical specialist and a team leader for feasibility studies and due diligence projects in India, China, Australia, Sri Lanka, South Africa and New Zealand. Seth has spent considerable time assessing greenfield and operational wind farms on behalf of developers wishing to acquire wind farm projects.
MORE THOUGHT LEADERSHIP ARTICLES
A bright future for RAPS: reliable, cheaper power for remote areas
Remote area power systems that integrate renewable energy sources such as solar and wind with storage or diesel backup are increasingly allowing remote communities to become more self-sufficient and sustainable by providing dependable, secure power that is cheaper than relying on diesel-generated power alone.
Saving money and the environment
Using renewable energy technologies to create power in a range of remote areas such as small to medium towns, mines or even islands makes perfect sense. The fuel usually used in these locations is diesel, which is expensive, vulnerable to broader pressures on price and supply, and can also be slow, complicated and costly to transport to remote areas.
Falling costs of renewable technologies, free fuel from the sun and wind and large savings on displaced diesel add up to significant commercial motivation to move towards renewable or hybrid systems. But there’s also a compelling environmental argument for developing RAPS – it reduces consumption of fossil fuel, lowers carbon emissions and helps reach sustainability goals.
This environmental argument carries extra urgency for low-lying island communities on the front line of climate change, as rising sea levels threaten their very existence.
Why Yap needs RAPS
To the north of Papua New Guinea, in the Western Pacific Ocean, lies one of these vulnerable islands: the postcard-perfect paradise of Yap. While Yap has already started to recognise the early impacts of climate change and increasingly severe weather events on its farms, coral reefs and palm-lined beaches, it has also witnessed at close range the high consequences of vulnerability to oil prices, as the world oil price shock in 2008 threw the neighbouring Marshall Islands into a state of fiscal crisis with the government having to bail out its own state-owned power utility.
As an early step towards reducing Yap’s heavy reliance on imported diesel for power generation, and to enable the island to rely as much as possible on indigenous, renewable resources, the Yap State Public Service Corporation (YSPSC) commissioned specialist power and water consulting firm Entura to design and supervise the delivery of a US$11 million integrated high-penetration renewable energy RAPS.
The RAPS project will also help Yap play its part in helping achieve the Federated States of Micronesia’s ambitious targets of 30 per cent renewable energy by 2020 and 70–100 per cent by 2050. The project will reduce fossil fuel consumption in Yap through developing renewable energy and improving the supply-side energy efficiency of the current grid. Once completed, the project aims to provide 17 per cent of Yap’s annual energy production and enable Yap to experience up to 70 per cent renewable penetration when conditions allow. The system is forecast to deliver an annual fuel saving of up to US$500 000.
Integrating renewables no longer a challenge
Until recently, integration issues have made it difficult to introduce large amounts of renewable energy into remote diesel-based electricity systems. High intermittency of renewable sources presented challenges for reliability and quality of supply in remote power systems. But new technological developments such as intelligent control systems, improved storage technologies and demand-side management assist with overcoming these concerns and increase the reliability of off-grid renewable systems.
As each RAPS is different, the challenge that remains is choosing the right solution and integrating it in the right way.
Yap’s power system is designed to meet the 2.2 MW load for the 7000 people living on the main island, delivering up to 1 MW of wind energy from small but robust turbines and 300 kw of remotely controlled grid-connected solar energy from the rooftops of seven government buildings. Two high-speed diesel generators have been included in the system, and have been selected for their responsiveness and ability to support higher renewable energy penetration and even out any energy fluctuations.
The clever trick to keep all these different electricity-generating assets working together smoothly to provide a continuous and reliable electricity supply is an innovative integration and control system. The overall design of Yap’s integrated high-penetration renewable energy system, combined with the automated integration and control system, balances and maintains the quality of the energy supply to maximise the amount of renewable energy used on the island.
Building capacity for the long term
The YSPSC is a sophisticated utility that fully embraces its commitment to provide clean and affordable power that is sustainable not only for the environment and the economy but also for Yap’s community in the long term.
The power system has been carefully designed to be able to realise future goals of operating at zero diesel, as well as to be able to be operated and maintained within the community rather than by external specialists.
YSPSC and Entura are working together to deliver the principles of ‘design and build, operate and maintain’, as opposed to a ‘build-neglect-rebuild’ paradigm, by working to develop capacity within the Yap community, so that the local people will not only be the owners of a new state-of-the-art energy system, but will also have the opportunity to develop the skills to operate and maintain it into the future.
Construction of the Yap RAPS is due to start in mid-2015 and finish in early 2016.
RAPS around the world
Entura and its parent company, Hydro Tasmania, have previously been involved with the delivery of hybrid off-grid systems and RAPS in the Solomon Islands, Vanuatu, King and Cape Barren Islands, and are currently assisting our clients in delivering a suite of projects in Australia, as well as in the Cook Islands.
Hydro Tasmania’s hybrid off-grid solution on King Island is now recognised as a world-first, achieving the ability to operate a megawatt-class power system solely on renewable energy sources for extended periods of time, when conditions allow. The King Island Renewable Energy Integration Project has also demonstrated that hybrid systems with the right mix of enabling and generation technologies are not only lower cost alternatives, but can also be more reliable and robust than traditional diesel generation in off-grid systems.
If you would like to discuss if a RAPS is the best solution to power your remote operations or community in a sustainable and cost-effective manner, please contact Silke Schwartz on +61 407 886 872 or Shekhar Prince on +61 412 402 110.
+61 412 402 110