By Reuben Adams
A successful mining hub for more than 90 years, Mount Isa reigns as the administrative, commercial and industrial centre for Queensland’s vast north-western region – a region which is not connected to the National Electricity Market (NEM). While the NEM interconnects the eastern states and South Australia – the closest NEM connection point for North West Queensland (NWQ) is in Townsville, about 1000km away.
The Queensland Government released the Sims Review of North West Queensland Energy Delivery in May 2009, calling on energy providers and major regional energy users to find a commercially viable, long-term solution to meet the needs of key regional energy users.
“The current source of local generation, the CS Energy-owned Mica Creek power station, is approaching the limit of its ability to supply the NWQ load reliably and also needs to replace some units which are old and inefficient,” the review stated.
“There is a current ‘fork in the road’ decision to be made in relation to NWQ energy supply.”
This ‘fork in the road’ decision included two alternatives put forward by the review: a transmission line solution and a local generation solution.
Now, nearly seven years later, the Diamantina Power Station has proven itself as an effective and reliable solution to the region’s power dilemma.
The Diamantina Power Station (DPS) was proposed and developed, and is now owned and operated in a joint venture between AGL Energy and APA Group. Both companies had prior involvement with the region and were keen to prove the viability of their solution by committing further investment to the region’s future.
According to the joint venture, a gas-fired power station was a natural solution to the region’s needs. It offers a number of benefits over diesel-fired generation, particularly fuel price stability. And as APA’s Carpentaria Gas Pipeline was already delivering natural gas to power generation and industrial operations, there was no need to invest in additional infrastructure to deliver the fuel needed for local generation.
As the cleanest burning fossil fuel, natural gas also offered benefits over coal. When used with combined cycle generation technology, the proposed gas-fired power station would be able to achieve far greater inefficiencies and generate significantly less greenhouse emissions than coal-fired generation. Combined-cycle plants can achieve thermal inefficiencies of between 50 per cent and 60 per cent versus coal generation at 35 per cent. The gas plant can also be brought on line very quickly.
The solution originally proposed by the joint venture involved development of a 242-megawatt combined cycle power station comprised of two 121-megawatt ‘blocks’. Combined cycle technology achieves high inefficiencies by using the heat of the exhaust gas to power a steam turbine.
Development was underpinned by a long term Energy Supply Agreement with MIM and a Power Purchase Agreement (PPA) with Ergon Energy. No additional government or local funding was required.
Just over a year later, the joint venture announced a 60-megawatt expansion to the project, with the open-cycle gas-fired power plant to be constructed concurrently and adjacent to the site. Leichhardt Power Station provides stand-by back-up power generation capabilities and surety of additional capacity for existing and new energy customers.
Because of its modular nature, the project was able to be brought on line progressively and started delivering power to the North West system in October 2013. The Diamantina and Leichhardt power stations became fully operational in October 2014 and were officially opened on site by Mount Isa Mayor, the Hon. Cr Tony McGrady AM on 3 December.
The development of the DPS Project by AGL and APA reflects the mutual strategic interests of the parties in becoming further embedded in the Mount Isa region. It enables APA to enhance the value of its Carpentaria Gas Pipeline, while AGL’s involvement in the project provides it with the opportunity to develop a significant presence in the Mount Isa market leveraging long term gas sales to the joint venture company.
The combined expertise and skills of two of Australia’s leading energy companies has delivered an energy solution to meet the current and future needs of NWQ’s productive mining region. In doing so they have also provided the Mount Isa community with a substantial new business that employs people living locally and can underpin growth.
With the joint development of the project, the operations of APA and AGL are now further invested in the region, and importantly, no government or local subsidies were required. The DPS has met the call of the Sims Review to provide a commercially viable, long-term solution to meet the needs of existing and future Carpentaria energy users.