The ability to recognise the potential in renewable energy assets is one thing but delivering success takes a deeper knowhow and sector experience. The story of biomass-fired Cape Byron Power Station is just that.
It is a story where newly constructed quality assets which ended up in the hands of receivers were turned around by an investor who spent three years turning the business into a success story with a sustainable future.
Brian Restall, senior director at Quinbrook Infrastructure Partners, explains the turnaround.
The power station, on the NSW north coast, was originally a joint venture between NSW Sugar Milling Co-operative and Delta Electricity, built in 2008. Plagued by construction delays and cost overruns, technical problems during commissioning and a lack of available fuel, the assets went into receivership in 2011.
End of story? Almost, but not quite.
Step forward Quinbrook, a clean energy investment company which mainly supports developers of new clean energy projects but can also take on failed assets where it sees potential. Cape Byron was one such case.
Today’s operation at Cape Byron consists of two 30MW biomass-fired power stations. Together, they form one of Australia’s largest renewable baseload generators supplying electricity to half the north coast region of NSW.
“The underlying assets were strong but we identified the need for technical and operational fixes that would be required to get the project up and running again,” says Quinbrook senior director Brian Restall.
“Fundamentally the project didn’t have long-term fuel supply security. With a variety of local biomass fuel sources secured and the implementation of an effective operational and maintenance regime we have been able to deliver success.”
Before Quinbrook could implement a range of efficiency, reliability and environmental improvements it had to overcome a number of barriers. Understanding the reasons for failure was the first step in the development of solutions.
Barrier 1
There was no secure fuel supply, so negotiation of long-term supply contracts was a priority. The company focused on locally supplied biomass, sustainability and the variety/diversity of supply to minimize risk.
Barrier 2
A fundamental culture change was required in the operational and maintenance regime. The power station operators were the key to creating success, Restall says.
“They shared with us how they did not feel part of the leadership team. We assessed their competencies and felt they needed to be at the centre of the business decisions going forward,” he says, so Quinbrook created an operator-led O&M strategy.
“There is no one who knows our plant better than the people who operate it day in and day out. We negotiated and agreed a new workplace enterprise agreement for our business and created a preventative maintenance program without incurring one day of industrial action.”
Barrier 3
There were inherent technical issues still unresolved in the plant since it was commissioned five years ago, Restall says.
“The new team set about working with the site engineering team to resolve a steam turbine gearbox issue that reduced one plant’s output by 15% as well as replaced the internals of a heat exchanger and boiler component internals,” he says.
“The combined effect of the technical fixes as well as an operator led O&M strategy meant that the inherent problems were now fixed and monies could be focused on minor enhancements to lower the MWh costs — increasing the profitability of the plant.”
The raw materials
The plant uses sustainably sourced biomass fuels which are 100% renewable, including waste timber, agricultural residues and dedicated energy crops generally not suitable for other viable uses.
“Variety and locally sourced suppliers make us an important part of local industry while mitigating our long-term fuel supply risk,” Restall says. “One example of this is utilizing solid residues from sawmills that were previously burned in open fire pits at the sawmill.”
The plant collects solid residue from over 50 sawmills, he says, “delivering a good result for our business, the sawmill and the local community who were previously affected by the open burning of this resource”.
Fuel sources include: bagasse, a bi-product of sugar cane processing; energy crops, or plantation timber grown specifically for energy production; material from tree clearance, such as weed species and material from road and subdivision clearance, and; waste timber from sawmilling operations.
Lessons learned
Biomass is often the “poor cousin” of renewables and is frequently over looked, Restall says. “The key issue that’s important to understand about biomass is that it is already an important part of the energy mix — the bigger energy picture. There is no golden ticket — no one energy source gives total security — all renewable energy technologies are part of a transition to a cleaner carbon economy.”
He lists the lessons from the Cape Byron Power overhaul:
- A secure fuel supply contract is your golden ticket – any successful project will need to be underpinned by secure (ideally long term) fuel supply arrangements. Without them you are risk exposed. Introduce variety, confirm quality, address seasonality, understand the competition for your fuel and explore local supply options. Think long term and local.
- Never underestimate the need for a sound operational and maintenance strategy – this kind of plant requires experience across a variety of commodities, asset classes and diverse geographical locations. Effective operations and maintenance services will enable owners to maximise the return on investment from their assets over the full life cycle of a project. Significant savings can be made.
- Sustainability is still important on a number of levels and particularly so for international investors. One of the key challenges for biomass powered generation is overcoming fuel sustainability concerns and preserving its “renewable” or “green” credentials. Know your suppliers. This can be a relatively straight forward risk to manage.
This turn around case study will be presented at the Bioenergy Australia 2016 conference, in Brisbane on November 14 and 15, along with 100 other presentations covering a spectrum of bioenergy topics. www.bioenergyaustralia.org.