Green Energy: Iron ore explorer says it will hit carbon ball ‘out of the park’, while a $370 million Queensland wind farm gets the go-ahead
A massive green power hub in Queensland (that was the subject of a major controversy over the Federal Government’s treatment of renewable power projects) has reached financial close, despite being denied funds from the Northern Australia Infrastructure Facility.
Neoen’s Kaban Green Power Hub is a 157MW wind power installation combined with 320km of new transmission infrastructure in the Northern Queensland Renewable Energy Zone.
It was denied a $280 million loan from the NAIF program earlier this year, despite Northern Australia Minister Keith Pitt receiving a recommendation from bureaucrats to support the project.
He vetoed it on the grounds it was not “dispatchable”, a word from a heavily-thumbed page of the Morrison Government’s energy dictionary.
It led to a circuitous interview on Sky News where Pitt called questions about whether a battery could back up a wind farm ‘broad and hypothetical’.
What is not broad and hypothetical is that the $370 million Kaban project will go ahead, having reached financial close this morning.
Neoen also has approval for a 100MW battery, although department officials told Senate Estimates details about the battery aspect of the project were not included in the NAIF application.
It paves the way for Neoen to sell power to the Queensland Government’s Cleanco from 2023 under a 15 year capacity purchase agreement.
A syndicate of five lenders including BNP Paribas, HSBC, MUFG, NAB and Nord/LB have backed the project.
It will host 28 Vestas V162 turbines each with a power generating capacity of 5.6MW, some of the biggest in Australia.
EPC contractors at Vestas began work on the site near Ravenshoe in June. 50 workers are active on the site at the moment with a total of 250 construction jobs to be delivered in the development process.
With a generating capacity of 457GWh a year Neoen says it would be able to supply the annual energy needs of 100,000 homes, more than the requirements of the city of Cairns.
The Queensland Government has also committed with Neoen to the transmission upgrade in the North Queensland coastal circuit, which Neoen and Powerlink Queensland claim will unlock up to 500 MW of additional capacity for future projects.
CleanCo CEO Maia Schweizer said the project would provide ‘critical system strength support’ for north Queensland.
“As an important part of CleanCo’s low emission generating portfolio, the renewable energy generated by this wind farm will allow us to offer affordable contracts to big energy users, translating to continued lower energy prices and increased competitiveness for Queensland businesses and communities,” Dr Schweizer said.
According to Neoen chairman and CEO Xavier Barbaro the company now has 2GW of renewable energy generating capacity in operation or under construction in Australia. It plans to expand that to 10GW by 2025.
There is no shortage of mining proponents claiming to be going green when it comes to reducing emissions from their project.
Macarthur Minerals (ASX:MIO), owners of the Lake Giles iron ore project in WA’s Yilgarn region are the latest to brandish those credentials, saying a technical study from analysts Veckta shows there could be as much as 90% renewables content or above in their stationary power supply when the mine begins operations.
“Achieving a material level of renewables penetration at the commencement of operations would undoubtedly
set Macarthur up as a leader in the Australian the mining industry,” Macarthur CEO Andrew Bruton said.
“At the high case of 90%, it would smash the ball out of the park when it comes to demonstrating the potential for the mining industry to meet the decarbonisation challenges that currently confront it.”
There is a bit of variance in the projections and a few options that will play out as Macarthur progresses its feasibility study at the Lake Giles magnetite project, which is also being prepared as the iron ore price slides towards US$100/t. It could start off as a bunt to first as well.
“A solar and gas hybrid solution with a renewables content exceeding 40% could also deliver a favourable LCOE, and this configuration could be a leading option if restrictions (for example, restrictions owing to additional land tenure requirements) constrain the incorporation of wind energy,” the company said, noting both options reduced the levelised cost of energy compared to using diesel or natural gas as its primary fuel source.
It has been suggested that mines powered by renewables will not only benefit from investor and lender support, but could also generate ESG premiums attached to their product from customers downstream looking to remove emissions from their own supply chains.
A number of major mining companies are aiming for net zero targets by 2050, or in the case of iron ore miner-cum-green hydrogen play Fortescue Metals Group (ASX:FMG), by 2030.
Some companies have a natural advantage on this front due to their location, such as miners operating in hydro-rich Tasmania and Canada or South Australia, where Razorback project owner Magnetite Mines (ASX:MGT) says it will be able to take advantage of the State’s 60%-plus penetration of (largely wind-powered) renewable energy.
However, eliminating carbon emissions from the global steel supply chain will be a larger challenge, with BHP (ASX:BHP) noting in its “Climate Action Report” last week that even in high decarbonisation scenarios the coking coal reliant steel sector does not reach ‘net zero’.