QPM Energy buys power plant to supply Moranbah gas project

QPM Energy to acquire Moranbah Power Station to power gas plant
Deal to deliver both increased revenue and reduced operating costs
Move first step in building power asset portfolio in the region

Special Report: QPM Energy has made a deal to acquire the 12.8MW Moranbah Power Station to power its Moranbah gas project in QLD, in a move set to save money and generate revenue for the company.

The project in Queensland’s Bowen Basin currently captures 28-30 terajoules per day of waste mine gas (methane) from coal mines and supplies it to industrial gas customers and the Townsville Power Station, a peaking gas plant that operates for three to seven hours per day during peak morning and evening periods when electricity prices are at their highest.

Currently, the company buys around 3MW of electricity to power the gas field from the Moranbah power station, which is co-located and directly connected to the project.

This acquisition will mean an immediate reduction in field electricity costs of >$500,000 a month, around 5% of monthly operating costs.

The station will be acquired from Sustainable Energy Infrastructure and as part of the deal QPM Energy (ASX:QPM) will have full operating and electricity dispatch rights. That includes the capacity to purchase electricity directly from the grid during periods of low and negative market prices.

This is particularly important because it gives the company the flexibility to buy electricity at low to negative pricing during the day and generate electricity for self-consumption and export at other times.

It will also increase electricity revenue via this dispatch of excess electricity generation to the grid and means the company will be able to use increased quantities of waste coal mine gas as fuel for the project.

Immediate savings

The company has also entered into an operating agreement with Carbon Logica and has the option to acquire the station at the conclusion of the operating agreement.

“The transaction associated with the Moranbah Power Station delivers us immediate operating cost savings and additional electricity revenue,” QPM CEO David Wrench said.

“We are pleased to have partnered with Carbon Logica and look forward to expanding our carbon abatement projects.”

Wrench says the acquisition is the first step on the path towards building an electricity portfolio in the region.

“QPM continues to make great progress in delivering on the potential of the Moranbah gas project,” he said.

“The MPS acquisition is a significant stepping stone towards our stated aim of developing a significant portfolio of electricity generation assets in Moranbah.”

Completion of the transaction is anticipated to occur on 31 December 2024 following satisfaction of relevant conditions precedent, including signing of a lease over the MPS site.

This article was developed in collaboration with QPM Energy, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.