Article – Big plans for the North

11 June 2014
Matt Sherrington
North Queensland Register
A POWER station that could save North Queensland residents hundreds of millions of dollars in electricity bills and a cane project that could bring the much-hyped Northern food bowl one step closer to reality.
These were the topics at the fore during a function held at Jupiters Townsville yesterday.
The findings of the report titled ‘North and North West Queensland Sustainable Resource Feasibility Studies’ were delivered by acting Prime Minister and Minister for Infrastructure and Regional Development Warren Truss among others.
Mr Truss said it was time that something was done for an area that has largely been underdeveloped and underutilised so it could fulfil its potential as a major export supply chain especially to Asia.
“The proposed major base load power station would be constructed approximately 200km from Collinsville in the Galilee Basin if given the go-ahead,” he said.
“A major (800MW) coal fired power station will put strong downward pressure on electricity prices with a potential $836m social cost benefit at a seven per cent discount rate.”
The $1.778b power station investment has been deemed commercially viable from findings in the report on the condition that a greenfield coal mine-mouth is developed.
The benefits to North Queensland if the power station is connected to the National Electricity Market (NEM) north of Collinsville will include a reduction in community service obligations and delivered electricity costs.
“The most financially viable power station concept that satisfied the study criteria is linked to availability of low-cost fuel (coal) that may be available from the proposed Galilee Basin coal mines.”
He said one of the main barriers to this proposed development is investor reluctance to participate in coal fired electricity generation.
“We expect the most economical base load technology in 2020 will be coal-fired.
“The environmental and social challenges of developing a coal-fired power station may prove to be significant barriers for some investors.”
The report stated that for the power station project to go ahead would involve:

  • Establishing a relationship with the host miner in the Galilee Basin.
  • Developing strategies to approach the Queensland Government for assistance addressing preferred location, transmission connection costs, off-take contracts or formation of a regional gen-tailer.
  • Initiating detailed water availability assessment and generation technology optimisation.
  • Initiating the connection process for access to NEM including route selection.
  • Assessing carbon price impacts on equity as required to ensure cost of capital is acceptable.

“The opportunity for new base-load generation in Queensland is finite,” the report stated.
“If the benefits from this power station project are to be realised it will need to enter the market ahead of competing power station projects.
“If the power station was developed in another region of Queensland the benefits specific to the North would reduce or diminish entirely.
The Dalrymple scheme would see a major dam on the Upper Burdekin River with a capacity of in excess of 625,000 mega litres constructed to underpin an irrigated agriculture project capable of supporting between 4 million tonnes per annum (mtpa) and 10mtpa of sugarcane production.
“The reports findings have shown that there is a high level of confidence in the capacity of the area to provide 49,000ha of relatively connected land, Mr Truss said.
“The Dalrymple scheme shows that with the right infrastructure and in the right circumstances the potential to expand North Queensland’s productivity capacity and wealth generation in the region would increase significantly,” he said.
Findings in the report showed that the total capital expense necessary for the project varies from $2.7b for the 4mtpa to $4.9b for the 10mtpa scale. This investment is forecast to be commercially viable only in circumstances of high prices for the output sugar and ethanol with current policy setting in place.
“The social cost benefit analysis does not provide a positive forecast for the 4mtpa case and emphasises the importance of larger operations to achieve economies for scale,” the report stated.
The 10mtpa project ould significantly increase the irrigated agricultural production in Queensland. This growth would be a major contributing factor in seeing the State Government’s wish to see agricultural production increase by 100pc by 2040 fulfilled.
To provide a relative measure of the scope of the project; cropping to support a 4mtpa sugar mill would see the total area under irrigation across all of Northern Australia increase by approximately 36pc.
Conclusions drawn from the report state that strategies needed to realise the Dalrymple scheme include:

  • Conducting detailed soil studies to firm up the availability and quality of land sustainable for irrigation.
  • Conduct more detailed engineering studies to optimise the design of water and related infrastructure.
  • The possibility that the Government may need to consider incentives to stimulate development and feasibility expenditure, given the risk for private sector initiated development.
  • Develop strategies to deliver land access or acquisition certainty.
  • Strategies for maximisation of the wider benefits of greater water management capacity in the region.
  • Develop a strategy with Government for funding the water infrastructure.
  • Establishing early relationships with large-scale investors would be critical given the development risk and the scale of investment required.

“The LNP want to make things happen for the North” Mr Truss said.
“This project was proposed by the previous government; the present government now wants to see it through to fruition.”
Courtesy of the North Queensland Register