To support and invest in more “cheap renewables,” Infigen Energy has recently made public its purchase of a “peaking” gas plant in New South Wales. The company claims that its latest acquisition will enable it to invest up to 400 megawatts more of renewables and it is eyeing several other wind and solar projects.
Renew Economy reported that buying the Smithfield peaking gas plant was mainly caused by a notable market opportunity for cheap renewables and it also reflects the low-cost valuation of “firm renewables” by Snowy Hydro, a government-owned generator.
Infigen also mentioned that the price of generating renewable energy has decreased. The “run-of-plant” renewable energy power purchase agreement has put the price of firming approximately $9 to $12 per megawatt-hour and the cost of “firm renewables” was around $54 to $67 per megawatt-hour.
The company also stated that the process for firm contracts are essentially higher and paves the way for a notable margin opportunity in selling low-priced intermittent renewables into higher-cost contracts.
Infigen further said during their presentation, “The NEM (National Electricity Market) is transitioning from baseload coal to variable renewables.”
The company will pay $60 million for the 109 megawatts capacity of the Smithfield open cycle gas turbine. It will also pay an additional $1 million per extra megawatt of capacity it can get out of the plan, but still subject to discussions with AEMO.
The report also stated, “It (Infigen) reasons it is a better deal to buy a gas plant and have a physical asset rather than taking out financial instruments. And it may also have an eye on the impact of the reliability obligation that will come into effect later this year.”
“The Smithfield gas generator is likely to be used only sparingly – around two to eight percent, which will ensure that the company retails a small carbon footprint. Currently, its emissions intensity is just 0.02 tonnes of Co2 per megawatt-hour of generation. It aims to be “carbon neutral” by 2025,” the report elaborated.
To learn more about this acquisition, read the full story here.