Unlocking Pilbara’s Renewable Energy Potential | ENGIE Impact

Interconnectivity Key to Unlocking Pilbara’s Renewable Energy Potential

Article | Read Time 5 min
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Amy Steel Senior Manager, Sustainability Solutions - APAC
Melissa Gray Senior Consultant, Sustainability Solutions – APAC
Renewable Energy
Net Zero Strategies

Electrification through renewable energy generation and storage is generally considered the most efficient way to cut emissions and meet Net Zero targets. However, many hard-to-abate industries — steel, chemicals, cement, plastics, mining, and others — face additional challenges in funding and building the necessary renewable infrastructure due to the remoteness of their operations.

This is especially true in the Pilbara region of Western Australia (WA). Despite the anticipated retirement of coal-fired power stations, rising demand for low-cost renewable energy generation, and geography boasting immense renewable energy potential, the Pilbara region suffers from one of the lowest renewable penetration rates in the country.

Currently, the major industrial players in the region are each undertaking their own energy projects in siloes. These standalone energy networks unconnected to any other renewable power source increase the risk of power shortages and increases reliance on fossil fuels. Additionally, the lack of suitable space for renewables within an allotted industrial site can be a major limiting factor in green energy availability.

In order to deliver more efficient outcomes, reduce energy costs, improve generation capacity, efficiently and respectfully utilise the ideal land options and adequately scale renewables, corporations must collaborate — with each other, traditional owners, and regional governments.

A collective approach to renewable energy that connects private and public grids would create the opportunity to optimise renewable energy sourcing. A truly unified North-West Interconnected System (NWIS) would accelerate the deployment of high quantities of renewable energy and storage, lowering the cost and increasing the resilience of decarbonisation solutions — to the benefit of all.

Energy in the Pilbara: The Need for Connectivity

Solar and wind power have become cheaper and more widely adopted as companies seek to reduce their carbon footprint and avoid fossil fuel market volatility. The Levelised Cost of Energy (LCOE) for procurement and execution of renewable energy projects has declined, making it the preferred energy alternative from a price standpoint (between 2009 and 2019, the price of electricity generated from utility-scale solar and onshore wind fell 89% and 70% respectively).

Western Australia has also been identified as one of the best locations globally for large-scale solar photovoltaic generation, complemented by high wind speeds at night. Private sector demand is growing and announced targets demonstrate public sector ambition. Despite these realities, the region has the second lowest renewable penetration rate (12%) in the country. The reason is connectivity.

Percentage of Installed Energy Capacity by Technology in Each State

Chart: Percentage of Installed Energy Capacity by Technology in Each State

Currently, the NWIS in the Pilbara region comprises several electricity networks. Horizon Power (a public company) operates the largest one and is joined by several private players that own major energy infrastructure in the broader Pilbara region to service their individual operations. These networks are only partially connected as substations were not built for end-to-end power transfer. So, while large-scale renewable energy sites have recently been added, they will only fulfill their decarbonisation potential provided the infrastructure is adequate to deliver it.

Recognising the need for infrastructure improvements, the Australian Energy Markets Operator estimates in its 2022 Integrated System Plan that more than 10,000 km of the new transmission is needed by 2050 to efficiently deliver firmed renewable energy to consumers on the east coast alone. The government of Western Australia has also developed an Energy Transformation Strategy to promote greater renewables integration, but it is still in the planning stages.

While waiting for these plans to reach fruition, an interconnected system of industrial energy producers and consumers sharing the infrastructure to transport and store renewable energy would benefit from multiple generation plants located in the most conducive inland areas — safe from typhoons and covering for each other in case the power becomes intermittent due to weather conditions.

If Pilbara’s industrial players could tap into a larger solar source than what they are limited to on-site, they could further their decarbonisation efforts while removing the risks and increasing the reliability of their renewable sources.

A unified NWIS would address the main issues associated with standalone renewable energy generation mentioned above. It would help balance the loads, generate power where the best renewable resources are located, improve the stability and resilience of individually operated networks and more importantly, accelerate the development of high quantities of renewable energy.

Large-scale renewable energy generation sites could further benefit the regional economy, as the wide availability of renewables may entice sectors other than iron ore mining or natural gas production to the Pilbara region. Green energy could be exported, used to bolster the foundations of Australia’s emerging green hydrogen industry, power ammonia facilities, or be used in new industries like green steel production.

The Economic Benefits of Collaboration

Some stakeholders in the Pilbara need better access to power lines and some need greater energy security, preferably from renewable sources. The pursuit of either aim individually is either cost-prohibitive, unfeasible, or both. What is needed is a cost-optimal combination of an interconnected grid, renewables, storage, and other green energy investments.

By unlocking a more cost-effective and resilient alternative to individual networks and removing the inefficiencies, collaboration on infrastructure and pooling renewable resources at scale would be financially advantageous for everyone involved.

Statistics on economies of scale in renewable energy technologies show that the unitary cost of a utility-scale solar project falls as the size of the installed power increases, with a 50-100 MW project costing 21% less than a 5-20 MW project. A similar trend is seen in Energy Storage Systems (ESS). One would also expect to have lower transmission and infrastructure costs as a result of:

  • Reduced cost in mobilisation and demobilisation for the construction crew
  • Reduction of battery sizing when a project is connected to the grid, especially with the size of projects mining companies are looking to build
  • Pooling the cost of transmission lines to different users
  • Pooling resources for scoping and pre-feasibility, accelerating permitting

New technologies, business models as well as infrastructure are needed to accelerate the region’s decarbonisation. We encourage regional industrial players, in collaboration with the Government of Western Australia, to create a collaboration roundtable among different consumers and solution providers. ENGIE Impact’s experience in the renewables landscape has shown us that collaboration can serve as a catalyst driving energy transition at the scale needed to meet climate targets of companies and countries alike.

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