Hornsdale Wind Farm, South Australia


Australia’s first multi-staged wind farm

Hornsdale is the first multi-staged, separately project financed wind farm in Australia and is located between 8km and 24km north of Jamestown in South Australia, about 200km north of Adelaide. The fundamentals driving the case for the project include the convergence of good wind resource, proximity to a major power line and the security of 20-year, fixed-price government supply contracts.

The wind farm is being constructed in three phases. The first two phases each involved the construction of 100MW, and each with 32 turbines. Phase 3 will add a further 35 wind turbines, totalling 109MW of capacity. Thus, once complete, the total project will consist of 99 wind turbines with a maximum capacity at the point of interconnection to the National Electricity Market (NEM) of 309 MW. (In fact approval exists to reach 315MW, but the size has been determined by grid capacity and other requirements).

A number of high capacity power lines run north from Adelaide to South Australian industrial areas around Port Augusta. All the wind farms in the mid/north of the state connect into those power lines. Access to power lines has been a key enabler for the low energy price (which in turn enabled the farm to win its supply contracts in government auctions).

When fully completed, the project is expected to generate ~1,050 GWh per year (implying a capacity factor of close to 40%).

After initial planning development by Investec, Hornsdale was purchased for further development and construction by French company Neoen in partnership with Australia’s Megawatt Capital Investments. Neoen will own and operate the assets over their life (20+ years). They already have an established Australian operations hub.

Siemens are providing the turbines and acting as EPC contractor, working with two South Australian firms, Catcon for civil construction and CPP for electrical works (thus providing important local economic benefits).

Among other firms involved have been professional services firm Herbert Smith Freehills, who advised on the construction, operation and financing of all three phases. The latter included aspects such as long-term project finance debt facility, construction, long-term maintenance arrangements and grid connection.

Total investment in the project is expected to be more than $870m.

 

Notes on the early feasibility assessment

Among key criteria that were investigated early in the development phase of the project were:

  • Wind resource assessment, with early start to provide many years of high quality wind data
  • Proximity to electricity network connection
  • Capacity available at the connection point
  • Visual impacts
  • Ecological and historical environments

The site covers ~7,500 hectares of private freehold land. During the feasibility assessment, land criteria included:

  • Supportive landholders
  • Terrain and geology
  • Area requirement
  • Compatibility with other land uses
  • Planning controls
  • Site access

A preliminary turbine layout provided for 105 x 3MW turbines, but with provision to amend based on the results of on-going technical assessments and discussions with the local community and regulators. The layout submitted in the planning application allowed for micro siting flexibility for each of the proposed turbine positions. In the end, the three phases will consist of 99 turbines in total.

 

The official project layout document, published 2015 (available to download here – pdf)

 

Detailed Timeline

 

Site Investigation:

2009: The locality of Hornsdale is identified as a potential wind farm location.

Detailed site investigation and wind resource assessment followed, including:

2010: First wind monitoring tower erected.

2011: 3 further wind monitoring towers erected.

 

Planning & Permitting:

October 2011: Planning application made.

July 2012: Development approval granted by the South Australia Department for Manufacturing, Innovation, Trade Resources and Energy.

September 2012: Signature of all land option deeds.

May 2013: EPBC Approval (Environment Protection and Biodiversity Conservation) is granted by the Department of Sustainability, Environment, Water, Population and Communities, with effect until 10th May 2042.

June 2014: French developer Neoen and its local partner Megawatt Capital Investments acquire the Hornsdale Wind Farm project from its former owner Investec.

 

Phase 1 kicks off:

February 2015: Hornsdale is awarded a 20-year contract to deliver 100 MW to the Australian Capital Territory (ACT) Government through a reverse auction. The price is fixed at A$92/MWh. This is the breakthrough that kicks off Phase 1 of the project.

August 2015: Neoen, Megawatt Capital and international infrastructure investor John Laing secure financing for Phase 1, securing a long-term debt financing package with two European banks: Société Générale and KfW. A week earlier, the engineering, procurement and construction (EPC) contract was signed with Siemens, the turbine supplier. The contract includes the commissioning of 32 direct-drive, 3.2MW wind turbines, associated civil and electrical infrastructure engineering, and a long-term service (O&M) contract.

October 2015: Construction starts for the first stage of the wind farm. Among the earliest tasks were the completion of an office compound and the upgrading of council roads to allow for the arrival of the longest (turbine) shipments later in 2016. Road upgrades and hardstand preparations continue through the end of 2015.

January 2016: Phase one construction is underway, with the arrival of the first turbines on site.

 

Phase 2 kicks off:

February 2016: a second contract, again via auction with ACT and again a 20-year duration, is awarded for the project’s second phase (a further 100MW). The auction attracted 18 bidders for a total capacity of 200MW. Hornsdale’s 100MW share will deliver close to 20% of the ACT electricity needs. The application sets Hornsdale to achieve a price of $77/MWh, at the time the lowest price in Australia for wind energy production and cheaper than some gas generation. The enabling factors for the low energy price are described as “excellent wind resources, important synergies with the first stage of the wind farm and optimal finance and equity structures”.

Early 2016: A period of 4-6 months is envisaged for financing for Phase 2 to be finalised, so that workforce (construction) can transition straight from Phase 1 to Phase 2 without disruption.

June 2016: Phase 2 reaches financial close, again a long-term senior debt financing package from international financiers.

July 2016: Siemens is awarded a contract to supply, install and commission another 32 wind turbines, each with a capacity of 3.2 MW and a rotor diameter of 113 meters, for Phase 2.

 

Phase 3 kicks off, while Phase 1 completes:

August 2016: Stage 3 achieves a (non-inflating) price of A$73/MWh in the latest ACT Government’s reverse wind auction program, again for a 20-year supply contract.

November 2016: Phase 1 commissioned (first generation and start of testing)

January 2017: Phase 1 switches on, in a special ‘energization ceremony’. South Australian and ACT government officials and the local community came together to switch on the first turbines. The milestone was commemorated with the announcement that local indigenous artwork would be featured on a wind tower in a world first.

March 2017: Phase 3 reaches financial close. For the 3rd time, KFW IPEX-Bank and Societe Generale firm-up a long-term structured finance package. Investec provided junior financing to the project, in line with the same commitments on Stage 1 and Stage 2.

 

Phase 2 complete:

June 2017: Phase 2 construction complete, bringing the total number of turbines on site to 64. Power curve and other testing begins.

 

Looking to future revenues & new business cases:

 

August 2017:

i. In co-operation with AEMO (the market operator) and ARENA (the Australian renewable energy association), Hornsdale announces it will be undertaking an Australia-first trial of frequency control services from a wind farm. AEMO will direct the wind farm to provide grid stabilising services to the National Electricity Market in reaction to rapid changes in supply/demand and other system conditions with the potential to affect the stability of the South Australian network. The aim of the trial is to explore untapped grid-stabilising potential within Siemens wind power technology.

ii. It is announced that the world’s largest lithium ion battery will be installed alongside Hornsdale under an agreement between Neoen, Tesla and the South Australian Government. The 100 MW/129 MWh battery is due to be completed by the end of 2017 (and contractually within 100 days of a contract signed at the end of September 2017). You can read more about this project here.

 

Future developments: market context

In addition to everyday peaks, South Australia experiences rare-but-large extreme peak demand events. On some days, the demand for electricity can be more than double the average demand on a typical day. This only occurs a few times each year, happening on extreme (hot) summer days and driven by increased use of air conditioners in homes.

Early in 2017, South Australia was widely considered to be in an “energy crisis”. That diagnosis followed a state-wide power outage event that occurred on 28th September 2016 (a “black system” event). Then a heatwave that occurred on February 8th 2017 led to the load-shedding of 90,000 South Australians.

Power outages are managed across the national electricity grid by the Australian Energy Market Operator (AEMO), and locally in consultation with the Government of South Australia, ElectraNet (the TNO – transmission network operator) and SA Power Networks (the DNO – distribution network operator).

The AEMO reported that the black system event was caused by a sequence of events, briefly:

  • Two tornadoes simultaneously damaged two different 275kV transmission lines, causing them to ‘trip’ and resulting in multiple voltage dips on the grid within a two-minute period.
  • This number of voltage dips caused a protection feature to be activated on eight wind farms, leading to a generation reduction of 456 MW over a period of just seven seconds.
  • To offset this reduction in windfarm output, a big increase in imported power flowing through an interstate interconnector (the Heywood Interconnector) was needed. But the rapid increase in flow activated another protection scheme; this one tripping the Interconnector offline. As a result, South Australia became ‘islanded’, separated from the National Electricity Market.
  • The remaining generation in the islanded state system was insufficient to meet the connected demand and so the frequency of the system could not be maintained – leading to the full system blackout.

The load-shedding event in February 2017 occurred when Adelaide endured a maximum temperature of over 42 degrees. Some inland locations saw readings exceeding 46 degrees. The resulting demand level corresponded to AEMO’s “P10” maximum half hourly demand forecast for South Australia. That means a forecast expected to be exceeded only one year in ten.

During this event, prices spiked to $13,000-$14,000/MWh for over 2 hours (which included the load-shedding period).

Some of the gap between local supply and demand was met from the two interconnectors linking SA to Victoria and the rest of the NEM. Rolling controlled load shedding over a period of about 1 hour was used as the last option to keep the system supply and demand in balanced.

To avoid such circumstances in future, South Australia’s system needs to be more flexible. However a recent report by the AEMO predicted that declining gas production could lead to major electricity deficits as soon as summer 2018. Climate commitments and an old fleet – built in the 70s and 80s – also mean an increasing number of Australia’s coal power plants are also due or likely to close. In other words, dispatchable generating capacity threatens to shrink at the same time as variable resources such as Hornsdale Wind Farm grow.

Hence battery storage and other solutions, to help combat both frequency events and bulk supply/demand imbalances, will be key to the continued development of renewable power projects in the region.

 

Last updated: October 2017

** You may also want to read about the Tesla “Big Battery”, which is written up as a case study here. **

 

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