Listed renewable energy developer Tilt Renewables says its delayed 336MW Dundonnell wind farm in Victoria has been given the green light to move to its next level of production this week, lifting output under the staged commissioning process to 226MW from 150MW.
The Dundonnell wind farm was expected to be in full production by now, was held back by the Australian Energy Market Operator – despite meeting its registration criteria – a result of AEMO’s cautious approach to new connections and because new detailed modelling it commissioned raised concerns about the wind farm’s impact on grid security under certain conditions.
Tilt CEO Deoin Campbell told investors in a conference call accompanying the company’s interim results on Monday that approval to move to the next “hold point” was received on Saturday from AEMO, and it is likely to be put into place during the week.
Tilt most recently has had to limit its output to 150MW, but Campbell says it was still able to deliver about 67 per cent of its expected total output. The major difference came in times of high wind speeds (above 7.6 seconds/metre), when it had to put in the cap, forcing it to run as a kind of baseload facility (or fixed output) during those time.
At 226MW, it will be able to deliver 85 per cent of its normal output, and the company expects to move to the next hold point – at 300MW – at the end of the year, when it can then deliver 95 per cent of its expected output and start to deliver on its contracts to utility Snowy Hydro, retailer Aldi, and the Victoria government, and then to full production in early 2021.
So far, the company has been limited to “merchant” sale, selling on market spot prices, which has delivered an average price of $61/MWh over the last six months a figure which includes large scale renewable energy certificates. It pocketed revenue of around $14.2 million in the first half, but this is around $12 million less than would have been expected if commissioning had progressed as planned.
Last month, Dundonnell was also hit by a fallen blade at one of its Vestas turbines, which brought production across the wind farm to a halt for a few days as the cause was investigated.
Campbell says it is clear that the blade fell because bolts holding it to the hub became loose, but the question of why those bolts became loose is still under investigation.
It is not the only blade fall to have occurred in Vests turbines in recent times, with a fall caused by a lightning strike at the Lal Lal wind farm last year, and four separate incidents in the US over the past year, including in Iowa last month.
Meanwhile, Campbell says Tilt is moving forward on an investment decision on its first big battery project, a 20MW/40MWh facility next to its 101MW Snowtown 1 wind farm in South Australia, with a decision likely to be made in the first quarter of next year.
Snowtown and other wind farms often has to be constrained due to grid limitations in South Australia, and also seeks to duck increasingly frequent negative pricing events, so a battery could help stores excess power during those times, as well as delivering other services to the grid.
“AEMO is understanding more and more about what market can and can’t do,” Campbell said. “They are being more granular in the way they constrain the market. They will not be as severe as they might have been.” Also, the proposed new interconnector to NSW will alleviate pressure, and prices, in the South Australia market.
Tilt is also looking to develop the 400MW Rye Park wind project in NSW, which is currently applying for a higher hub height and which Campbell says is the company’s “best dressed” project in its development portfolio.
Asked if there were concerns about commissioning problems at that wind farm, Campbell replied that the multiple rule changes – the industry was now up to about version 150 of the registration requirements, a lot to do with reactive power support – were being factored in. “These issues are now known and understood by the industry. We are in a better position to deal with it.”
Tilt delivered a fall in operating profit of 55 per cent to $31.8 million, but this was mostly due to the sale last year of the Snowtown 2 wind farm – it’s biggest wind farm before Dundonnell. Bottom line earnings doubled, thanks to accounting measures and the removal of depreciation charges from Snowtown, to $26.8 million.
Campbell says Tilt is well placed, with $300 million in the bank even after a cash return to investors, and with more than 3,000MW of potential projects in the pipeline, mostly in Australia but also in New Zealand, where it is also building the 130MW Waipipe wind farm. It has maintained a market value of around $NZ1.5 billion despite the cash return.
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