Our thermal energy portfolio is made up of power stations that are powered primarily by gas and coal and operate as base, intermediate or peaking plants with a range of offtakers. This diversity protects our investment from unexpected events or circumstances that could impact the whole portfolio.
Long-term contracts with quality offtakers exist for all assets, excluding Loy Yang A Power Station, which operates as a merchant plant providing one-third of Victoria’s electricity requirements.
All of TSI Fund’s power assets, excluding Loy Yang A, are substantially protected from the impacts of the Australian Government’s proposed Carbon Pollution Reduction Scheme (CPRS) by their contractual arrangements. While Loy Yang A would be impacted should the proposed changes be implemented, the direction of the Australian Government’s Green Paper supports the long-term viability of Loy Yang A and TSI Fund’s investment.
TSI Fund’s focus is to work with Loy Yang A management to negotiate transition arrangements which secure available compensation and develop abatement opportunities to attract Australian Government support and reduce Loy Yang A’s carbon footprint.
TSI Fund is engaged with the Australian Government and various industry bodies to provide our views on the scheme design.
Asset performance
Kemerton Power Station is a gas peaking plant providing input into the South West Interconnected System in Western Australia. Kemerton Power Station performed extremely well during the year due to increased customer demand for power and the high availability and efficiency of the power station.
Demand for power increased due to an unusually warm summer and a gas shortage in June. Primarily run on gas, Kemerton utilised its dual fuel capacity during the gas shortage. The fuel risk for the power station – for both gas and liquid fuel – does not rest with TSI Fund, but forms part of the power purchase agreement with Verve Energy.
We improved the efficiency of Kemerton Power Station with the installation of an innovative and environmentally friendly upgrade. This solution boosts Verve Energy’s ability to supply power to the West Australian market, supplying power to up to an additional 10,000 homes. The power purchase agreement between TSI Fund and Verve Energy was amended to account for the increased capacity at Kemerton.
Collinsville Power Station operates as a coal-fired intermediate plant and provides input to the Queensland region of the National Electricity Market.
Extreme wet weather in north Queensland during February 2008 caused the worst flooding in 30 years. Manager Transfield Services, kept Collinsville running despite the impact on coal supply for power generation.
TSI Fund does not bear fuel price risk for coal for Collinsville as energy charges under the power purchase agreement are matched to cover the fuel costs under the coal supply agreement.
Townsville Power Station operates as a gas base load plant providing input to the Queensland region of the National Electricity Market.
Townsville performed well during the year, meeting availability and power purchase agreement requirements.
Financial performance was aided by a one-off payment of $5 million following the transfer of the power purchase agreement to AGL/Arrow. Under the power purchase agreement, AGL/Arrow supplies and transports the gas for the operation of the plant, removing any fuel supply risk for TSI Fund.
Townsville’s turbine blades will be upgraded during FY2009, increasing capacity by 10 megawatts to 250 megawatts. This work is part of a planned overhaul of the power station by Manager Transfield Services. The power purchase agreement has been amended to account for this additional capacity.
TSI Fund owns 14.03 per cent of Loy Yang A Power Station, an essential base load power generator, providing one-third of Victoria’s electricity requirements with a base generating capacity of 2,200 megawatts. Located in Victoria’s Latrobe Valley, it consists of the power station and the adjacent brown coal mine.
Lower than expected demand for power, combined with the high availability of Victorian generators, resulted in lower pool prices in the second half of FY2008. Loy Yang A also experienced an increase in operating expenditure, as a result of increased maintenance costs. Despite this, the cash contribution from Loy Yang A was in line with the PDS assumption for FY2008.
TSI Fund owns 30 per cent of BP Kwinana Cogeneration Plant, a 118 megawatt gas power station located at BP’s Kwinana Refinery in Western Australia. It provides electrical output to the South West Interconnected System in Western Australia and electrical output and steam to the BP Refinery.
The Kwinana plant outperformed for the year due to additional payments for power generation above contractual requirements.
| total energy produced (megawatts) | energy source | Offtaker | TSI Fund ownership | |
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| Kemerton Power Station | 300 | gas and liquid fuel | Verve Energy | 100 per cent |
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| Townsville Power Station | 240 | gas | AGL/Arrow | 100 per cent |
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| Collinsville Power Station | 180 | black coal | CS Energy | 100 per cent |
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| BP Kwinana Cogeneration Plant | 118 | gas | BP and Verve Energy | 30 per cent |
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| Loy Yang A Power Station | 2,200 | brown coal | n/a | 14.03 per cent |