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Australian farmers to own new biomass co-op to fuel cheaper power

Local farmers will own and operate a new cooperative-style biomass business that will supply a power company on South Australia’s Yorke Peninsula.

The A$100 million (€65m) Yorke Biomass Energy (YBE) project, Australia’s first straw-fuelled power plant launched in September this year, has launched a cooperative-style business model that will see local biomass suppliers own and operate a new company called Yorke Biomass Supply (YBS).

YBS and the individual farmers and straw aggregators who make up the company, will have an exclusive 20-year contract with YBE for the supply of suitable biomass at a base price of A$85 per tonne maintained in real terms.

As part of the initiative, local Yorke Peninsula residents could be given an option to connect to a hybrid micro-grid and enjoy discounted electricity costs of at least 15%.

YBE chairman and renewable energy pioneer Terry Kallis says the co-operative style business model will ‘turn the local electricity market on its head’.

‘Our business model has clear and compelling benefits, including providing local farmers with a new and diversified source of income that in itself will inject around A$6 million per annum into the local community. In fact, our economic modelling estimates that total local spinoffs of around A$27 million per annum will be generated.

‘Ultimately, this project has the potential to significantly reduce the power costs to Yorke Peninsula residents, including Ardrossan, Maitland, Minlaton, Curramulka, and Port Vincent,’ Kallis says.

The Yorke Biomass Energy project will be located near the Ardrossan West substation – currently shared by ElectraNet and SA Power Networks – and be based on global infrastructure company Acciona’s 25MW Sanguesa straw-fuelled project near Pamplona in the Navarra region of Spain.

The project has secured the necessary land and garnered interest from local biomass suppliers on the Yorke Peninsula.

‘We’ve also secured a streamlined approval process and have in place an exclusive engineering, procurement and construction deal with Acciona, which has a proven track record of establishing large biomass plants.

‘We’ll also be employing an open profit-sharing arrangement between YBE, YBS, and local electricity customers. Profits achieved above the 12% internal rate of return being sought will be shared by YBE with suppliers and customers in the form of higher dollar per tonne prices and lower electricity charges respectively,’ Kallis says.

YBE is currently in discussions with SA Power Networks – operator of the South Australian electricity distribution network – regarding how the existing electricity grid network could be used to facilitate lower-cost power.

Paul Roberts, SA Power Networks’ manager of stakeholder relations, says the company supports innovation in the electricity market that will provide a choice in supply options for customers.

‘The Yorke Peninsula biomass energy proposal is interesting and an example of the kind of innovation that is emerging in the area of distributed/renewable generation,’ says Roberts.

Kallis says YBE is aiming for the Ardrossan power plant to be operational by 2017, but the company is already exploring options for its business model in other parts of Australia.