Solar Power Generation Facility BUSINESS CASE
Transcript of Solar Power Generation Facility BUSINESS CASE
BUSINESS CASE Prepared by Berri Barmera Council in support on the funding
submission to the State Local Government Infrastructure
Partnership
Berri Renewable Energy
Solar Power Generation
Facility February 2017
Berri Barmera Council Business Case for Berri Renewable Energy Solar Generation Facility
SLGIP Funding Submission February 2017
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Table of Contents
Executive Summary 3
Strategic Assessment 6
Project Description 9
Strategic Alignment 13
Alignment with Council Strategic Management Plan 13
Local Government Act and Riverland Development Plan 14
Alignment with SA Strategic Plan 17
Ten Economic Priorities 17
Planning Strategy for SA 20
Strategic Infrastructure Plan for SA 21
Integrated Transport and Land Use Plan 22
Stakeholder Engagement 23
The Case for Investment 24
Overview 24
Background 25
Objectives/benefits/outputs 28
Economic growth 28
Reliable power supply 29
Project beneficiaries 30
Options analysis 32
Project Management 33
Project delivery 33
Project management capacity 35
Project evaluation 36
Project Funding 38
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Figure 1 Berri Barmera Council Area 8
Figure 2: Solar Power Generation Facility framed PV modules 9
Figure 3: Site of Renewable Energy Solar Power Generation Facility 11
Attachment 1: Development Application
Attachment 2: Risk Management Plan
Attachment 3: Financial Model
Attachment 4 Regulatory Review
Attachment 5 Project Delivery and Expenditure Plan
Attachment 6 Independent Cost Estimate
Attachment 7 Berri Barmera Council Long Term Financial Plan
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Executive Summary
Berri Barmera Council is committed to leading the way in South Australia as a showcase
‘renewable energy region.’ Construction of a solar farm will reduce Council’s carbon footprint
and deliver a predictable and cost-effective renewable energy supply for the region.
Recently there has been significant increases and volatility in power costs to key Riverland local
businesses including those with high energy needs. Economic diversification and development
in the Riverland is constrained by the cost and unreliability of power to grow existing business
and attract new business. Construction of the Berri Renewable Energy Solar Power Generation
Facility is in response to a localised need for affordable power to users with high load
requirements to support business, local economic growth and stability of the Riverland region.
An independent financial modelling process has been completed and confirms the solar farm’s
viability. A development application has been lodged and a feasibility study and Prudential
Review will be completed by April 2017 when design and development will commence.
Construction of the Solar Power Generation Facility will begin in September 2017 and be
completed by September 2018. A project risk management plan, independent costings, works
schedule and expenditure plan are attached in support of this business case.
Funding through the State Local Government Infrastructure Program (SLGIP) will accelerate
this project providing an immediate economic stimulus through construction and job creation.
Economic analysis on other solar farms have been used to determine the economic value of the
Berri Solar Power Generation Facility1 which will create 132 full time jobs during construction
and 3 full time positions during the operation of the plant. More than 50 flow on and indirect jobs
in regional industries will result from this project.
1 Mount Remarkable Study 2013. Based on 11 construction jobs/MW and 0.3ongoing jobs/MW
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Specifically, economic benefits include2:
Employment
Gross value added – labour, goods and materials sources locally
Skills – providing skills for local workers providing the foundation to support future solar
projects in the region and state
Long term economic growth strategy – contribute to diversifying the economy and build
local skills
Supply chain development – Australian manufacturing of tracker systems, power cables,
switch gears and construction and installation of plants
A significant benefit of the Berri Renewable Energy Solar Power Generation Facility will be
through 5.5 km of transmission cabling, Accolade Wines and CIT in Glossop can access power
behind the meter. This increases the returns for the Facility and delivers greater benefits and
reliability of power to these companies.
This project is scaleable and would allow for a larger array if the power consumption increases
or batteries become a more viable storage option.
The Berri Renewable Energy Solar Power Generation Facility will deliver on the South
Australian Government’s ongoing commitment to invest in renewal energy projects in regional
South Australia. This project aligns and delivers on the priorities outlined in key SA Plans below.
In addition, this project also delivers on the Low Carbon Investment Plan for South Australia and
the SA Climate Change Strategy.
South Australia’s Strategic Plan
Ten Economic Priorities
Planning Strategy for South Australia
Strategic Infrastructure Plan for South Australia
Integrated Transport and Land Use Plan (ITLUP)
2 AECOM Australia Pty Ltd (2010) Economic Benefits from Solar Flagship Project. BP Solar/FRV Consortium
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The cost to construct the Berri Renewable Energy Solar Power Generation Facility is $25.17M.
Council is seeking a partnership with the SLGIP for 20% of costs i.e. $5.034M.
Berri Barmera Council staff will contract a separate project manager of oversee the construction
of this project. To support sound project management principles, Council has prepared a risk
management plan for the project –project reporting for construction will occur in line with the
agreed funding deed and milestones. Longer term reporting on outcomes will occur through the
Council’s reporting process using the logical connection between the completed project and the
intended results. A comprehensive project final report will provide details of the outcomes
achieved.
Measurable indicators can identify progress towards achieving project objectives:
Accelerating regional economic growth
Cost effective and reliable power supply
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Strategic Assessment
The proponents (applicant)
The Berri Barmera Council area is located within the Riverland, three hours’ drive to the north
east of Adelaide. The Berri Barmera Council is one of three Council areas within the Riverland
which border the River Murray from Blanchetown in the west to Paringa in the east. The Berri
Barmera Council is located within the heart of the Riverland and incorporates some spectacular
scenery and over 65 kilometres of the River Murray, see Figure 1.
The Berri Barmera Council is in the Riverland region of South Australia. The Riverland
population is approximately 33,000 with the Berri Barmera Council population 10,500.
The area is 50,845ha which incorporates the townships of Barmera, Berri, Cobdogla, Glossop,
Loveday, Monash, Overland Corner and Winkie. The economic base of the community is driven
by horticulture and viticulture and associated industries. Berri has traditionally serviced the
region for state and federal government services. Other major sources of economic
development within the area include Accolade Wines Australia located at Glossop, tourism and
retail shopping.
The Berri Barmera area has its origins in the pastoral holdings which occupied extensive tracts
of land adjacent the River Murray as early as the 1850s. The first overland stock route between
New South Wales and South Australia established by Joseph Hawdon and Charles Bonney in
1838 saw the development of Overland Corner as an important staging post for drovers. The
River Murray also attracts visitors to the area for many recreational pursuits e.g. water skiing,
fishing and house boating. Lake Bonney is also located within the Berri Barmera area and is a
key tourist and recreational attraction. The Berri Barmera Council accounts for 34% of the
Riverland population of 33 460. The Riverland unlike other country regions has a stable
population with a small percentage increase.
Berri has a population of 6802, is the major town (originally part of the Cobdogla Sheep Station),
the business heart of the district and the location for many government offices. The Berri Bridge
completed in 1997 has proved to be of great benefit to business and the community.
Barmera with a population of 4132 is located on the shores of Lake Bonney and is a popular
area for recreational pursuits and tourism opportunities. The town should experience a small
growth in population and allowance for this should be made.
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The region has a well-earned reputation for an outdoor lifestyle and sporting excellence coupled
with a naturally friendly and outgoing social acceptance. Berri Barmera Council is very much a
River Murray local government body with their future linked hand in hand with the health of the
river for their economy, recreation and amenity.
Berri Barmera Council is the applicant for the Berri Renewable Energy Solar Power Generation
Facility project submission to the State Local Government Infrastructure Partnership (SLGIP).
To complete the Facility, Council is seeking the SA Government as an investment partner.
Council will fund 80% of the project, $20.136M and is seeking $5.034.9M from the SLGIP.
Council is committed to operating a financial sustainable manner and has conducted a financial
analysis of the Facility which confirms the feasibility of the project.
Berri Barmera Council is in a strong financial position and has developed rigorous policies and
processes to ensure that funds are spent and managed in accordance with Local Government
Legislative requirements. Council has provisioned their contribution to this Facility in the long
term financial plan
1. Council financial commitment $20.136M
2. Partnership Funding from SLGIP $5.034M
Total Project Costs $25.17
Project Description
Project nature and infrastructure
The Berri Renewable Energy Solar Power Generation Facility involves the construction of series
of photovoltaic panels mounted on steel frames. The Facility will have 10 MW capacity The
framed PV modules will be at a fixed horizontal height of approx. 2.9m above ground - see
Figure 2 below.
The land for the Solar Power Generation Facility project is freehold and Council has owned the
title for several decades. The facility requires a relatively even surface level site occupying 30
Ha (hectares) of land. The land is currently vacant and is zoned as ‘infrastructure.’ Previous
uses of the land include a racecourse, wastewater lagoons and irrigation. Development
approval for site coverage required for the Facility has been sought in accordance with
submitted plans and drawings (refer Attachment 1).
The Facility contains the following key components:
Solar PV modules with trackers
Inverters and medium voltage step up transformers
Underground electrical conduits and cabling to connect the arrays to the inverters and
transformers
Transformer station and switchgear
A supervisory control and data acquisition (SCADA) control system
A site office and maintenance building
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Main Gate
Security cameras
Internal access tracks
Laydown area
Perimeter security fencing; and native vegetation hedges
Project location
Property location Moritz Road Berri
Valuation Nos. A2527; A2526 and A2528
CT Reference CT 5979/41 and CT 5937/730
Plan Nos. Parcel Nos. H740200S498; H740200S726;
H740200S500; H740200S499
Berri Barmera Council owns substantial under-utilised land to the north of the township which is
very well suited for renewable energy generation solar array due to the lands’ proximity to an SA
Power Network substation.
The identified 35-hectare site is located to the south of Hoskin Road and bounded by Moritz
Road to the east – see Figure 3. To the west, the site is bounded by private allotments with
residential properties off Minnis Road, a large native copse to the north west and other
commercial land use activities to the south west. The site is separated from Jellett Road to the
south by an active vineyard and now abandoned orchard.
The chosen site provides economical grid connection costs and relatively flat land located in
appropriate zoning. The site also presents no environmental or cultural heritage constraints for a
development of this nature.
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Figure 3: Site of Berri Renewable Energy Solar Power Generation Facility
Financial Sustainability
Berri Barmera Council has a strong history in managing grant funding which provides
confidence to the LGASA that the grant will be expended according to the grant agreement –
see Project Management section for relevant experience. Risks associated with project delivery
and ongoing management have been addressed in the Risk Management Plan – See
Attachment 2.
Berri Barmera Council has sufficient funds to meet its obligations for the project through its own
cash reserves, and borrowings through the Local Government Financing Authority. To validate
that the project is investment ready with construction to commence within months of signing the
funding agreement, reference can be made to Berri Barmera Council Annual Business Plan
2014/15 and Long Term Financial Plan 2014/24 – see links on submission form. Council’s
financial position and the ability to fund any cost overruns and maintain the project in the long
term are also outlined in Council’s Long Term Financial Plan.
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Council will take on the level of indebtedness as part of delivering this project and to ensure
long-term financial sustainability, they have completed relevant financial modeling for inclusion
of this project in their long-term operations. Council can confirm that the project will be in
addition to any existing expenditure committed for the next 2 years. Costs for the Solar Power
Generation Facility are reflected in the revised capital expenditure figures outlined in the
application.
Council operates within a range of prudential management policies, practices and procedures
relating to all areas of operation that align with the Local Government Act (1999), specifically
Part 3, Prudential requirements. The project aligns and reflects all prudential requirements
under the Act.
Council has an established asset and financial management strategy which covers maintenance
of all council assets. Council will manage and maintain all aspects of the Solar Power
Generation Facility and has apportioned appropriate recurrent funds and resources in their
annual budget and capital works program from 2017/18 inclusive.
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Strategic Alignment
Alignment with Council Strategic Management Plans
The Solar Power Generation Facility is an important community asset for the future of region.
It is a key outcome of Council’s Strategic Plan: Goal 4: Valued Natural
Environment/Resources, Objective 1: We will explore alternative energy supplies to reduce our
carbon footprint.
The Facility aligns and delivers on all five goals outlined in the Berri Barmera Strategic Plan –
see below and is a specific objective
1. Confident and contributing community – the solar power facility will create jobs and
improve the liveability of the town and region
2. Diverse economy – the solar power facility will facilitate business development and
business diversification that will broaden the economic base
3. Smart infrastructure – renewable power facilities are smart infrastructure and the new
facility will use modern and leading technologies for energy efficiency
4. Valued Natural environment/resources – taking advantage of natural resources such
as sun will work towards self -reliance on energy and reduce energy costs for the
community
5. Strong internal capability and capacity – Council maintains strong procurement,
monitoring and evaluation processes to ensure it remains prudent with decision making
and spending
The project has been evaluated against State strategic documents and the relevant provisions
of the Berri Barmera Council Development Plan (consolidated 29 November 2012). Overall, the
proposed works are consistent with a number of state strategic directions and are not at
variance with the desired outcomes of the Berri Barmera Council Development Plan.
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Local Government Act and Riverland Development Plan
Berri Barmera Council have a range of prudential management policies, practices and
procedures relating to all areas of operation that align with the Local Government Act (1999),
specifically Part 3, Prudential requirements for certain activities. The project aligns and reflects
all prudential requirements under the Act.
The project aligns with the objectives of the Berri Barmera Development Plan (consolidated 8
December 2016)3, specifically:
Energy efficiency
1. Development designed and sited to conserve energy and minimise waster
2. Development that provides for on-site power generation including photovoltaic cells and
wind power
3 http://www.dpti.sa.gov.au/__data/assets/pdf_file/0003/249960/Berri_Barmera_Council_Development_Plan.pdf
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Industrial development
1. Industrial, warehouse, storage, commercial and transport distribution development on
appropriately located land, integrated with transport networks and designed to minimise
potential impact on these networks
2. The development of agricultural industries, wineries, mineral water extraction and
processing plants, and home based industries in rural areas
3. Industrially zoned allotments and uses protected from encroachment by adjoining uses
that would reduce industrial development or expansion
4. Industrial development occurring without adverse effects on the health and amenity of
occupiers of land in adjoining zones
5. Compatibility between industrial uses within industrial zones
6. The improved amenity of industrial areas
7. Co-location of industries in townships to enable promotion and implementation of
innovative waste recovery practices, methods of power generation and re-use of by-
products.
Infrastructure
1. Infrastructure provided in an economical and environmentally sensitive manner
2. Infrastructure, including social infrastructure, provided in advance of need
3. Suitable land for infrastructure identified and set aside in advance of need
4. The visual impact of infrastructure facilities minimised
5. The efficient and cost-effective use of existing infrastructure
6. Development within the River Murray valley be connected to an approved water
reticulation and sewage disposal scheme
Renewable Energy Facilities
1. Development of renewable energy facilities that benefit the environment, the community
and the state
2. The development of renewable energy facilities, such as wind farms and ancillary
development, in areas that provide opportunity to harvest natural resources for the
efficient generation of electricity
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3. Location, siting, design and operation of renewable energy facilities to avoid or minimise
adverse impacts on the natural environment and other land uses.
Infrastructure Zone
1. Primarily, a zone for the provision of infrastructure
2. Infrastructure facilities and land required for infrastructure facilities preserved from the
encroachment of incompatible land uses
3. Development designed and sited to establish and maintain high amenity along zone
interfaces and public access roads and to protect native vegetation.
Alignment with State Government priorities
The South Australian Government has a vision to make South Australia a place where people
and businesses thrive. Underpinning this vision is the committed to establish Adelaide as the
world’s first carbon neutral city which complements the economic priority to unlock the full
potential of South Australia’s resources, energy and renewable energy assets.
The SA Government has committed to renewable energy and low carbon generation
investment providing significant economic benefit to regional and state economies. Since 2003
there has been 5.5 billion in investment in renewal energy in South Australia with 40% of this
occurring in regional areas.
The Berri Renewable Energy Solar Power Generation Facility will deliver on the South
Australian Government’s ongoing commitment to invest in renewal energy projects in regional
South Australia. This project aligns and delivers on the priorities outlined in key SA Plans
below. In addition, this project also delivers on the Low Carbon Investment Plan for South
Australia and the SA Climate Change Strategy.
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SA Strategic Plan
This project will deliver on SA seven strategic priorities including:
An affordable place to live– providing cost effective and reliable energy will improve
affordability of living in South Australia, job creation in regional SA will accelerate
economic and population growth
Growing Advanced Manufacturing – affordable and reliable energy will support growth
and diversification in industry and manufacturing
Premium food and wine from our clean environment – achieving carbon neutrality
through investment in renewable energy infrastructure will enhance SA’s global premium
food and wine status
Safe communities and neighbourhoods – ‘green’ and energy-efficient communities
support healthy and active lifestyles. This project also assists to mitigate against major
storms
Every change for every child – providing cost effective and reliable energy will improve
affordability and liveability of regional SA, specifically the Berri Barmera Council region.
Realising the benefits of the mining boom – creating affordable energy for expanded
electricity transmission and new generation infrastructure in the mining sector; support
the global promotion that SA is a competitive location for investment in energy
development and production
Ten Economic Priorities
This project will deliver on many of the SA’s ten economic priorities including:
Unlocking our resources – the SA government has a clear directive to invest in
renewable energy resources, the Berri Renewable Energy Solar Power Generation
Facility will create nearly 200 jobs in regional SA
Best place to do business – carbon neutrality and cost effective and reliable utilities
will attract business investment
Opening doors for small business – carbon neutrality and cost effective and reliable
utilities will attract and support regional small business
International connections - carbon neutrality and cost effective and reliable utilities will
attract global investment
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Destination of choice – contributing to the world’s first carbon neutral city will increase
tourism in metropolitan and rural SA
Premium food and wine exported to the world – improved roads will facilitate safer
connection and increased accessibility between primary production, processing centres
and linkages to major transport centres – ports and rail networks
A destination of choice for travelers – direct link to Sturt Highway – main route
between Adelaide to Sydney
Growth through innovation – supporting innovation through new and emerging
renewal energy technologies and investment
The knowledge state – building the local knowledge base for smart, renewable
technologies that delivers strong economic growth and creates jobs
SA Strategic Plan Key Drivers and Target
The Berri Renewable Energy Solar Power Generation Facility aligns with the SA Strategic Plan
Key Drivers and Targets:
Prosperity
Vision: A strong, sustainable economy that builds on our strengths
Goal: We develop and maintain a sustainable mix of industries across the state.
Target 40 Food Industry- Grow the contribution made by the South Australian food
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industry to $20billion by 2020.
Target 66 Emissions intensity- Limit the carbon intensity of total South Australian
electricity generation to 0.5 tonnes of CO2/MWh by 2020.
Comment: the Solar Power Generation Facility will support major businesses involved in food
and wine production in the Riverland. The generation of renewable energy from the Facility will
provide stable and affordable power over long term business cycles allowing predictable growth
and expansion and contributing to the State’s goal to minimise carbon intensity associated with
electricity generation.
Vision We have a skilled and sustainable workforce.
Goal All South Australians have job opportunities
Target 47 increase employment by 2 % each year from 2010 to 2016
Comment: Food and wine industries provide for a large percentage of local job opportunities in
the Riverland. The Solar Power Generation Facility provides for long term stability for power
costs to CIT and Accolade Wines and as such supports sustainable jobs growth in the district.
Environment
Vision South Australians think globally, act locally and are international leaders in
addressing climate change.
Goal We reduce our greenhouse emissions.
Target 59 Greenhouse gas emissions reduction - Achieve the Kyoto target by limiting the
state's greenhouse gas emissions to 108% of 1990 levels during 2008-2012, as a first
step towards reducing emissions by 60% (to 40% of 1990 levels) by 2050
Target 64 Renewable energy - Support the development of renewable energy so that it
comprises 33% of the state's electricity production by 2020 (Milestone of 20% by 2014)
Target 66 Emissions intensity - Limit the carbon intensity of total South Australian
electricity generation to 0.5 tonnes of CO2/MWh by 2020
Goal South Australia has reliable and sustainable energy sources, where renewable
energy powers our homes, transport and workplaces.
Target 64 and 66 as previously mentioned.
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Comment: the 10 MW Solar Power Generation Facility assists in addressing the challenges
associated with climate change through dedicated renewable energy generation to meet the
demands of local large scale customers. The Facility will contribute to the State’s target of 33%
of electricity generation being from renewable resources by the year 2020.
Planning Strategy for South Australia
The Murray and Mallee Regional Plan outlines the State Government’s directions for land-use
change and development in South Australia. Relevant planning directions of this document have
been incorporated into the Berri Barmera Development Plan.
The Berri Renewable Energy Solar Power Generation Facility delivers on key issues identified
in the Regional Plan:
Economic development – encouraging the development of alternative energy
industries i.e. solar power; attracting industry to the region where there is infrastructure
capacity for growth i.e. electricity
Infrastructure and service provision – expanding the local generation of electricity
through solar, wind farms and peaking plants to increase capacity for economic activity;
providing strategic electricity infrastructure corridors for augmentation and extension of
the transmission network
Population and settlements – providing greater employment, recreation and other
opportunities to retain young people – achieve through job creation from the solar power
generation facility
Berri Barmera Council has considered all updates and amendments to the South Australian
Planning Strategy. The Berri Barmera Development Plan (see above) is consistent with the SA
Planning Strategy through ongoing review and preparing strategic directions reports. As a
result, the Berri Renewable Energy Solar Power Generation Facility leverages and delivers on
both the SA Planning Strategy and Berri Barmera Council Development Plan.
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Strategic Infrastructure Plan for SA (update)
The Berri Renewable Energy Solar Power Generation Facility delivers on the strategic priorities
in the SA Infrastructure Plan for the following:
1. Energy sector:
Electricity generation and the supply/demand balance - maintain a reliable,
secure and competitively priced supply of electricity in a carbon constrained
economy.
Electricity transmission and distribution networks - facilitate greater
interconnectivity of electricity transmission networks to increase system security
and reliability and increase exports of South Australian renewable energy
Climate change - foster research and development and fast take-up of
technological advances in renewable energy supply and use; promote the
development of market and regulatory arrangements that encourage energy
industry developments that minimise growth in greenhouse gas emissions
Managing demand - Promote the adoption of demand-side measures that
contribute to more efficient energy use and improve use of existing infrastructure
Energy market development and reform - Promote the development of national
policy and regulatory arrangements for energy markets that ensure that South
Australia secures access to reliable, sustainable and affordable supplies of
energy; contribute to national energy reforms that will support the timely
development of transmission infrastructure and equitable cost allocations.
2. Minerals and energy resources sector - Upgrade the electricity transmission network to
accommodate investment in renewable energy generation.
The Berri Renewable Energy Solar Power Generation Facility delivers on the strategic priorities
in the SA Infrastructure Plan – Regional Overview Murray and Mallee:
electricity extension and augmentation for new areas of agriculture, horticulture, mining
and processing can require long lead times.
Renewable energy exploration/ development activities are occurring across the region -
geothermal, wind and solar energy sources are all being considered.
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Ensure that infrastructure upgrades support diversification of the region’s economic
base.
Integrated Transport and Land Use Plan
This Berri Renewable Energy Solar Power Generation Facility will be located close to the Sturt
Highway. The improvements to the regional road network identified in above Plan will support
the project’s outcomes of economic diversification, business development and jobs growth.
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Stakeholder Engagement
Accolade Wines are supportive of strategies which underpin predictability of power costs whilst
assuming more control over risks associated with supply reliability. Accolade strongly support
the construction of the Solar Generation Facility – see attached letter of support.
For CIT, the embedded generation offered through the Berri Renewable Energy Solar Power
Generation Facility can reduce and stabilise local power costs for irrigation charges by CIT to
regional producers. CIT strongly support the construction of the Solar Generation Facility – see
attached letter of support.
The Berri community fully support the solar farm – see attached letters of support. As required
by Section 48 (2) d of the Act, a formal public consultation process will occur prior to the
schedule of works. This will take around 2 months.
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The Case for Investment
Overview
Recently there has been significant increases and volatility in power costs to key Riverland local
businesses including those with high energy needs. Economic diversification and development
in the Riverland is constrained by the cost and unreliability of power to grow existing business
and attract new business. The project is being driven by localised need for affordable power to
users with high load requirements to support business, local economic growth and stability of
the Riverland region.
Berri Barmera Council will construct the Berri Renewable Energy Solar Power Generation
Facility with an initial capacity to generate up to 10 MW for local distribution and grid connection.
The development will use solar photovoltaic technology with both local ‘behind the meter’
connection to industrial and commercial customers and grid connection to the Berri substation
located close to the Solar Power development site.
The project will assist in building a business environment that supports employment creation
and retention and growth associated with agriculture and wine production with representative
key sectors of the local economy. Both intended ‘direct connect’ customers Accolade Wines and
Central Irrigation Trust (CIT) are large scale employers of local people, purchasers of local
services and goods and are significant project partners in the Solar Power Generation Facility.
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Berri Barmera Council will to establish formal agreements for purchase of generated power from
Accolade Wines and CIT.
The potential impact of the Solar Power Generation Facility upon the local economy through
direct investment and multiplier effects is very significant. Financial modelling has been
completed of the Facility and demonstrates that the project is feasible – see Attachment 1.
Background
Geographically, the location for the Berri Renewable Energy Solar Power Generation Facility is
ideal for both solar load and the transmission of electricity. The proposed site for the Facility is
located near the ElectraNet/SA Power Networks 132/33 kV substations in Berri North.
Solar Power Generation Facility and had previously been considered by a private entity for a
grid connected solar farm. Changes in Federal Government policy and market conditions have
held back progress of the site being developed for a small-scale grid connected solar farm.
However, in recent years there has been significant increases and volatility in power costs to
key local businesses including those with high energy needs. Subsequent investigations have
demonstrated that embedded local solar generation can be supplied to these customers at a
cost that is competitive with market based supply through the retail market or spot market.
Berri Barmera Council is developing the project in collaboration with Accolade Wines and CIT.
The infrastructure developed will remain in the ownership of Berri Barmera Council. The
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purchase of power from the site will be subject separate contracts (Power Purchase
Agreements) with end users. Through PPA, stability in power costs can be guaranteed for these
businesses and provide a level of certainty desired for ongoing financial management and future
investment.
Accolade Wines has a growth strategy which includes additional investment in their Berri plant
to service growing export markets, including the developing increase in demand from China for
Australian bottled table wines. The company’s decision to consolidate its investment in the Berri
district indicates likely generation of local employment opportunities especially for younger
residents looking for long term career opportunities and stable employment. However, power
costs associated with the Berri operations are a substantial component of overall production
costs and the unpredictability of these costs impact upon future growth plans and additional
investment in local employment. Critical production components such as refrigeration and 24
hour shifts require a high level of reliability in respect to power supply. Accolade Wines are
supportive of strategies which underpin predictability of power costs whilst assuming more
control over risks associated with supply reliability.
For CIT, a similar story exists in that there is a power charge component for supply of CIT water
that is passed onto end users. This charge has risen significantly in recent years and has a very
strong impact on grower capacity to manage existing businesses successfully, let alone
consider expansion and providing additional employment opportunities to local community.
‘….power generation charges have now doubled in the 2015/2016 financial year….Immediately
after the announcement of the closure of Northern Power Station in Port Augusta we saw the
price of generated power double. CIT is looking at ways to minimise this impact but there are
very few options.’ (CIT Chairman 2016)
The embedded generation offered through the Berri Renewable Energy Solar Power Generation
Facility is one such option that can reduce and stabilise local power costs as a component of
irrigation charges by CIT to regional producers.
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Regulatory Review
Council have engaged CQ Partners to conduct a Regulatory Review of the Berri Renewable
Energy Solar Power Generation Facility – see Attachment 4 for an overview. CQ Partners are a
market advisory company specializing in providing advice, services and structured products to
achieve commercial solutions in the electricity, gas, carbon, renewable and fuel markets. The
Review will be completed prior to project commencement.
CQ Partners have produced the financial modelling and will provide regulatory advice including:
AER retail application
Austraclear account set up
Prudentials – via financial institution and lodgement with AEMO
AEMO application to become a market customer
Any applicable licences through ESCOSA
B2B systems to support AER application (settlements, risk management framework,
meter reading etc)
AER application focuses on key areas including capability, financials, systems and
resources.
Where necessary assist Council in these areas
PPA structure and implementation
Implementation of retailing business and risk mitigation
Clutch will provide advice on transmission infrastructure and connection to the grid including
negotiations with SA Power Networks and Electranet. May Brothers will provide project
management for the construction of the solar array and other infrastructure. Yates Electrical
Services – Have provided a quotation for the construction of the solar array to the point the
energy leaves the site.
Council will specialist resources and energy legal services for the Power Purchasing Agreement
from a panel of suitable firms.
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Objectives/Benefits/Outputs
What is the gap or need which the proposed project is seeking to fill?
The two main needs this project will address are:
1. Accelerating regional economic growth
2. Cost effective and reliable power supply
Economic Growth
Access to transport, telecommunications, power, gas, and water networks are critical inputs for
business as they undertake productive activities, expand, and create jobs. Investments in
electricity produce long-term economic growth rates and are positively correlated with job
growth4. Energy plays a fundamental part in the economic growth process. An international
literature review confirms a positive correlation between energy use and economic growth5.
Funding through the SLGIP will accelerate this project providing an immediate economic
stimulus through construction and job creation. More than 50 flow on and indirect jobs in
regional industries will result from this project. Specifically, economic benefits include6:
Employment
Gross value added – labour, goods and materials sources locally
Skills – providing skills for local workers providing the foundation to support future solar
projects in the region and state
Long term economic growth strategy – contribute to diversifying the economy and build
local skills
Supply chain development – Australian manufacturing of tracker systems, power cables,
switch gears and construction and installation of plants
A significant benefit of the Berri Renewable Energy Solar Power Generation Facility will be
through 5.5 km of transmission cabling, Accolade Wines and CIT in Glossop can access power
4 http://www.ifc.org/wps/wcm/connect/83affa004f7ce00bb812fe0098cb14b9/chapter6.pdf?MOD=AJPERES 5 CDC Group (2016) What are the links between power, economic growth and job creation? Development Impact
Evaluation, Evidence Review. 6 AECOM Australia Pty Ltd (2010) Economic Benefits from Solar Flagship Project. BP Solar/FRV Consortium
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behind the meter. This increases the returns for the Facility and delivers greater benefits and
reliability of power to these companies.
This project is scaleable and would allow for a larger array if the power consumption increases
or batteries become a more viable storage option.
Job creation
As a source of energy, solar power is a job-creating powerhouse. Money invested in solar
power creates two to three times more jobs than money invested in coal or natural gas7. A solar
farm will bring significant and sustained economic benefits to one of South Australia’s most
disadvantaged communities, the Riverland.
The economic benefits of developing large-scale solar farms extends beyond the boundary of
the project into the wider community. Economic analysis on other solar farms have been used to
determine the economic value of the Berri Solar Power Generation Facility8 which will create
132 full time jobs during construction and 3 full time positions during the operation of the plant.
More than 50 flow on and indirect jobs in regional industries will result from this project.
Reliable Power Supply
Solar energy is a renewable free source of energy that is sustainable and totally inexhaustible,
unlike fossil fuels that are finite. It is also a non-polluting source of energy and it does not emit
any greenhouse gases when producing electricity. Berri Renewable Energy Solar Power
Generation Facility will provide an affordable and reliable energy source for local business and
the community. The Facility will also secure a sustainable and independent energy future for the
Riverland community. Berri’s business sector and the community will no longer be reliant on un-
renewable energy suppliers from outside South Australia or unnecessary policy directives from
large multi-national companies for load sheading in peak periods.
7 costofsolar.com/solar-power-advantages-and-disadvantages/ 8 Mount Remarkable Study 2013. Based on 11 construction jobs/MW and 0.3ongoing jobs/MW
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Environmental benefits of the Solar Power Generation Facility upgrade include:
Reduces the effects of global warming
Reduces carbon emissions
Noise reduction
Renewable energy source
Minimum reliance on land, water and hazardous materials
Project beneficiaries
The Berri Council, community and business sector will be the beneficiaries of the project. In the
immediate term, Council has secured two direct connect customers who are large scale
employers of local people and purchasers of local goods and services. Accolade and CIT will
purchase energy from the Solar Power Generation Facility and funds will be used for These
funds will be used to offset construction costs of the Facility and be used for community benefit.
Accolade Wines
Accolade Wines is the number one wine company in Australia and the UK by volume, and the
fifth largest wine company in the world. Headquartered in Australia, Accolade Wines delivers
approximately 38 million cases to more than 140 countries annually; including Australia, the UK,
Mainland Europe, the US, Canada, Japan, New Zealand and China.
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Central Irrigation Trust
Central Irrigation Trust which is situated in Barmera, pumps water from the River Murray
through large diameter pipeline systems to 1,600 growers who irrigate 14,000 hectares of
horticultural crops in 12 Private Irrigation Districts in the Riverland Region of South Australia -
Berri, Cadell, Chaffey, Cobdogla, Kingston, Loxton, Moorook, Mypolonga, Waikerie, Lyrup,
Golden Heights and Sunlands.
This project will be in no competition with private business or other public services. The Solar
Power Generation Facility will provide an alternative, cost-effective and reliable energy source.
This will enable economic diversification through growth of existing businesses, attracting new
business and jobs growth in the region.
If applicable, provide information about the extent of any direct private benefit from the project
and ICT expenditure involved (refer Guidelines P.5)
NA.
Estimate the direct employment impacts, during the construction phase and, if any, ongoing
once the project is completed.
Berri Solar Power Generation Facility9 which will create 132 full time jobs during construction
and 3 full time positions during the operation of the plant.
Estimate any indirect employment impacts.
Due to increased operating capacity, more than 50 new jobs will occur in Accolade Wines and
CIT from this project. Additional indirect employment due to other business growth and new
business entries may account for another 10-20 jobs.
9 Mount Remarkable Study 2013. Based on 11 construction jobs/MW and 0.3ongoing
jobs/MW
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What is the expected contribution of the project to the local economy or nearby business
(section 48 (2) (c) of the Act)
A financial modelling process was completed for the Berri Solar Power Generation Facility. The
positive net present value (NPV) with a high IRR (11.61%) means that the investment is
beneficial – see Attachment 3.
Options Analysis
Outline any alternative options for meeting the need identified and why the proposed project is
the preferred solution.
Berri Barmera Council are a leader in environmental and natural resource management and
supporting a growing economy in the region. In analysing alternative options to the current one-
dimensional and unreliable power supply and escalating energy costs to consumers, Council
have completed an analysis of viable and alternative energy options.
The State Government’s focus on renewable energy, low carbon generation investment and
development of alternative energy industries in the Mid Murray and Riverland region was
considered in Council’s energy analysis process. Council also considered the independent
financial modelling completed of the Solar Power Generation Facility determined a positive net
present value (NPV) with a high IRR (11.61%) meaning that the investment is beneficial.
Berri Barmera Council have completed a risk assessment of this project. The result being that a
Solar Power Generation Facility option including size (10 MW) and type (solar photovoltaic
modules with trackers) is the most prudent, effective and efficient solution to affordable
provision of power to users with high load requirements. This option supports the business and
local economic growth and stability of the Riverland.
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Project Management
Project delivery arrangements
Project Delivery
Council have assessed whether a formal Prudential Management Report is required for this
project, as outlined in the Act. As the total project cost is in excess of $4M, Council will conduct
a Prudential Review prior to project commencement. Informing the Prudential Review will be the
outcomes of the Feasibility Study – Attachment 4. Other documents to support the project
delivery approach include Attachment 2 for Risk Assessment and Management Plan and
Attachment 5, Project Delivery Timetable.
How will Council staff and external contractors be involved?
Council staff have a strong background in project and financial management and have
experience in managing many infrastructure projects to standard, on time and within budget.
Council staff manage more than $200M of infrastructure assets on an annual basis. Recent
projects include:
Riverland Regional Innovation and Sports Precinct - $7M
Berri boat ramp - $320 000
Berri Stormwater recycling scheme - $900 000
Council’s Director of Infrastructure will liaise with the successful construction company who will
manage the delivery of the Solar Power Generation Facility.
Berri Barmera Council business aligns with the legislative guidelines of the Local Government
Act 1999. Chapter 4, parts 3 and 4 of the Act outlines the prudential requirements and contracts
and tender policies for SA Councils. In preparing the Risk Management Plan, Attachment 2 for
this project Council has determined that the management and delivery approach is the most
appropriate for carrying out the project.
Berri Solar Power Generation Facility10 which will create 132 full time jobs during construction
and 3 full time positions during the operation of the plant. Due to increased operating capacity,
10 Mount Remarkable Study 2013. Based on 11 construction jobs/MW and 0.3ongoing jobs/MW
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more than 50 new jobs will occur in Accolade Wines and CIT from this project. Additional
indirect employment due to other business growth and new business entries may account for
another 10-20 jobs.
How will Council seek to maximise use of local contractors/consistency with the SA Government
Industry Participation Policy?
Berri Barmera Council supports and adheres to the South Australian Industry Participation
Policy (IPP). Council aligns with Part 4 Contracts and tenders policies of the LGA Act (1999)
and where possible, use local, regional or SA-based competitive businesses employing South
Australians to deliver works for Council. If relevant, Council will select contractors that use
Australian Steel products.
In developing tender documents, Council will ensure that the successful contractors will
demonstrate they have maximised employment opportunities for SA residents and use local
businesses for contract opportunities.
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Project Management Capacity
Relevant Council Staff Experience and Capacity
Berri Barmera Council staff will contract a separate project manager of oversee the construction
of this project. To support sound project management principles, Council has prepared a risk
management plan for the project – Attachment 2.
Council’s Director of Infrastructure, Myles Somers will oversee the project management– see
below for a statement on his capacity and experience. Additional Council staff will assist the
project manager and include the CEO, the Executive Management Team, HR, finance and
administrative staff. An additional 85 hours in staff time has been estimated over the 18-month
project duration.
Myles Somers is the Manager Environmental Services and Major Projects and is a Registered
Planner with an extensive career in both Local Government and in the private sector working in
the Energy development industry. He holds qualifications in Environmental Health, Economics
and Urban Planning and is a Member of both the Australian Institute of Project Management
and the Planning Institute of Australia. He leads a number of major projects for Council and
manages a team delivering statutory legislation services in Planning, Building, Environmental
Health, Property Management and Local laws. His previous position prior to joining Berri
Barmera Council in 2015 was with ElectraNet the South Australian Electricity Transmission
Network Provider as Manager of Planning Approvals. During his 10-year tenure with ElectraNet
he was a core member of project team delivering complex high value projects such as power
line, substation and private sector energy developments. He has a vast network of contacts with
access to specialist support for major project delivery.
David Beaton is the Chief Executive Officer for Berri Barmera Council and will be the
nominated Project Manager within Council. He has a strong background in leadership and
management and has overseen many of Council's infrastructure projects over the past 5 years.
David has led improvements in Council’s financial performance and community support. He has
been able to attract federal funding to secure improvements in water use and reuse efficiency
and long term aspirational community goals. David has established community led groups in
Berri and Barmera to assist Council in town developments and environmental sustainability.
David seeks methods and partnerships that maximise community benefit.
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Karyn Burton is the Manager of Corporate Services of the Berri Barmera Council, Karyn holds
a Master of Commerce in Professional Accounting. She has over 27 years’ experience in Local
Government undertaking various roles within the corporate business units of Council. Karyn
uses her comprehensive accounting and financial management skills to manage all financial
aspects of the Council and associated staff. Karyn has used effective time management and
organisational skill to provide a proven track record of meeting targets. She applies leadership
and managerial skill throughout the organisation.
Project Evaluation
Monitoring, evaluation and reporting is the way that the government and Berri Barmera Council
will know that the objectives and expectations are being achieved, both with the construction of
the project, and the ongoing benefits into the future.
Project reporting for construction will occur in line with the agreed funding deed and milestones.
Longer term reporting on outcomes will occur through the Council’s reporting process using the
logical connection between the completed project and the intended results. A comprehensive
project final report will provide details of the outcomes achieved.
Measurable indicators can identify progress towards achieving project objectives:
Accelerating regional economic growth
Cost effective and reliable power supply
A range of measures will determine project achievements and include:
1. Local economic data analysis
2. Energy output data of Solar Power Generation Facility
3. Review local and regional employment figures pre and post project
4. Consultation/survey post project with community, Council staff, project management
company
5. Analysis and review of project management approach
6. Financial reporting and analysis, six-monthly
7. Reporting against risk management plan, six monthly
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Indicators may include both activities and outcomes such as a measurable improvement in job
creation and economic development.
A quarterly Project Status Report will be completed for the project outlining;
Key deliverables and milestones
Major activity /deliverable behind schedule
Accomplishments
Next major activities
Major issues and risks
Financials
Change requests
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Project Funding
Income
3. Council financial commitment $20.136M
4. Partnership Funding from SLGIP $5.034M
Total Project Costs $25.17
Expenditure
A detailed expenditure plan should be provided. See Attachment 5 for costed schedule
of works and delivery timetable.
Independent costs are provided in Attachment 6
Council’s Long Term Financial Plan is provided in Attachment 7
Attachment 8 are letters of support.
Wider and longer-term impact
Berri Barmera Council’s LTFP demonstrates Council’s financial sustainability over the ten-year
term of the plan. The plan incorporates maintenance funds for capital upgrades over the long
term. One of the advantages of a Solar Power Generation Facility is their relatively low
maintenance costs and the anticipated ongoing costs for the Facility are reflected in the asset
maintenance plan. Council will include the solar farm infrastructure in their asset register and
initiate an appropriate maintenance and upgrade schedule into the future as part of Council’s
Long Term Financial Plan.
Council can confirm that the project will be in addition to any existing expenditure committed for
the next 2 years. Costs for the Solar Power Generation Facility are reflected in the revised
capital expenditure figures outlined in the application.