Big names target Australian renewables
Falling solar and battery storage costs, combined with a desire to save on infill gas use, are luring majors into Australia’s renewables generation sector
Upstream operators BP, Shell, Eni and Total have upped their renewables investment markedly the past 18 months, while local independent producers Santos and Woodside are also starting to invest in green technologies.
Only 1GW of Australia's installed renewable energy capacity is currently owned by the upstream majors, but significant forecast investment means they will be the dominant renewable developers in Australia by end-2020, says consultancy Rystad Energy.
"The Australian renewable energy pipeline is surging above 100GW of solar, wind and utility storage projects with investment matching upstream capex at $10bn per annum," says Gero Farruggio, Rystad's head of Australia and global head of renewables.
The drive is almost wholly due to the rising value of gas and the fact that exporting it as LNG is more cost-effective than burning it in generation facilities used to power gas transport, processing and liquefaction facilities.
"If the amount of gas used at Woodside's Karratha and Pluto facilities is replaced by renewables, Woodside could offset between 7-10pc of gas use. Over the lifetime of those facilities, this equates to Woodside's A$4.5bn ($3.12bn) development interest in the Scarborough field," says Farruggio.
With balance sheets large enough to bankroll investments in emerging technologies, Total, BP, Eni and Shell have so far been the first movers into the Australian renewables sector as a complement to their oil and gas operations. Public perception has also partially motivated this spend, with the more progressive upstream majors keen to be seen investing in low-carbon technologies.
Utility-scale solar the main focus
With up to 450MW of utility-scale renewables under development through its venture with Eren Groupe, Total has invested the most of any major to date in the Australian renewables sector.
BP has approximately 400MW of utility-scale renewables investment awaiting approval in Australia through its LightsourceBP venture, while Shell has 250MW of approved investment. Following its recent acquisition of the Katherine solar farm in the Northern Territory, Eni is also carving out a presence.
Among Australia's domestic producers, Santos has installed 30kW of solar and a 100kWh Ecoult battery storage unit at its Hobbes oil well in the Cooper Basin, replacing a 16kW diesel generator. Further solar and battery investments are planned as Santos seeks to maximise gas produced for export through its Queensland LNG terminal.
"The Hobbes project is commercially driven with the capital invested paid back through savings in fuel, logistics and maintenance. Most importantly, Santos currently uses 15pc of gas produced in the Cooper Basin for infield use which it cannot afford to do at east coast gas prices. We estimate a saving of A$78mn ($54mn) per year at current production," says Farruggio.
In Western Australia, Woodside is using a microgrid solution with a lithium-ion battery energy storage system (BESS) on the Goodwyn A platform. Commissioned this year, it is the first time battery storage technology has been applied in an offshore hydrocarbon facility.
Strong global interest in hydrogen and ammonia technologies has the potential to drive further investment by upstream operators in Australian renewables where much public and private sector attention is being given to building 'blue', 'green' and 'brown' hydrogen export capabilities.
This could see Woodside or another upstream player buy into the planned Asian Renewable Energy Hub in Western Australia's Pilbara region. This envisages installing at least 7,500MW of wind turbines and 3,500MW of solar photovoltaic panels to generate 11,000MW of renewable energy. The bulk of the power will enable large-scale production of 'green' hydrogen products for domestic and export markets.