Bioenergy Proposal

The Briefing Paper “Kangaroo Island Energy – An evaluation of integrated energy opportunities from plantation timber biomass” has identified the most suitable technology available that meet some diverse drivers / challenges we have as an Island and identifies that there are some significant opportunities here for the Community and Council to consider.

  • It's a clear path to reducing cost of living pressures on our Community from energy bill creep –initial projects would be to remove $0.8-1.1M per year from participating consumer power costs.
  • It's a potential means of mobilizing forestry on the Island that does not necessarily rely on the construction of a Port Facility.
  • It's a potential means of mobilizing forestry on the Island that does not necessarily rely on the construction of a Port Facility.
  • It opens the door for a string of other possible lower cost options for critical infrastructure and services – a strong alternative potable water source in particular.
  • It has the potential to provide an environmentally friendly and reduced cost alternative to municipal waste management – no costly shipment off Island on waste coupled with costly landfill fees and Government levies.
  • It has the potential to create significant opportunities for other business to develop off the back of this project – directly - viticulture, horticulture, bottled water, salt products, hydrogen, ammonia; indirectly – co-location to access cheap behind-the-meter power, water, steam, pressure, hot water etc – key inputs into businesses.
  • It is a unique point in time where Australian and State Government policy and grant funding initiatives are aligned as project enablers presenting a novel opportunity for such an initiative to be undertaken for maximum community advantage.
  • It is completely aligned with the Island’s brand and could significantly bolster / boost tourism for the Island.
  • Assuming Council choose to participate with an equity position, it is a means for Council to generate a revenue source independent of rates and grants (and not to the financial detriment of the Community) – this benefits all in the Community providing the ability to maintain / reduce conventional Council charges in the future. This revenue stream is anticipated to be $0.73-1.5M per year for the years 9-20 in the 20 year modelled life of the project. Distributions in Year 1-8 are assumed to cover costs of equity and interest (a distribution of $0.75M pa). This is the return on power supply only and does not factor in additional return from other enterprises that supply better returns than sale of power to grid (either retail or wholesale), for example through sale “behind the meter”; monetizing “waste” streams of steam and heat; reducing Council costs in other areas (power cost reduction, waste disposal cost avoidance etc).

It is believed that we are at the point where a full feasibility study, to produce an investment ready bankable project document, is the next step. This will require somewhere in the region of $1-1.25M to carry out and it is proposed that the detailed pre-feasibility work carried out to date will provide sufficient depth of information to allow the proponents to approach the appropriate State and Australian Government Agencies and give them confidence to provide funding to carry out this work. It is noted that this initiative aligns very closely with their objectives for delivery of secure and reliable electricity, improving energy productivity, exporting renewably energy and developing the potential for the hydrogen economy.

It is therefore expected that we will be able to look to both State and Australian Governments for funding for the full feasibility study.

In the process of pre-feasibility several contacts have resulted with outline discussions around potential for funding / co-investment in this project and, with the resolution of Council on 13 February 2018:

Moved Cr S Kauppila                                       Seconded Cr L Turner
That Council concur with the assessment of the Chief Executive Officer (in conjunction with Environmental Energy Australia) that there is a business case for seeking funding for a full-feasibility study on the design, construction, commissioning and operation of an integrated bio-energy project for Kangaroo Island and direct the CEO to continue working with EEA with the intent of seeking confirmed external funding for such work, reporting back when funding sources have been identified for further consideration and direction.
CARRIED. 4 For 3 Against                               Minute: C42:2018

The CEO will continue to work with EEA and other technology providers and consultancies to secure funds for the full feasibility study, return to Council for consideration/direction as required and then to progress this as a key project to completion and the production of a full, bankable document. It is anticipated that running concurrently with this will be the identification of potential co-funding equity partners and / or commercial lending facilities that will enable the project to proceed should the full feasibility study confirm the works carried out to date in the pre-feasibility works.

It is anticipated that the full feasibility study will take 6-9 months to complete and therefore the project has the potential to be initiated in August / September 2018.

It is hoped that sufficient funding will be able to be sourced to keep Council input to an “in kind” contribution of CEO time only and not require a cash component. Hours will be recorded and held to be capitalized into equity should the project proceed - whether Council choose to invest additional cash or otherwise to take a participating equity position.

All Questions are welcome and answers will be shared in the Frequently Asked Questions document that can be found under related links on this page.

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