At present whilst LGC’s are at current levels I think it works. However, if this isn’t completed for a year (which is likely) then Northam will only get 1 decent year of LGC’s. (NOTE: based on forward estimates that LGC’s are expected to drop to $30 or below after 2020. LGC’s are deemed annually so the first year of operation won’t be realised till 2020/21.
You then need to look at LCOE delivered by plant. No one knows this number but I expect the CAPEX sits around $1.60$/w installed. Cost of plant is then roughly 17.6million. I know CCE think it’s less but let’s face it their track record on pricing projects is poor. Further you them must look at yield. I assume it’s going to generate 24,000MWh pa. (CCE advice)
This issue very simply is that the AEMO WEM Spot (which is effectively what the plant will get paid) is very low during daylight hours. If you use today as an example, roughly $25 MWh. Infact the WEM goes into negative already during peak daylight hours on many days throughout the year for reasons Dyeman suggested. This is simply a reflection of household PV coming on strongly into the network. This will only increase and increase dramatically. If you use today’s WEM numbers less LGC’s....well you do the math and make up your own opinion.
My estimation (without factoring in capacity credits, Western Power costs, cost of capital, operations and maintenance or taxation benefits) is that this does not have a payback for 10 to 20 +++ years. At best this is an 8 year play. There is such a significant spread because it’s hard to understand what the future holds for policy or where WA energy markets will land. In my personal opinion is a big white elephant unless a PPA is committed at $120MWh.
But that isnt what has been sold to shareholders or investors!!!
I now realise this business survives on people not knowing or not understanding. It exploits very good people and it rides the greenwash wave. Drink the coolaid and suck on the vapourware! Get everyone so high on announcements that are nothing more than that. Announcements!!! 10 plus years of them!! But no one seems to care. Get everyone to believe in the end game and the greater good... but it seems most don’t understand or question what is happening in between.
And the only people that benefit??? Well time will tell. In my opinion you follow the money and you have your answer.
Do your own investigations. I have and it’s not pretty.
The truth will come out.
CCE Price at posting:
1.6¢ Sentiment: Sell Disclosure: Held
