Renewable Energy Handbook 2010 - Department of Finance - The ...

28DEVELOPING A RENEWABLE ENERGY PROJECT IN WESTERN AUSTRALIAOFFICE OF ENERGYRENEWABLE ENERGY HANDBOOK 20103.1 Overview of theDevelopment Process3.1.1 INTRODUCTIONThis chapter describes in detail the approval processesfor the development of a renewable energy projectin Western Australia. It also is intended to provideinterested parties with a broad overview of theprocess for developing renewable energy projects,from concept through to the construction stage.A fl ow diagram of the various stages involved in thisprocess is available at Figure 7. The diagram breaksdown the process into four discrete stages:Exploration of options;·Feasibility study;·Project design; and·Implementation and operation.·3.1.2 EXPLORATION OF OPTIONSProject Identification andPreliminary EvaluationThe fi rst task in the development of a project isto identify an opportunity that could be developedinto a viable renewable energy facility. This willrequire knowledge of local resources and infrastructure(for example, wind speed over various seasons;the quality and type of solar radiation, quality andquantity of landfi ll site methane; proximity to theelectricity grid and grid capacity) and an appreciationof the minimum resource or process requirementsto develop a feasible project. A preliminary fi nancialevaluation will need to be developed to determineproject fi nancial viability. For a preliminary evaluation,initial costings are typically based on information fromcomparable projects, industry contacts and generalengineering “rules of thumb”. Revenue streams, suchas RECs and Green Power rights should also be factoredinto the analysis along with market energy prices.3.1.3 FEASIBILITY STUDYA feasibility study will need to be undertaken to assessthe technical and economic viability of the project,as well as to identify any barriers or obstaclesto project development (such as environmentalsensitivity, heritage issues, planning processes,equipment supply lead times) that will need to beovercome. Initial consultation with local stakeholders,including the local government, is also encouragedat this stage as it can aid the progress of a proposalthrough the approvals process.Figure 7. Indicative Development Planof a Generic Renewable Energy ProjectP roject DesignStudy FeasibilityExplore OptionsPreliminary negotiations for PPAwith energy customerProject identificationPrepare preliminary financial evaluationDecision toproceedYesSite investigation and data collectionReview power generation optionsFinancial analysisPrepare and submit feasibility studyDecision toproceedYesStop projectInvestigate environmentaland planning approvalsPreliminary negotiations withgovernment agencies and investorsStop projectFormalise PPA Obtain necessary approvals Secure investorsPrepare project definition documentDecision toproceedYesNoNoNoStop projectThe most common constraints a company will needto address in establishing a project are selecting ordeveloping a competitive renewable energy technology,access to land, project approvals, access to transmissioninfrastructure from the resource location and salesto a competitive and regulated market.Implementationand OperationFormalise contractsDetailed design procurement constructionand commissioningOperation of power station