PHILIP HOPKINS
By PHILIP HOPKINS
THE refurbishing of the Jeeralang gas power station was no slick corporate deal; it was a convoluted, international process of pure luck – and had a key Latrobe Valley connection. And it saved hundreds of millions of dollars.
Michael Hutchinson, son of legendary SEC power executive John Hutchinson, was working for Siemens in Berlin when he had a fireside chat with a colleague. They began to talk about Jeerelang being near the end of its life, and conversation turned towards a closed gas power station at Wilmersdorf in Germany.
“That started a dialogue,” said the head of Energy Australia’s (EA) gas assets, Dale Hogarth.
Talks were had with the power station owner, Vattenfall, but they were not interested in selling the parts; they just wanted to demolish the lot.
That was May 2021.
“We largely walked away, thinking this ‘will not happen’ – but we continued to ask questions,” Mr Hogarth said.
“Michael and I got contact from Porr, a demolition company. They said ‘We might do business with you’.”
Porr, a specialist demolition contractor, had a contract with Vattenfall to demolish the plant.
“We struck up a conversation, there were late evening phone calls. (The Porr executive) negotiated with Vattenfall to sell the equipment to us for salvage, not scrap. We were able to establish a relationship with Porr to buy from them what would have been scrapped, but largely at scrap price. This was a bonus for them, a commercial advantage for them to make money. There was also the sustainability argument – repurposing.
“It was critical for us to get these components. You could not buy them (such components) that still had some life,” Mr Hogarth said.
A remanufactured key component would cost $75 million.
“It did not make commercial sense to rebuild all the units. We look at that as an option, but the idea did not make commercial sense; we would have walked away from B station and shut them (the units) down,” Mr Hogarth said.
The EA team was in principle able to buy the scrap for only $15 million, but that was not the end of the story.
“We did due diligence on what we were buying, but it was all at our risk, Vattenfall or Porr would not give guarantees – they would have thrown them in the bin, ” Mr Hogarth said.
It boiled down to trust.
“We did the best due diligence we could do. We got German technical reports, we had to pay to have them translated into English. It got to the stage where we were comfortable enough that ‘We can do with this’, but could not just grab these machines out of Germany and put them in our machines and say, ‘You beauty’, and get on with life,” he said.
“We had to satisfy ourselves technically.”
The COVID pandemic added another complication.
“We could not see these things being taken apart, so we contracted Siemens to be our technical agent on the ground. We were not contracted to take anything, but Siemens was contracted to do a bit of testing,” Mr Hogarth said.
The EA team had to trust their word. “Was it worth continuing? Yep – but all at our risk.”
EA could not commit until the company knew there was no export or import issues with Germany, so engaged the transport logistics company Fracht to organise the shipment to Melbourne.
“We found out, at that particular time coming out of Germany, it was ‘stink bug’ season. There were export and import limitations around fumigating the things – such little things we had to deal with along the way!” Mr Hogarth said.
“You can’t just import from Germany – things must be asbestos-free, oil-cleaned.”
Then there was the issue of what to with the machines technically.
“We started talking to Ethos Energy, a spinoff from the original manufacturer, to assess the components’ life and set out a series of scenarios. We sent the rotors to a workshop in Italy, the other components are in Thailand being assessed,” Mr Hogarth said.
EA had a contract with Ethos as well, and had to choose from various scenarios: spend between $1-2m to get 1000-2000 ‘starts’ from the refurbished components.
EA’s Jeeralang asset leader, Julia Heslop, had to research EA’s business plan cycle, taking into account how much the Yallourn power station would run.
“For us it’s more difficult. What are the AEMO (Australian Energy Market Operator) scenarios; the energy predictions; what we have done in history – the biggest year was after Hazelwood shut, a bumper year; five-year averages; and plot that against end of life, 2039 ,” Ms Heslop said. “We do that process every year.”
EA is looking to do a rotor exchange program some time towards the end of 2024 into 2025.
THE Jeeralang gas-fired power station, owned by Energy Australia, is undergoing a major upgrade to prepare the station for a prime role in the energy transformation of the Latrobe Valley and Central Gippsland.
Jeeralang, which opened in 1979 as a niche peaking station to support the Valley’s brown coal power stations, will take on an additional firming role as renewables energy kicks into the power grid.
Wind and solar are intermittent when the wind drops off and the sun isn’t shining, so gas-fired power from the refurbished Jeeralang will take up the slack in the grid’s electricity supply.
It is located next to the Hazelwood terminal station, so has direct access to the power grid, and will also connect to output from the proposed Star of the South wind farm in Bass Strait and the Marinus Link to Tasmania.
With a nominal output of 449 megawatts, Jeeralang operates in tandem with its sister station, the 500MW, gas-fired Newport power station in Melbourne.
Dale Hogarth, the head of gas assets at Energy Australia (EA), said Jeeralang was designed as a niche player when the former SEC built the coal-fired power stations.
“It has stood the test of time. It was built for peaking demands and system restart, but now will be firming for renewables and system restart, and has moved through that evolution since 1979,” he told the Express during a tour of Jeeralang.
“Basically, Jeeralang has performed that same role, ran depending on what has been going on in the marketplace.”
When the SEC outsourced its activities in the late 1980s, Jeeralang went through different ownerships, but when the then owner EcoGen put it up for sale in 2018, EA bought the asset and took it over, along with Newport.
However, Jeeralang had become a tired ‘old warhorse’. “A lot of expenditure was needed as it largely had an expired life. Not a lot of outages (for maintenance and refurbishment) had been done,” Mr Hogarth said. He and Julia Heslop, Jeeralang’s asset leader, were given the task to spend money and put life back into the peak gas station.
Ms Heslop told the Express that between 2020 and 2023, major works on the seven units totalled towards $60 million. “It’s significant for a site this size,” she said.
But more was needed. Ms Heslop said it was estimated one new B unit for Jeeralang would cost $75 million.
“We looked at that as option; the idea did not make commercial sense, we would have walked away from B station and shut them down,” she said.
Mr Hogarth said replacing three units, plus the demolition costs and new parts, would push the total cost towards $300 million.
Then luck and persistence took a hand. EA was able to buy some old units for $15 million from a closed peaking power station at Wilmersdorf in Berlin.
“It was critical for us to get these components that still had life in them,” Mr Hogarth said.
These units are now being refurbished in Italy and Thailand and should be on site within 18 months. They will not be not quite new, but very useable and have plenty of life.
“We’ve done that effectively for $15m,” Mr Hogarth said, including the refurbishment work, which would take Jeeralang through to 2039.
“It’s a really good story for repurposing a site. In current environment, not sure anyone would spend $300m to build a 200MW gas turbine station.”
Ms Heslop said the refurbishment work could be done while three units were still available.
Even if EA said, ‘build another unit’ that could not be done as generation was not available.
“Whereas with this, we can get these rotors and when ready, we plan a small outage and we change them out, that becomes a spare. If we did need that later, we can refurbish that and put it back in – it gives us a lot of flexibility,” she said.
EA’s planned battery – the Wooreen Energy Storage System – will be built on empty paddocks next door to Jeeralang. The battery is not connected to Jeeralang operationally, but is deliberately located near the Hazelwood terminal station.
“We own the land it’s on, so it’s easier to get relevant permissions and there are synergies. The technical people are on hand if needed,” Mr Hogarth said.
Jeeralang’s new firming role will not change how it runs, but will change depending on the time of the year. Ms Heslop said the peaking station would typically run mornings and evenings, especially in hot times of year when air-conditioning was operating. “Now it’s more autumn and spring, depending on when renewables drop off,” she said.
Mr Hogarth said in winter, in the middle of day, solar was pumping as well as it can, and wind was typically “not great, but okay”. “The market is long with supply in the middle of the day, so the big stations Yallourn and Loy Yang try to get out of the way; the sun goes down before afternoon peak – you have effectively lost all your solar generation by 4.30-5pm, ” he said.
At the afternoon peak, when people turn on their heater and television, energy supply was short.
“Jeeralang or Newport become important; they can start quickly, cover the afternoon peak and then shut down again. They may run for two hours, they are purpose-built for that. Yallourn and Loy Yang can’t respond that quickly,” Mr Hogarth said.
Jeeralang is remotely operated from Newport; it has 10 day workers and no night shift. There is a direct communications link to Newport and its operations in the control room.
“They have a control system screen; they start the Jeeralang plant from there. If there is an alarm, they can call the officer here,” Ms Heslop said.
Mr Hogarth said Jeeralang was not 24/7 in terms of staffing but was 24/7 in terms of operation.
“The gas turbines can remotely start. This site can be available without manning around the clock compared with a bigger site that runs around the clock with staff,” he said.
“This plant will run fine unattended.”
