Horizon Power managing director Frank Tudor talks to Energy Source & Distribution about supplying disconnected electricity across the vast expanse of regional Western Australia.
From the squeaky-white beaches of Esperance to the sizzling red soil of Kununurra, vertically integrated generator, distributor, transmitter and retailer Horizon Power is tasked with covering the majority of Western Australia’s 2.5 million sq km. Six urban and regional offices are all that manage the state’s vast network of 36 independent systems, servicing a sparse population base of one person every 53.5 sq km. Cut off from external sources of power, the 36 disconnected systems use a regional business model to manage their own embedded generation and train service teams to maintain their customers.
Each Western Australian town or region is supplied power in unique ways. A hybrid generation facility made up of gas and wind powers the beach-lovers’ paradise of Esperance. The gas and diesel-fired Mungullah power station in Carnarvon will be commissioned at the end of the year and has been designed to incorporate future renewable energy sources. Nullagine and nearby Marble Bar, Australia’s hottest town, feature the country’s largest solar-tracking system of 2000 solar panels. Other stations make use of hybrids of diesel and solar PV, while regional and Aboriginal communities are trained to service and maintain their local electricity networks. Ten per cent of the network’s energy portfolio is renewable-based, with hydro, solar and wind working alongside compressed natural gas, liquefied natural gas, pipeline gas and diesel.
According to Horizon Power managing director Frank Tudor, being connected to communities, understanding their concerns and issues, working with them to develop infrastructure and finding the best ways to request funding through government processes is an important part of their business. As a government-owned enterprise with a distributed management structure, Horizon Power is the “local energy partner” to their customers.
“We are regionally based, which means that we are part of the community. In establishing our regional base and having open doors in our regions, we have developed community and customer relations manager roles that work very closely with the people from our head offices to actively disseminate information,” Mr Tudor explained to Energy Source & Distribution.
The rising cost of electricity production and the pressure of peak load has caused the utility to accelerate the uptake of innovative retail options and technology. The state’s energy usage swing factor is almost 50 per cent, with resource-boom subsidised air-conditioning causing peaks to go through the roof during summer, only to drop dramatically during mild winters. The state’s electricity prices have remained flat for 10 years and the tariffs charged to residential customers have been out of whack with the cost of supply. Since 2009 though, the Western Australian Government has moved towards tariffs that better reflect the cost of supply, but a uniform tariff policy means that Horizon Power requires a government subsidy to cover its operating loss from servicing remote towns.
“So you can imagine the issues that poses for installed capacity – how do you cover those peaks?” Mr Tudor asks.
“And we are still somewhat limited in what we can do because we have a fixed price tariff. Hence, the current pricing policy does not influence buyer behavior. So that does mean that we are faced with very high peaks.”
The swing in demand has impacted installed capacity in the Pilbara, where pipeline-supplied natural gas is mostly used. This has rippled throughout the business, and Mr Tudor is looking for ways to work with resource companies, residential customers and government to try and bring about change.
In some isolated and remote systems where the cost of fuel and generation is expensive, Horizon Power is encouraging communities to develop rooftop PV. The utility will begin offering a revised renewable energy buyback scheme to regional areas in July, targeting communities with high fuel and generation costs. The utility has communicated the scheme through media promotions, establishing local community partnerships and organised town hall sessions. Customers will be able to sell their power to Horizon Power at a price that reflects fuel costs and credit for installed capacity.
“It’s a lovely win-win, and we’ve been in the process over the last two months of rolling those proposals out across our entire footprint, all the way through from Esperance up to Kununurra, and we’ve had pretty reasonable uptake,” Mr Tudor said.
There is, however, a natural limit to how much embedded generation can be tolerated in a relatively small independent town-based network without causing quality and reliability issues. In some towns the take-up has been so high that they have approached their natural limit, and novel solutions need to be found to allow more renewable energy penetration.
“We are looking to dispatch technologies to enable us to more directly control the release in and out of these renewable energy systems. We are looking at storage systems, which might be able to help. Because in a lot of cases, if you have weather that changes on you, then we are required to backup pretty quickly with fossil fuel to make sure we’ve got continuity of supply,” Mr Tudor said.
Extreme weather is a regular aspect of Western Australian life, and Horizon Power cracks into crisis and emergency mode at different times of the year. Flooding recently struck the Aboriginal community of Kalumburu, while the Kimberley community of Warmun had to be evacuated to Kununurra and supplied with remote camp power after devastating floods last year. On another occasion flooding caused road closures around Halls Creek, and Horizon Power had to liaise with defence forces, through the State Emergency Coordination Group, to find ways to fly in essential equipment. Fortunately, roads were re-opened before this was required.
“It’s very satisfying and interesting for our people when we get into those situations to make sure our customers can still rely on Horizon Power for the provision of their energy. It’s one of those very satisfying things about being able to work in this company. We deal with that on a regular basis, and I think we are pretty good at it. We work very closely with the state’s emergency services and our communities and it certainly brings out the best in our people,” Mr Tudor said.
Another route to reducing the costs of servicing dispersed remote communities will be their advanced meter infrastructure initiative, which is currently being installed in customers’ homes. The utility is progressively installing advanced meters and will eventually be able to switch them on and off remotely. Mr Tudor is working closely with the state and various government agencies on the implementation of its smart meter features, which will interface with customers at a new level.
Some utilities have had customer engagement issues with their smart meter roll-outs, and Mr Tudor is careful to manage their implementation alongside government.
“I think when you are in that space you do need government policy to work with you, because you would like to send the right incentives to customers and that requires a change in tariff policy. That area is being looked at, in conjunction with government, but largely being led by government on how it wants to approach and deal with the issue,” Mr Tudor said.
Having worked in the oil and gas industry as part of BP and Woodside and as the National President of the Australia China Business Council (ACBC), the 54-year-old is able to draw on his experience to help navigate the infrastructure economics and government policy needs of his role.
“Electricity is the ultimate user of what I used to be involved within the oil and gas industry, so I think a lot of generic skills are readily transferrable. I’m enjoying this role at the moment because it is a genuine opportunity to make a difference to the way that infrastructure is planned and established for the long term, and I think there is a real connection between what our company does and how it benefits both the current and future generations of Western Australians,” he said.
“We certainly have a role to be able to assist in the extensible, long-term planning of the energy infrastructure and looking over the horizon, so to speak, is important, rather then making year-in, year-out incremental decisions which don’t have any view on the longer term and what it might mean. That’s an important aspect of what I think we do.”
With $50 billion of Australia’s $70 billion natural resource export to China coming from Western Australia, and with Chinese businesses looking for international infrastructure projects to invest in, maintaining the state’s regional power supply represents an enormous opportunity.
“It’s a potential bottleneck to us being able to exploit opportunities and I think Chinese foreign investment is a huge opportunity for the state and the country. In my capacity if I can play any small role through Horizon Power and through the ACBC to facilitate that then I will be very satisfied,” Mr Tudor said.