Stakeholder Analysis, Milestones, Risks - Barn Hill Wind Farm - Research Paper Example

AGL Project Proposal- Barn Hill Wind Farm (Red Hill, Mundoora) Student’s Name: Name of Institution: Instructor’s Name: Course Code: Date of Submission: Table of Contents Table of Contents 2 Executive Statement 3 Background 4 Overall Aim and Purpose 5 Project Scope Statement 5 Project Objective 5 Project Variables 5 Milestones 5 Objectives 6 Outcome 6 Approach & Methodology 7 Personnel Tasks 7 Key Milestones/Time Plan 8 Risk Assessment Matrix 9 Resources 10 Risks 11 Recommendation/Conclusion 12 Bibliography 12 AGL 2009. AGL acquires two wind farm developments from Transfield 12 Services. http://www.agl.com.au/about/ASXReleases/Pages/AGLacquirestwowindfarmdevelopmentsfromTransfieldServices.aspx (accessed 21 June 2012) 12 AGL 2012. Renewable Energy. 13 http://www.agl.com.au/about/Pages/RenewableEnergy.aspx (accessed 20 June 2012) 13 AGL Sustainability Report 2009. Expand our portfolio of investments in renewable 13 energy. http://2009.aglsustainability.com.au/greenhouse/strategy02.asp (accessed 21 June 2012) 13 Alexander, T, Barry, B, Choto, J, juste, Y & Smith, M 2009. Wind turbine energy for the 13 city of Kamsar- Guinea. http://www.slideshare.net/yjuste/wind-energy-project (accessed 21 June 2012) 13 Clarke, D 2012. Wind power and wind farms in SA: wind in the 13 Bush, http://ramblingsdc.net/Australia/WindSA.html (accessed 20 June 2012) 13 KPMG 2011. Stage 3 Report: Semi-scheduled, non-scheduled and exempted generation 13 by fuel source, 2010-2011 to 2034-35. A Report for the Australian Energy Market Operator (AEMO), April. 13 U.S. Department of Energy 2009. Federal energy management program: wind 13 energy resources and technologies, http://www1.eere.energy.gov/femp/technologies/renewable_wind.html (accessed 21 June 2012) 13 Executive Statement AGL is one of the top integrated energy companies in Australia. In line with its mission and vision, the company aims towards a creating sustainable energy for the future for its investors, customers and communities. As part of this, AGL runs both merchant and retail energy businesses, upstream gas portfolio and assets for power generation. In other words, AGL deals in diverse energy options, including thermal power and other renewable sources of energy. Speaking of renewable energy, AGL is the leading private owner as well as operator of assets for renewable energy, and has always sought to expand its position in this field, especially by exploring options for low emissions and other development opportunities for the generation of renewable energy (AGL 2009). Barn Hill Wind Farm is part of that dream. On 18th of June, 2009, AGL announced it had acquired from Transfield Services Limited two (Barn Hill) wind farm developments at the price of $9 million. The Barn Hill Wind Farms are located north of Adelaide, 170 km away. The development plan for this wind energy project is to involve the installation of 62 turbines. The project, in line with other projects in the region, is expected to have average wind speeds of about 8.3 meters per second in the long run (AGL 2009). This paper is a project proposal report aims to review aspects of the project from inception to execution, including objectives, stakeholder analysis, milestones, risks and recommendations, amongst others. Background Climate change is a reality and there is need to not find a solution to it. Part of this solution is found in the sources of energy used. Therefore, there is need for Australia, and the world at large, to consider and seek other energy alternatives rather than fossil fuel. Although wind does not provide the only answer to climate change (such an answer is not as simplistic), it is one critical consideration. This is confirmed by research statistics that have showed that the development of wind energy in South Australia reduces the emission of greenhouse gases as a result of reduced electricity consumption, i.e. not only the amount of greenhouse gases emitted, but also the intensity of such emissions. Moreover, wind remains the only economically viable and competitive sustainable energy form well poised to form a key part of the fight against climate change. Other sustainable energy sources being used, such as methane or other biological wastes, may be feasible, but they still have limited capacity (Clarke, 2012). Against this backdrop, it is easy to see that this project is not only financially sensible for the AGL, but also in line with its commitment to providing sustainable energy. In agreement, AGL’s Managing Director, Michael Fraser (cited in AGL 2009) welcomed the project as being consistent with the company’s Renewable Energy Target Scheme. Also, the project would be part of the path towards achieving the Australian’s Federal Government’s target of 45,000 gigawatt hours of renewable energy by 2020. Thus, on the basis of South Australia’s anticipated or current climate change regulatory requirements, this report concludes the Barn Wind Farm development will offer significant opportunities for AGL, which will hinge on the company’s reputation for flexibility on renewable energy and low greenhouse gas emissions. The introduction of Carbon Pollution Reduction Scheme, for instance, the Barn Wind Farm development will be part of the many investments that add $300 million to AGL’s value by 2020, thanks to its potential renewable and low emission assets and not having to purchase AEUs. Overall Aim and Purpose This project is only a small part of AGL’s overall aim and purpose. As already mentioned above, the project is to focus on the installation of 62 turbines as part of the Barn Hill Wind Farm project, which is to occupy the space that runs along Barunga Range (i.e. between the Snowtown Wind Farms and Clements Gap). Also, the project is consistent with AGL’s Renewable Energy Target Scheme, which is part of AGL’s key commitment to providing sustainable energy options for the future for its investors, customers as well as the communities it serves. Like the other wind farms in which AGL has invested, the Barn Hill is a portion of AGL’s aim to contribute towards the recommendation(s) of the 2009 (August) Commonwealth Government legislation which aims to have Renewable Energy contribute 20 percent of Australia’s total electricity by 2020(AGL, 2012). Table 1 below shows specific details in relation to the projects aims and purpose. Project Scope Statement Project Objective To install 62 wind turbines at the Barn Hill Wind Farm Project Variables Upon completion, each turbine is expected to generate approximately 2.1 to 3 megawatts. Together they should generate about 130 to 186 megawatts Milestones Effective feasibility study and complete planning Stakeholder approval through consultations, i.e. holding information sessions Approval of the Wakefield and Port Pirie councils on the Development Application and Environmental Assessment Approval of the Wakefield and Port Pirie councils on the connection of a transmission line from the Barn Wind Farm to the main electricity grid Approval of South Australia’s DEH (Department of Environment and Heritage), as well as the federal Department of the Environment, Water, Heritage and the Arts (DEWHA), especially regarding specific threatened/endangered ecological species and communities as outlined under Environment Protection and Biodiversity Conservation Act 1999 Objectives The planning of this project is written with certain goals and objectives in mind. In other words, the Barn Hill Wind Farm is expected to: To provide energy security: Wind power is generally affordable, efficient and renewable (i.e. inexhaustible). On top of these, it is available. Although it is an intermittent source of energy, it can reduce/cut utility peak demand to ensure sustainable energy use, i.e. increase energy security. This project is part of this objective. To provide remote energy: Barn Hill is ‘quite’ remote. The cost of connecting electricity to such areas can be expensive. This wind farm provides a solution to the objective of providing energy for remote areas. To meet regulatory requirements: This project is also aimed at meeting renewable energy requirements as spelt out in a number of legislations made in recent years. For example, Australia’s federal government which has set a target for renewable energy (AGL Sustainability Report, 2009). Outcome As the completion of the project is anticipated, there are expectations tied to it. In other words, there are outcomes that the project is likely to cause. Importantly, as will be seen, these outcomes are key to AGL’s mission and vision. Ultimately, AGL’s business portfolio and a key character in the race towards sustainable energy source will grow. These will help its business standing in the eyes of all its stakeholders (investors, customers, and communities): Expansion of wind power: This project, as already mentioned, is expected to generate about 130-180 megawatts of electricity. Upon completion, therefore, the wind farm will add up to the total portion of wind power in South Australia’s total electricity. This means that the country’s reliance on other non-renewable energy sources, e.g. fossil fuel- albeit slightly- is slowly reduced. Meeting energy demand: Also, power generated from this plant is expected to contribute to the South Australia’s power demand. Cost reduction: As more wind farms arise, the Barn Hill wind farm being only one, the cost of wind energy (even in areas that experience low-wind) is expected to fall even further so as to compete with other much cheaper traditional sources of energy, e.g. natural gas. Approach & Methodology Although this project involves actual installation of turbines (hard labour), most of it involves management. For example, the project will mainly involve: Contracts department (deals with obtaining contract from the relevant customer, as well as other contractors who will help with the development project e.g. build, test, ship material, install the turbines, etc.); Site Confirmation and Contract (this deals with the contract involving the land to be developed. It considers conducting tests on the ground to check its capacity to hold the turbines, the weather, the wind and the potential environmental impact of the project; Administration (this is concerned with the passports, permits and licenses, visas, insurance and accommodation of the project team); Engineering and Design; Personnel department (this is responsible for the hiring and training of the local crew, as well other overall matters associated with the project staff); Transportation (Oversees the transportation of equipment and personnel); Project Management; Construction; Security and Implementation departments. Personnel Tasks Personnel/Department Tasks and Responsibilities Project Manager Project shut down or relocation, etc Mechanical Engineer Oversight of information and technology, i.e. keep track of technological changes to ensure the technologies adopted are up to date and compatible with tasks performed, etc Security Ensure security of project, e.g. check on security breaches; monitor and address potential security threats; follow up on policies to ensure reduced risks, etc Project Coordinator Hiring personnel; check on personnel health, e.g. ensure proper medical care to personnel, recommend quarantine, validate vaccinations, etc Procurement/Construction Engineer Check on transportation, e.g. of personnel and material; Construction Engineer may also keep track of weather factors that may threaten the project Key Milestones/Time Plan Transformers and turbines are purchased The selection of vendors is completed and contracts are released The team for project management arrives on site Appropriate permits and licensing are obtained from the government Local staff is hired Construction equipments are transported to the site Grid construction commences Site construction sites The main transformer and turbines are transported to site Transformer and wind turbines are installed Turbines are tested Break for Christmas Holidays Turbines testing proceeds System (transformer, turbines and grid) Testing begins Customer acceptance Handover Inauguration Risk Assessment Matrix The Risk Assessment Matrix below summarizes some of the risks that may be faced in the process of overcoming some of these milestones. Risk Consequence Likely to Happen [Low (L), Medium (M), High (H)] Impact [Low (L), Medium (M), High (H)] Response Plan Weather (to equipment installation and land level construction Activity delays; Financial loses; Contract breaks H H Schedule tasks around the dry and wet seasons; reschedule outdoor activities; perform indoor tasks Personnel absence due to personal or health issues Some tasks/work are not performed; Re-hire expenses M H Hiring additional people; hire temporary staff; have a pool of resources Material not arriving on time Schedule delay; reduced material or equipment; increase of budget M H Keep track of the shipment of material and equipment until they are delivered; have different shipping companies; find alternatives Transportation delays Personnel absence; material and equipment not available; delay of schedule; additional costs M H Use different means of transport; use private carriers, etc Security breach from external and/or internal sources Threatened personnel and material/equipment/property; cancellation of projects; contract losses; lawsuits; revenue losses; delay on schedule H H Government corruption may threaten project continuance Abrupt project end; revenue losses; contract cancellations; project delays; budget increases M H Project shutdown if necessary; project relocation if necessary, etc Resources For this project to be successful, there are a number of resources that must be available and ready. Some of them are primary, others are secondary. These resources may be financial, human or material, etc. Financial Resources/Capital: Although the cost of wind farm development has decreased significantly in the last decade, it is still known to demand higher initial capital/investment than the generation of fossil fuel. These costs are spent on the turbines, construction, interconnection fees, equipment for metering, and maintenance and repair. According to USDE (2009), almost 80 percent of the initial capital goes into machinery alone and the rest goes into site preparation and finally installation. Interconnection may refer to grid-connected cases (which require large turbines) or stand-alone applications (which require small turbines). Also, although turbines are meant for the long-term (about 20 years) and run automatically, it is still necessary to consider the costs of operation and maintenance. Land: The availability of wind depends on the exact location and the prevailing micro-climate. On top of this, wind turbines need a lot of open land with no possible obstructions to wind. In relation to this, turbines also demand a variety of logistical and environment considerations, which include animal, birds and bat movement and migration routes. In other words, lands picked for wind farms may face competition from other resources. Importantly, wind turbines can be also installed on grazing and farming lands. Human Resources: This refers to staffing during the process of developing the project. Experts and other technical staff will be needed at the different stages of the project. These include management, project team, communications personnel, finance, development and design team, etc. This list is not exhaustive of the resources needed here. There are many other resources. However, these are the main resources and others may fall under these ones. Risks Irrespective of site-specific factors, wind energy projects are likely to face certain common problems or risks: LGC revenue outlook: As part of the attempts to recover the diminished REC price, the RET was divided into SRES and LRET. But despite of these efforts, the LGC price has remained deflated. This LGC market, referred to as ‘soft’ by KPMG (2011) has caused most wind farm investments to stall. For example, Transfield Services Infrastructure Fund’ s Barn Wind Farm project stalled until AGL bought it away. Cost of turbines: The cost of turbines is a key factor, making the initial cost of construction quite capital intensive, which makes up about 70-80 percent of the projects total lifetime cost (USDE, 2009). Transmission Infrastructure Access: Considering the intermittent nature of wind farms, this also remains a major issue. As long as new generation connections to the network delay, investment projections still face a potential downside risk. Community Support: Another risk is associated with an alarmingly growing local opposition against wind farm projects, e.g. there have been anti-turbine campaigns in the NSW. In response to these oppositions, for instance, the state government has changed regulations for the planning of wind farms which have seen much control of planning given to local councils. Other Physical Needs: Climate change is likely to cause extreme changes in weather patterns and weather events. These may also cause physical risks to the company’s wind energy infrastructure, e.g. the wind turbines, as well as financial risks related to changes in energy demand(s). Recommendation/Conclusion This paper has explored factors surrounding the development of Barn Hill wind farms. In the process, it has showed that the project is not likely to go as smoothly as planned or expected. On the contrary, there are many potential risks and limitations that could result in the project stalling as can be seen in the case of Transfield Services, the company that was originally set to run the project. The success of a project therefore depends on the sound reconciliation of its positive side and potential negative factors. This in-turn depends on the ability to predict and anticipate such risks so that management measures are put in place before they occur. Ultimately, successful project management depends on the ability to harmonize all available resources (financial, human, material, or other). According to Alexander et al (2009), it is paramount to conduct a thorough project feasibility assessment (including estimates, activities, etc) and project viability. On top of these, project management team must respect the budget and timing constraints. Bibliography AGL 2009. AGL acquires two wind farm developments from Transfield Services. http://www.agl.com.au/about/ASXReleases/Pages/AGLacquirestwowindfarmdevelopmentsfromTransfieldServices.aspx (accessed 21 June 2012) AGL 2012. Renewable Energy. http://www.agl.com.au/about/Pages/RenewableEnergy.aspx (accessed 20 June 2012) AGL Sustainability Report 2009. Expand our portfolio of investments in renewable energy. http://2009.aglsustainability.com.au/greenhouse/strategy02.asp (accessed 21 June 2012) Alexander, T, Barry, B, Choto, J, juste, Y & Smith, M 2009. Wind turbine energy for the city of Kamsar- Guinea. http://www.slideshare.net/yjuste/wind-energy-project (accessed 21 June 2012) Clarke, D 2012. Wind power and wind farms in SA: wind in the Bush, http://ramblingsdc.net/Australia/WindSA.html (accessed 20 June 2012) KPMG 2011. Stage 3 Report: Semi-scheduled, non-scheduled and exempted generation by fuel source, 2010-2011 to 2034-35. A Report for the Australian Energy Market Operator (AEMO), April. U.S. Department of Energy 2009. Federal energy management program: wind energy resources and technologies, http://www1.eere.energy.gov/femp/technologies/renewable_wind.html (accessed 21 June 2012) Read More