QPM Energy (QPME) has inked a Memorandum of Understanding (MOU) with Ratch Australia Corporation to negotiate and enter into a new Capacity Agreement for 100% of the Townsville Power Station’s (TPS) generation capacity beginning in February 2025.
TPS comprises a 160MW Siemens turbine and an 82MW heat recovery steam generator. 100% of the TPS’s power-generating capacity is presently committed to the Moranbah Project under an existing PPA that expires in February 2025. The PPA operates as follows:
- Moranbah Project can send gas to TPS and has exclusive ownership of the power generated by this gas;
- The Moranbah Project has control over when TPS generates electricity;
- Ratch is the owner, operator, and maintainer of the TPS; and
- Moranbah Project pays Ratch a fee that includes both a fixed and variable component.
The Moranbah Project now produces ~10PJ of gas per year, 7PJ of which is supplied to Dyno Nobel. Queensland Pacific Metals (QPM) expects to raise gas production to 12-13PJ per year within six months of the Transaction’s completion. To satisfy the demands of the TECH Project, QPME intends to increase output from the Northern Bowen Basin to 20+PJ per annum while the TECH Project is being built. As such, TPS is crucial since it effectively uses this gas during the ramp-up period and beyond.
QPME and Ratch recognise the strategic commercial rationale for engaging in a new PPA and have signed into a non-binding MOU to emphasise the parties’ purpose. The following are the MOU’s key terms:
- During the term of the MOU, Ratch will solely negotiate with QPME about TPS’s electricity generation capacity;
- During the term of the MOU, QPME will only engage with Ratch for the sale/supply of gas beginning in 2025 and will not negotiate with any other power stations or energy generators;
- QPME and Ratch shall negotiate in good faith to enter into a new PPA that will begin upon the expiry of the current one; and
- The MOU will end on 31 August 2023 or when a new PPA is signed.
According to the Australian Energy Market Operator (AEMO), the impact of coal-fired power plant closures, combined with insufficient new dispatchable generating and storage capacity investment, would put the National Electricity Market’s (NEM) ability to satisfy electricity supply demands on the line.
“In the next decade, Australia will experience our first cluster of coal-generation retirements, at least five power stations totalling 8.3 gigawatts (GW), equal to approximately 14 per cent of the NEM’s total capacity. Without further investments, this will reduce generation supply and challenge the transmission network’s capability to meet reliability standards and power system security needs,” AEMO CEO Daniel Westerman said.
