Yorke Peninsula farmers to own new biomass co-op

Local farmers will own and operate a new biomass cooperative-style business that will supply Australia’s first straw-fuelled power company on South Australia’s Yorke Peninsula.

The $100 million Yorke Biomass Energy project has announced the cooperative-style business model that will see local biomass suppliers own and operate a new company called Yorke Biomass Supply (YBS). YBS, and the individual farmers and straw aggregators who make up the company, will have a 20-year contract with Yorke Biomass Energy for the supply of suitable biomass at a base price of $85 per tonne maintained in real terms.

As part of the initiative, local Yorke Peninsula residents could be given an option to connect to a hybrid microgrid and enjoy discounted electricity costs of at least 15%. According to Yorke Biomass Energy Chairman Terry Kallis, the cooperative-style business model will “turn the local electricity market on its head”.

“Our business model has clear and compelling benefits, including providing local farmers with a new and diversified source of income that in itself will inject around $6 million per annum into the local community,” he said. “In fact, our economic modelling estimates that total local spinoffs of around $27 million per annum will be generated.

“Ultimately, this project has the potential to significantly reduce the power costs to Yorke Peninsula residents.”

The project will be located near the Ardrossan West substation and be based on global infrastructure company Acciona’s 25 MW Sanguesa straw-fuelled project near Pamplona, Spain. Up to 40 long-term jobs will be created through the plant’s operation, as well as through the ongoing collection and transportation of straw.

“We’ve also secured a streamlined approval process and have in place an exclusive engineering, procurement and construction deal with Acciona, which has a proven track record of establishing large biomass plants,” said Kallis.

“We’ll also be employing an open profit-sharing arrangement between Yorke Biomass Energy, YBS and local electricity customers. Profits achieved above the 12% internal rate of return being sought will be shared by Yorke Biomass Energy with suppliers and customers in the form of higher dollar per tonne prices and lower electricity charges respectively.”

Yorke Biomass Energy is currently in discussions with SA Power Networks, the operator of the South Australian electricity distribution network, regarding how the existing electricity grid network could be used to facilitate lower-cost power. The company is aiming for the Ardrossan power plant to be operational by 2017 and already exploring options for its business model in other parts of Australia.

“We’re… already attracting strong interest from potential partners and investors nationally to expand our project,” Kallis said.

“We’re also really excited about the longer term environmental benefits, including potential improvements to sustainable local farming in terms of soil health, crop rotation and weed management, in addition to reduced greenhouse gases and improved energy security.”