Capacity Investment Scheme – Public Consultation paper

31 August 2023

Mr Salim Mazouz
Branch Head
Capacity Investment Scheme
Department of Climate Change, Energy, the Environment and Water
GPO Box 2013
Canberra ACT 2605

Dear Salim

Capacity Investment Scheme Public Consultation Paper

Thank you for the opportunity to provide a submission on the Government’s Capacity
Investment Scheme (CIS) Public Consultation Paper (the Paper) published in August 2023.

As you know, EDL is a leading global producer of sustainable distributed energy proudly
headquartered in Brisbane. We own and operate 83 power stations across Australia, North
America and Europe, both grid connected and remote and fueled by wind, solar, gas, liquid
fuels and storage. In Australia, we operate 12 grid-connected sites that generate firm,
renewable power from the combustion of landfill biogas.

EDL strongly supports the Federal, State and Territory Governments’ objective that the CIS
encourage investment in clean, dispatchable capacity to support reliability and reduce volatility
in Australia’s rapidly changing electricity markets.

EDL has confined its response to the questions raised in the Paper to those concerning the
eligibility of our existing landfill gas power stations to participate in the CIS.

The relevant eligibility criteria proposed in the Paper are that investment supported under the
CIS involves a fuel source the use of which contributes to zero Scope 1 emissions, produces
dispatchable electricity, involves a minimum generation capacity of 30 MegaWatts (MW) and is
new. The Paper also queries whether projects that receive other sources of government
funding should be eligible for CIS support. Each proposed criterion is addressed in turn below.

Landfill gas to electricity (LFGTE) generation makes a material contribution to zero scope 1
emissions by combusting the methane component of the biogas. Methane has a Global
Warming Potential 28 times greater than carbon dioxide. LFGTE therefore not only avoids
increasing scope 1 emissions, it also significantly reduces the greenhouse gas emissions that
would otherwise occur from the release of landfill gas into the atmosphere. Each year the
Australian LFGTE industry prevents more than five million tonnes of carbon dioxide equivalent
(tCO2-e) greenhouse gases from entering the Earth’s atmosphere.

Energy Developments Pty Ltd Head Office PO Box 2768
ABN 84 053 410 263 Waterfront Place Queen Street Mall
Tel: +61 (7) 3541 3000 Level 6, 1 Eagle Street Brisbane QLD 4000
Brisbane QLD 4000 Australia edlenergy.com Australia
The industry also generates more than 1,000 gigawatt hours (GWh) of highly reliable power.
Biogas is continuously produced from the landfill and captured for combustion. EDL sizes its generation capacity to maximise the expected gas volumes and normally resizes as the gas curve starts to decline after the landfill site has been closed to new waste. Depending on the landfill size, that decline typically occurs over a period of twenty to thirty years.

The size, age and composition of the landfills means that EDL’s LFGTE power stations range in capacity from less than a single MW to just under 20 MW (at Lucas Heights in NSW). They are therefore registered with AEMO as market non-scheduled generators meaning they are treated as running continuously. Thus, they can participate in the wholesale market, CIS and any other electricity market without requiring specific central dispatch instructions. While their capacities lie below the 30 MW minimum proposed in the Paper, as noted above, LFGTE power makes a material contribution to the production of reliable renewable power and the reduction of Australia’s greenhouse gas emissions. EDL submits that the combination of those benefits justifies an exception to the proposed minimum or, alternatively, the adoption of a more light-handed approach to tendering for that class of generation.

Finally, the Paper proposes that only new investment (including upgrades) should be eligible to participate in the CIS. Unlike other forms of renewable power, LFGTE generation requires ongoing investment to refurbish and replace the engines due to the dirtiness of the gas and to keep upgrading the gas collection infrastructure to maximise capture volumes. This makes such generation more expensive than other forms of renewable power although less expensive than storage.

The environmental benefits LFGTE provides have in part been recognised by the ability of a number of those projects to date to earn Large Generation Certificates (LGCs) under the
Renewable Electricity Target (for displacing higher carbon generation from the electricity grid) and/or Australian Carbon Credit Units (ACCUs) (for the destruction of the methane component of the landfill gas). However:
 not all LFGTE projects earn these credits (for example, due to baselines)
 the LGC displacement value is falling as the carbon intensity of the grid rapidly reduces
 the eligibility of EDL’s LFGTE projects to earn ACCUs ceases in 2026
 the Government is currently engaged in a process to revise ACCU baselines upwards for
existing projects.

As the Paper notes, electricity wholesale market revenue is also likely to become increasingly volatile moving forwards.

The combination of the above is making it harder to justify the ongoing investment needed to keep our existing LFGTE projects operating. Without alternative revenue opportunities such as the CIS, EDL may need to close down our sites and we consider this may also be true for much of the industry. This would likely lead to a material increase in Australia’s methane emissions and the loss of a significant source of firm, renewable power. Shutting the power

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stations down would also result in the loss of industry jobs and a reduction in the beneficial use of the large volumes of waste that either have been or continue to be disposed into landfill.

EDL submits it would be an appropriate policy response to these matters, consistent with the objective of encouraging (ongoing) investment, to include existing LFGTE projects in the CIS.

I look forward to discussing the above with you and your team in the coming weeks. In the interim, please contact me at anthony.englund@gmail.com or on 0412 039 860 should you have any questions in relation to this submission.

Yours sincerely

Anthony Englund
Head of Regulatory Affairs

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