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Farmers to own new biomass 'Co-Op' to fuel cheaper power

7 January 2016    

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, as part of an innovative business model designed to slash the cost of electricity for residents.

The $100 million Yorke Biomass Energy project, launched in September this year, has announced the novel 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 an exclusive 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 micro-grid and enjoy discounted electricity costs of at least 15%.

Yorke Biomass Energy Chairman and renewable energy pioneer Terry Kallis says the co-operative style business model will “turn the local electricity market on its head”.

“Our aim is to shake up the state and national electricity market and provide greener, cheaper power to homes and businesses,” said Mr Kallis.

“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. 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, including Ardrossan, Maitland, Minlaton, Curramulka and Port Vincent.”

Already dubbed the “Uber of the electricity market”, the Yorke Biomass Energy project will be located near the Ardrossan West substation (currently shared by ElectraNet and SA Power Networks) and be based on global infrastructure company Acciona’s 25MW Sanguesa straw-fuelled project near Pamplona in the Navarra region of 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.

“The project is well advanced having secured the necessary land and garnered extensive interest from local biomass suppliers on the Yorke Peninsula,” said Mr Kallis.

“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.

“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 – operator of the South Australian electricity distribution network – regarding how the existing electricity grid network could be used to facilitate lower-cost power.

“SA Power Networks supports innovation in the electricity market that will provide a choice in supply options for customers,” said Paul Roberts, SA Power Networks’ Manager Stakeholder Relations.

“The Yorke Peninsula biomass energy proposal is interesting and an example of the kind of innovation that is emerging in the area of distributed/renewable generation.”

Mr Kallis says Yorke Biomass Energy is already exploring options for its unique business model in other parts of Australia.

“We’re really excited at the prospect of delivering significantly cheaper electricity to people and are already attracting strong interest from potential partners and investors nationally to expand our project,” he 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.”

Yorke Biomass Energy is aiming for the Ardrossan power plant to be operational by 2017.

Terry Kallis, Yorke Biomass Energy Chairman, on 0419 810 153

Kieran Hall on 0422 147 151 or