Mr Willoughby, the former head of CWP Renewables, which Squadron bought in a $4 billion-plus deal in December, said the combined assets created an expanded renewable portfolio with access to all-important “firming” fuel through Squadron’s LNG import terminal under construction in Port Kembla in NSW.
“You bring those two businesses together, and you create a really powerful, integrated energy company,” he said. “We’re not a portfolio of projects, we are an energy business supplying our customers with firmed renewables.”
Dubbo power station
Squadron’s first gas-fired power plant will be built in Dubbo, a 68-megawatt project that will support weather-dependent wind and solar and battery storage to provide a constant, low-carbon electricity supply.
That will be followed by other modestly sized gas plants in the National Electricity Market with the intention of switching them as soon as possible to running on green hydrogen. In total about 500MW of gas power generation could be built by Squadron, indicating seven or eight separate generators, based on the size of the Dubbo plant.
Dr Forrest, the chairman and founder of Fortescue Metals Group, has been an enthusiastic advocate for green hydrogen, which is being pursued through Fortescue Future Industries, and a fierce critic of developing new gas fields, backing the push by the Greens this year to ban new coal or gas projects.
But he has continued to invest in developing the Port Kembla LNG import terminal, which Squadron expects will become a highly valuable asset in the years before green hydrogen becomes readily available.
The Australian Energy Market Operator has advised that the southern states face shortages of gas on peak-demand winter days amid the many obstacles in the way of developing local gas resources, including declining flows from ageing Bass Strait fields and constraints in the pipeline grid running south from Queensland.
Cornerstone LNG customer
Squadron has 1.1 gigawatts of renewable energy generation in operation and a development pipeline of wind and solar of 20 gigawatts. It is also developing battery storage, which is likely to include large-scale lithium-ion batteries and “flow” batteries that use a technology that may be better at delivering energy over a longer period.
However, Squadron has found that even with battery storage, “firming” is required to provide the reliable power that businesses and industrial customers want. It decided that pumped hydro was too risky from an economic point of view.
“We look around and say, ‘well, what’s the appropriate fuel at the moment for that firming generation’, and the reality is between now and the end of the decade it’s going to be gas,” Mr Willoughby said, noting that on an annual basis, gas power would only provide 5 per cent to 10 per cent of Squadron’s electricity mix.
“We don’t think it’s a long-term solution – we think the green hydrogen will be the firming fuel that powers the renewable transition long term – but we don’t want the transition to stall until green hydrogen is available, we’re going to do both things at the same time.”
The strategy means Squadron will be its own cornerstone customer for the $250 million Port Kembla LNG import project.
Mr Willoughby said Squadron had lately fielded “a number of approaches from different companies who are interested in working with us to utilise the capacity of Port Kembla”. Until now, many potential customers had baulked at signing up.
‘Really important role’
On its current schedule, the Port Kembla gas terminal is due to be mechanically complete at the end of 2024 or early 2025, and Squadron wants gas from the site starting in 2026. But Mr Willoughby said the terminal could start in 2025 if the demand was there.
While some gas industry sources doubt the economic viability of LNG import terminals after Labor’s price controls on domestic gas on the east coast, Mr Willoughby said it was not a problem for Port Kembla.
A South Australian developer is also expecting to proceed with a separate LNG import project.
“We’re looking through the short term, and we’re saying, ‘the physical requirement of gas into New South Wales and Victoria is really evident, and we think that the terminal plays a really important role in solving that problem’,” Mr Willoughby said.
Lead growth projects within the enlarged Squadron portfolio include the $3 billion Clarke Creek wind farm in central Queensland, an asset acquired by Squadron before the CWP Renewables deal. Construction was paused earlier this month to switch to in-house management of construction.
Next month, Squadron aims to announce the commencement of its 414MW Uungula wind farm near Wellington in central-west NSW, and has several others in the works, including the proposed Jeremiah wind farm near Gundagai, NSW, and the Spicers Creek project west of Gulgong, also in NSW.
It is also looking to install a battery at its Sapphire wind farm, a project in New England, in NSW, where it also has approval for a solar farm.