Papua New Guinea supply of Hydro Power via Undersea Cable to Australia seems Extremely Costly

Australia’s Province of Queensland and Papua New Guinea (PNG) have agreed to set up a 1800 MW Hydro Plant in PNG which would supply 1200 MW of Electricity to Queensland through an Undersea Cable.The Project.Origin Energy which is Australia’s 2nd Biggest Energy Producer will submit a feasibility document by 2012.This Electricity Project is one of the most ambitious International Cooperation Agreement in Energy as it will involve the laying down of a  250 KM Undersea Cable.PNG is a very poor isolated country with 40% of the population living below Poverty Line.Cheap Electricity might spur prosperity in this poor nation as 600 MW of the plant would be used locally.Origin Energy has some Renewable Assets with Wind Farms in South Australia and is building a large Geothermal Plant in Indonesia in partnership with India’s Tata Power.

The Project seems Extremely Costly and would need Massive Subsidies

Note this Hydro Plant will cost around $31 Billion which is quite costly at $15/watt if the the $31 Billion is used for the 1800 MW capacity.This is is almost 15x the cost of a typical Hydro Capacity and  would need massive subsidies.Papua New Guinea is a poor country and might receive aid from Australia but the $31 Billion would make even the richest country balk at this price.Australia is not exactly energy deficient with massive resources of coal,wind and solar energy.In Renewable Energy the country has been quite slow with provinces like NSW and South Australia promoting renewable energy through regional subsidies.Hydro Power is the main source of Clean Power accounting for 90% of the Clean Energy Mix.The Project will take 10 years to build and their remains an outside chance that Oil Prices become so high that 24 hr Hydro Power at that time might make sense at $15/watt.

Origin Studies PNG Hydro Project to Supply Queensland – Bloomberg

Origin Energy Ltd., Australia’s second-biggest electricity and gas retailer, agreed to study the development of a hydro project in Papua New Guinea that would supply power to northern Queensland.

The venture at Wabo, 350 kilometers (217 miles) north-west of the capital Port Moresby, would have continuous-power generation capacity of about 1,800 megawatts, Origin said in a statement today. An engineering and environmental study is expected to be completed by 2012, the Sydney-based company said.

Talks about supplying power to resource projects in far north Queensland will start “very soon,” Origin spokesman Tim Scott said by telephone today. While it’s premature to project the development costs or the timing of construction, the hydropower project would be Origin’s second-biggest investment after the proposed Australia Pacific LNG venture with ConocoPhillips at Gladstone in Queensland, he said. Analysts have estimated that project may cost $31 billion.

The Papua New Guinea project would also supply power to local villages and rural communities in a country where about 40 percent of the population lives on less that $1 a day, according to estimates from AusAID, the Australian government agency responsible for managing overseas aid. The venture may help “open up significant industrial development” in the Pacific nation, Queensland Premier Anna Bligh said in the statement.