KEN 0.00% 1.3¢ kuth energy limited

kuth initiates network connection strategy

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    To expedite the process of connecting to electricity networks, KUTh Energy commissioned John Thompson Inclusive Pty Ltd (JTI) of Adelaide to begin the process of eveloping grid connection strategies for KUTh and to review their indicative costs. KUTh Energy holds over 14,000 km2 of geothermal tenements in Tasmania, which it is actively exploring to establish an economic geothermal reservoir capable of sustaining electricity generation. This is the largest geothermal acreage in Australia with multiple “hot rock” areas and the highest recorded borehole heat flow in Australia within the tenement area (over 2 times the norm @159mW/m2).

    Both high and low voltage power grids traverse the tenement area, which KUTh sees as a major commercial advantage, as it will minimise the amount of new infrastructure needed to establish generation connection. The JTI study included a review of the present high voltage grid’s condition and capacity for new generation connection, indicative costs of connection, and other issues facing KUTh as a potential new generation entrant in Tasmania. JTI also examined an option of connecting an initial pilot generating plant (eg 3MW, escalating to about 10+MW) to the low voltage distribution grid. The John Thomson Inclusive study, although preliminary, has highlighted the attractiveness of the KUTh Energy tenements in respect of existing grid infrastructure. There are two complementary connection scenarios under consideration, taking account of the likely staged ramp-up in generation capacity (each scenario will require a number of agreements to first be made with Network Service Providers and other agencies, as well as the establishment of an economic geothermal reservoir):

    1) Initial pilot generation, and additional capacity up to approximately 10MW could be fed into the low voltage distribution grid, via a number of low voltage connection points. The Aurora Energy 22 kV distribution grid is widespread across the tenement and would readily facilitate connection, including more than 10MW if other suitable feed-in points were available. This would be a low-capital cost option to demonstrate commerciality and would establish KUTh’s initial cash flow;

    2) As generation capacity ramps up beyond 10MW, connections could be made to the high voltage grid at access points within the KUTh tenement that are capable of supporting between 40 - 75MW of additional

    Highlights from the John Thompson Inclusive report include:

    · The majority of existing high voltage network constraints in Tasmania occur on network segments away from those which KUTh is likely to be utilising. A ‘network constraint’ is a limitation from time to time on the ability of a network segment to transfer power from a generation point to a load centre and occur to some degree on most networks. Transend Networks have recently announced some major upgrade works on areas of greatest constraint in Tasmania.

    · Marginal Loss Factors (or ‘loss on transmission’) for sites KUTh is likely to be focussing on are relatively low, 0.97 or better (where 1.00 is best). By comparison, the Woolnorth wind farm in the north-east of the state had an MLF of 0.9365 in 2006/07 and the Wattle Point Wind Farm in South Australia had an MLF of 0.8609.

    · If a pilot plant of 3MW was established on the first two production wells, a viable connection strategy would be to connect direct to Aurora Energy’s low voltage distribution network (via a suitable agreement with Aurora), which is very extensive within the KUTh tenement area.

    · Two of the possible high voltage connection scenarios are a 110kV connection via the Avoca substation (Fingal Valley) or a 110kV connection via the Palmerston (south of Launceston) - Avoca transmission line. capacity without major upgrade. Other connection points, with higher capacities are available.

    John Thompson Inclusive will be working further with KUTh Energy to advise KUTh on National Electricity Market and grid connection issues, and to develop and implement its connection strategy. This will include the formal lodgement of a Connection Enquiry with Transend Networks later in 2008, which is the first stage of obtaining connection to the high voltage grid, should an economic geothermal reservoir be established.
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