The station, near Merredin, is being developed for use during peak times when other plants are unable to meet energy demand. “It really is only meant to operate very few hours of the year and it relies on being able to generate power when needed, so people pay you for that capacity to generate,” explained Lloyd. The bid to secure the project was not overly competitive, Lloyd said. Palisade preferred not to get involved in heavy competition as it often resulted in people paying “silly prices” for assets. “On this one, the idea was brought to us by the early developer of the asset through their financial advisor and it was on the basis that we were willing to invest an appropriate price and we just worked with them to get to the final outcome. It wasn’t a competitive process,” Lloyd said. “Based on our willingness to execute and our ability to, they were willing to partner with us.” The Merredin project is fully privatised, with no government backing. “That’s the way the market works over there,” Lloyd said.
“You apply to government to generate and they provide you with these capacity credits, so once you’ve got that you have to develop the project to the specificities authorised by government. Ultimately, it’s governmentregulated.” The project is Palisade’s second investment in Western Australia, following its stake in an environmental waste treatment in Shenton Park in Perth. The development environmental waste treatment facility has been a three-step process, Lloyd explained. “We invested a small amount of money – $15 million – initially to effectively ensure that we have a robust technology,” he explained. “We’re in construction of the second stage, and we’ve had mechanical engineers rake over everything to ensure it was as robust as it can be. That’s in construction now. “About this time next year we’ll hit commissioning and then we’ve got a take-or-pay, or supply-orpay arrangement with the western metropolitan regional council. It’s going to be tremendous, not only as an asset, but a sector as well as waste is becoming such a big issue.” Construction for the Merredin power station is scheduled for completion in mid-2012.