Progress to Date in Delivering the

East Pilbara Link Project

Ken Woolley – Executive Director Power Generation

Michael Riches – Executive Director Corporate Services

16 July 2013

Overview of Alinta

• Alinta Energy is a vertically integrated energy company and is at its heart a

Western Australian gas business

• Comprised of 3 operating divisions: Power Generation, Wholesale Energy

and Retail Energy

• Alinta has been a major supplier of energy in the Pilbara since 1996

2

Power Generation Wholesale Energy Retail Energy

- Over 2,400 MW

- Over 400 employees

- 10 Power Stations

- Gas and Coal

- OCGT / CGGT

- Operating coal mine

- > 200 TJ/day

- Gas transportation

services on multiple

pipelines

- Environmental products

- Spot trading

- Major customers

- 700,000 customers

- 5 states

- Mass Market, C&I

- Electricity and gas

3

Glenbrook

112 MW

co-generation plant

Braemar

502 MW gas fired

generator

147km gas pipeline

Bairnsdale

94 MW gas fired

generator

Port Hedland Station

210 MW gas fired

generator

66kV transmission lines

Newman Station

178 MW gas fired

generator

Alinta West

Pinjarra: 285 MW gas fired

Wagerup: 380 MW dual fuel

Retail: 600,000 customers

180 TJ/day gas portfolio

Flinders

Coal-fired generators

– Northern: 544 MW

– Playford: 240 MW

Western

Australia

Northern

Territory

South

Australia

Queensland

New

South

Wales

VIC

East Coast Retail

100,000 retail electricity

customers

GGTP Pipeline

12% ownership of

pipeline

Overview of Alinta’s Portfolio

Leigh Creek Coal Mine

Historical Energy Development in the Pilbara

• Large scale development of the iron ore fields of Western Australia has generally followed the

installation of linear infrastructure.

• To date this development has predominantly followed gas pipeline investment which has resulted in

generally small gas (or in some circumstances dual fuel) power stations.

• These power solutions are capitally inefficient as a result of over investment in:

• Capacity (generally [n-1] configuration of maximum expected load)

• Substantial spinning reserve

• In addition part load operation of power generation assets results in higher cost electricity

production.

• Alinta’s vision is to use 220kV high voltage overhead transmission lines rather than gas pipelines, to

serve the electricity requirements of the miners along the East Pilbara iron ore fields.

4

Pilbara Linear Infrastructure

Newman West Angeles

Parabadoo

Tom Price Yandi

BHP Yandi

Shay Gap

Goldsworthy PORT HEDLAND

Exmouth

Onslow

Pannawonica

Millsteam

Karratha

Wickham Dampier

Mt Brockman

Spinifex Ridge

Marble Bar

Nullagine

100 100 0 50

Kilometres

Wodgina

Gas Pipeline

Electrical Transmission

PORT ANKETELL

Power Station

5

East Pilbara

Link Corridor

6

Proven Guyed Mast Designs

7

Proven Free Standing Tower Designs

Nature of Generation That can Utilise the System

• The inherent flexibility of transmission lines lends them to wide utilisation

• Existing Diesel

• Connection of existing diesel facilities is relatively straight forward

• Operators retain ultimate security of supply from their own plant

• Operators can benefit from substantially lower cost gas and solar power

• Existing Networks

• Existing networks can interconnect

• Increased security of supply

• Higher power quality and reduction in overall losses

• New Loads

• Small loads will be able to source gas based electricity at a price that does not constitute a

barrier to entry

8

Opportunity to Develop Solar Resources

9

• The Pilbara has a vast untapped solar resource.

• Building on our transmission line investment Alinta could deploy solar power generation in the Pilbara. On a meaningful scale

• Servicing both community and mining requirements.

• Inland solar PV connected to coastal loads via transmission lines avoids cyclone impacts

• Alinta has a multipronged strategy:

– Government assistance in permitting and approval processes

– ARENA for grants to develop and execute project

– CEFC for loan assistance to make projects viable

• Quotes suggesting solar technologies can achieve levelised costs of $150 to $300/MWh are based on projects which have been de-risked

• Significant subsidies would be required in order for a private generator to commercialise solar technologies such as subsidies in construction or Feed in Tariffs.

Key Challenges in Project Delivery

Route Alignment Selection

•Competing Infrastructure - road, rail, gas pipelines, transmission lines and of course mines

•Environmental requirements

•Underlying tenure considerations

•Physical landscape – topography, geotechnical, distances covered and access proximity for

ease of construction;

Nature of Tenure

•Section 91 Licence for construction

•Easement granted on an as completed basis

•Interaction with mining and Land Act tenure

•Native Title considerations

East Pilbara Link Project

Financing

• Long term offtake required

• Strong focus on generation, and associated fuel, risk. Unlike transmission infrastructure connected

to multiple generation sources, project is not financeable without proven and reliable generation

• Failure to deliver electricity, whether caused by transmission or generation failure, ultimately can

result in offtake contract termination and stranded assets. Fundamental therefore that generation

and transmission assets are held in a single project financed vehicle

• Tier one contractors are required with local expertise. Concern over cost overruns necessitates

rigorous and prescriptive contract scoping with fixed price

Approval process

• Initial approval for ‘lightweight’ s91 licence for geotechnical and ground truthing work and aboriginal

heritage surveys

• Heavyweight s91 licence for construction and consents from underlying landholders

• Native Vegetation Clearing Permits

• Flora and fauna surveys and EPA approval requirements

• Snap-back easement on completion of construction

• Shire development approval

• Licence under the Electricity Industry Act

East Pilbara Link Project

ROLE OF GOVERNMENT AND INDUSTRY

How has Government Assisted

•Department of Lands

◦Early engagement allowed consideration of multiple different approaches on tenure

◦Positive interaction and constant communication with Department to notify them of project

status and requirements enabled the right form of tenure to be adopted

◦Collaboration on timing of applications to ensure that timeframes are met

•Department of State Development

◦Review of State Agreement

◦Facilitation in processes to ensure development of transmission line could be conducted

through the same entity that owns and operates the power station

•Economic Regulatory Authority

◦Process for Integrated Regional Licence application to allow for cutover from State Agreement

exemption to new licence

How can industry benefit from this Project

•Intention is for this Project to be the start of a connected system. A connected system has the

benefits of multiple generations sources and fuel types to ensure reliability of supply

•For existing miners, diesel generation does not have to become obsolete. It can become an

integral back up fuel source and therefore have value

•Early discussions on demand loads, project scope and feasibility will allow for long term planning

of the route to facilitate maximum delivery points