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Energy & Utilities

Building globally competitive tenders for transmission infrastructure projects

23 May 2023, by Amy Sarcevic

Building transmission infrastructure is one of Australia’s greatest priorities as its makes headway with its decarbonisation agenda. It is also one of the greatest challenges, with heightened overseas competition and global shortages of skills and equipment to contend with.

Ricardo Da Silva, Networks Business Development Manager at Iberdrola Australia believes several things are important in our quest to build globally competitive tenders for transmission projects.

Ahead of his speech at the third annual Australian Renewable Energy Zones Conference, he lists a few.

Coordinate the pipeline

With overseas peers ramping up production of their own transmission infrastructure, there is often unrealistic pressure on the Australian pipeline.

“We see competition in transmission becoming a trend in all jurisdictions we are operating,” Ricardo said.

As a result, equipment such as conductors, transformers, switchgears and synchronous condensers are globally scarce, with lead times for acquisition often surpassing 24 months. Trade professionals, such as lines-people, are also in short supply.

With this in mind, Ricardo believes we should strive for as little overlap as possible with major overseas projects.

“Contractors and suppliers need to find a more stable way of delivering and spreading their resources, instead of having overlap between projects. To do this, we need to put some effort in coordinating resources globally to avoid conflicts with the delivery timescales of main projects in the USA, Europe, Brazil and other nations with whom we regularly find ourselves competing,” he said.

“We also need to ensure a smooth pipeline of projects for professionals, such as lines-people, so that we aren’t trying to all poach from the same pot when a single project requires them. One idea is to coordinate with other industries, such as offshore wind, where their skills can also be deployed. Building a continuous supply of work, and minimising conflicts between states and overseas, will make Australia a more attractive proposition for people in this trade.”

Ricardo says there are also procurement benefits with this industry-wide approach.

“When we procure on a project-by-project basis we miss out on cost savings,” he said.

“Coordinating and organising procurement and supply chain for the energy industry will allow for a greater knowledge of products and the market. It will build attractiveness and a better relationship with global suppliers. It will also bring innovation to Australia and improve efficiency and cost savings.”

Become more sophisticated in how we seek finance

Across the world, finance is becoming more sophisticated, making it harder for companies with less attractive finance options to compete.

Ricardo believes Australia will particularly benefit from a rethink on how finance is structured, with billions of dollars’ worth of investment to unlock.

“The reality is that we are being exposed to competitors that are very financially sophisticated, so we need to keep pushing ourselves to innovative and improve,” he said.

“The scale of the transmission infrastructure we require is on our side, but we need to rethink how we attribute risk, for example, in line with our overseas competitors. Utilities will need to be comfortable getting away from the typical 60/40 regulated capital structure to remain competitive in contestable processes.”

Keeping ahead with design trends

The designs of towers, isolators and other key components of the transmission infrastructure should also be reconsidered to combat any resistance from the market, he says.

“The design of transmissions infrastructure is changing constantly, as companies seek to create new values solutions and build up their own intellectual property. So Australia will need to be open-minded about these and openly embrace innovation in the same way other global peers have.

“If operators don’t push on new designs, we will get stuck on those made years ago. These were good enough at the time, but aren’t going to alleviate competitive tensions in the current market neither provide cost-effective solutions for consumers.”

Innovate on operations and maintenance

Operations and maintenance is a thin layer in the costing of a project but often the deciding factor when comparing tenders, Ricardo highlights.
“We are constantly seeing projects in which decisions have hinged on operations and maintenance, so we need to push players to develop new approaches to asset management. Believing that competition is all about the cost of capital is a narrow view of how this highly technological and global industry works,” he said.

Ricardo says innovating is especially important when companies already have an incumbent business in the country they are dealing with, as this can often cause complacency.

“Sometimes having an established business leads companies to believe they have a competitive advantage and it can stop them looking for ‘above and beyond’ approaches. Given the importance operations and maintenance can sometimes play in the tendering process, it’s really important to give it a closer inspection.”

Ricardo da Silva is Iberdrola’s Network Development Manager in Australia. He has over fifteen years’ experience in a wide range of energy industry activities and electrical engineering, including energy markets and networks regulation across different jurisdictions and Utilities in Spain and the UK.

Hear more from him at the Australian Renewable Energy Zones Conference to be held 30-31 May at the PARKROYAL Darling Harbour Sydney.

Learn more and register your place here.

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