With the reduction in the number of vehicles on the road running on LPG, we are increasingly seeing surplus quantities of LPG in the market, and because of this, the price of LPG is softening not just in Australia, but internationally.
For our Capstone Microturbines this is a great opportunity as we can run on either LPG or blends of propane and butane. Currently, we are installing a machine that will run on 100% butane for a customer in Queensland.
Recently, the market for butane has shrunk considerably, so it is now a very low cost fuel. In this instance we are able to take an effectively redundant product from this customer which has very little commercial value, and we have been able to turn it into a megawatt of continuous electricity production which is reducing the customers quantity of electricity they are having to buy from the grid. This has generated a million dollar per annum saving for the customer.
The interesting opportunity for this is that with high natural gas prices on the East Coast of Australia we are seeing an increase in opportunity to provide butane or LPG to customers as a fuel source who may already have an existing natural gas supply. But in the case of LPG/butane we are able to offer the gas price, which in many cases is lower than what the customer can get from the grid.
In addition to that there is an ability to potentially fix the price of the LPG or butane for a period of up to three years, providing the customer with a very high degree of energy pricing security for that period.
We are working now on a number of projects on the East Coast of Australia where we are looking to bring this low cost fuel option to our customers, and the reduction in energy costs for the customers is substantially better than anything they can currently access from either the electricity or the natural gas grid. These projects are also perfect opportunities to integrate some behind the meter solar PV to further reduce the customers cost of electricity and emissions.