A sub-5MW capacity credit power plant in Western Australia's SWIS grid. A compelling infrastructure investment with contracted revenue and strong risk-adjusted returns.
Western Australia's electricity grid is transitioning to renewables, but it still needs reliable backup power. That's where we come in.
A power plant generates electricity. Our plant uses high-efficiency diesel generators — similar to large marine engines — to produce up to 5 megawatts (MW) of power. That's enough to power approximately 3,500 homes.
Plants under 5MW benefit from a streamlined approvals process in WA. No Environmental Impact Assessment required. Faster grid connection. Lower regulatory burden. This means faster time-to-revenue and lower development costs.
WA operates its own isolated grid called the SWIS (South West Interconnected System). Unlike the east coast, WA has its own unique electricity market with strong demand for reliable "dispatchable" generation.
Unlike solar and wind, which depend on weather, our plant can be switched on when needed. The grid needs these "on-demand" plants as insurance for calm or cloudy days. This reliability is what we get paid for.
As WA adds more solar and wind farms, the grid becomes more dependent on backup power — not less. Our plant fills this growing gap. Think of it as the "insurance policy" for the electricity grid, and AEMO (the market operator) pays us to be available.
Two reliable revenue streams, one of which is contracted and guaranteed regardless of whether we run the plant.
AEMO (the grid operator) runs an annual auction where they buy "Capacity Credits" from power plants. This is essentially a retainer fee — they pay us to be available to generate power when needed.
Think of it like: A fire station gets paid whether or not there's a fire. Our plant gets paid whether or not we generate electricity.
Estimated: ~$650,000/year (contracted 10 years)
When the grid needs extra power (hot days, peak demand), we run the generators and sell electricity at the market spot price. During peak events, prices can spike dramatically.
Think of it like: Uber surge pricing — when demand exceeds supply, the price goes up. We only run when it's profitable to do so.
Estimated: ~$180,000/year (conservative)
| Revenue Source | Annual Est. | Contract Type | Risk Level |
|---|---|---|---|
| Capacity Credits (AEMO) | $650,000 | 10-year bilateral | ● Low |
| Energy Sales (Spot Market) | $180,000 | Market-based | ● Medium |
| Total Annual Revenue | $830,000 |
A clear, transparent breakdown of what it costs, what it earns, and what you can expect as a return on your investment.
| Investment (CAPEX) | |
|---|---|
| Generator Sets (3 × MTU) | $1,100,000 |
| Switchboard & Electrical | $280,000 |
| Transformer & RMU | $320,000 |
| Civil Works & Site Prep | $350,000 |
| Grid Connection (Western Power) | $250,000 |
| Engineering & Approvals | $200,000 |
| Contingency (10%) | $200,000 |
| Total CAPEX | $2,700,000 |
| Annual Operating Costs (OPEX) | |
|---|---|
| Fuel (diesel, variable) | $95,000 |
| Maintenance & Servicing | $65,000 |
| Insurance | $35,000 |
| Land Lease | $30,000 |
| AEMO Fees & Compliance | $20,000 |
| Administration & Accounting | $25,000 |
| Total OPEX | $270,000/yr |
$560,000 / year
Revenue ($830K) minus OPEX ($270K)
| Return Metric | Value | What It Means |
|---|---|---|
| Project IRR | 21.5% | Far exceeds the typical 8–12% benchmark for infrastructure |
| Payback Period | 2.9 years | Your initial investment is returned in under 3 years |
| Net Present Value (15yr) | $3.8M | Total value created above the cost of capital |
| Cash-on-Cash (Year 1) | 20.7% | Each $100K invested earns ~$20.7K in Year 1 |
| Equity Multiple (15yr) | 3.1× | Every dollar invested returns $3.10 over the project life |
A simple explanation of the WA electricity market and why our plant has guaranteed demand — explained without jargon.
Every year, AEMO (Australian Energy Market Operator) calculates how much total power capacity WA will need for the next summer. They look at population growth, extreme heat events, and how much renewable energy is being added.
Renewables like solar panels don't work at night or on cloudy days. As old coal plants retire, there's a growing gap between what the grid needs and what it has. This gap is our market.
To fill the gap, AEMO runs an auction where power plants bid to provide backup capacity. Successful bidders receive annual payments called Capacity Credits. This is a legally binding, contracted revenue stream for up to 10 years.
Our plant earns Capacity Credits simply by being ready to run. We don't need to generate electricity every day — just during a handful of peak events per year (typically 2–5 very hot days). The rest of the time, the plant sits idle but the revenue keeps flowing.
When we do run during peaks, we sell electricity at market spot prices, which can be 10–50× higher than normal. These events are rare but highly profitable, adding a bonus revenue stream on top of our contracted credits.
The Capacity Credit system means 78% of our revenue is contracted and guaranteed by AEMO, regardless of how much electricity we actually generate. This is not speculative — it's an infrastructure play with government-backed revenue certainty.
Every investment carries risk. Here's an honest assessment of ours and the strategies we use to mitigate them.
| Risk | Impact | Mitigation Strategy |
|---|---|---|
| Capacity Credit price drops | Revenue reduction | Locked in via 10-year bilateral contracts; not exposed to annual auction price swings |
| Diesel price increases | Higher OPEX | Fuel is <12% of total cost; plant runs <200 hours/year; hedging possible |
| Equipment failure | Availability penalty | 3 independent generators; any single failure still meets obligation; comprehensive maintenance contract |
| Policy/regulation change | Market uncertainty | WA CRC mechanism underpins $6B+ investment; politically difficult to dismantle; 10-year contracts provide buffer |
| Construction delays | Delayed revenue | 12-month build program with 3-month float; modular equipment enables fast deployment |
From investment decision to first revenue in approximately 18 months, with a clear, staged development pathway.
A simple, transparent structure designed for equal participation and clear governance.
A new Proprietary Limited company is formed specifically for this project. Your investment goes directly into the project — not mixed with other ventures. Clean, auditable, and ring-fenced.
All shareholders invest on equal terms. Voting rights, distributions, and capital returns are proportional to shareholding. No hidden fees or management carry.
Profits are distributed quarterly to shareholders after operating costs and a prudent cash reserve. Target distribution: 80% of net profits.
Full Shareholder Agreement with drag-along/tag-along protections, deadlock resolution, board composition, and exit mechanisms. Based on standard private equity templates.
| Example Scenario | $100K Investment | $250K Investment | $500K Investment |
|---|---|---|---|
| Equity Stake | 3.7% | 9.3% | 18.5% |
| Annual Distribution (Est.) | $20,700 | $51,800 | $103,500 |
| Payback Period | 2.9 years | 2.9 years | 2.9 years |
| 15-Year Total Return | $310,500 | $776,250 | $1,552,500 |
| Equity Multiple | 3.1× | 3.1× | 3.1× |
We invite you to review the detailed financial model, meet the team, and discuss how PowerUP Energy fits your investment portfolio.