Facebook Google Menu Linkedin lock Pinterest Search Twitter

Advertisement

Markets

May 7, 2014

This may be as good as it gets for Australian wind energy

Wind energy in Australia has hit a record share of electricity production. But antipathy to wind turbines, and the anticipated trashing of supportive policies, means wind in Australia may be reaching its peak.

User login status :

Share

New data released on Monday suggests that Australia in the month of April reached its record level of output for wind energy — 4.6% of total generation from the national electricity market.

That is a fine and welcome achievement, albeit modest in the global context, and follows a two-year period where the share of black coal generation has also reached record lows — with the added benefit of lower emissions, lower wholesale electricity prices, and more jobs.

But for Australia, this may be about as good as it gets for wind energy in the foreseeable future. A few projects being completed this year might take the total output from Australian wind farms close to 5% of total generation, but on current settings it will be unlikely to get much further.

Policy uncertainty — around the carbon price and the renewable energy target — has effectively brought the development of the Australian wind industry to a halt, and the Abbott government might extend that hiatus for another few years, depending on the outcome of the renewable energy policy review. If, and when, the policy levers or the market conditions change, then large scale solar is likely to displace much of the wind capacity currently in the pipeline.

Right now, there is little optimism in the industry for any positive policy levers to be left in place by the current government. Treasurer Joe Hockey last week caused consternation over his comments that wind turbines near Canberra were “utterly offensive”. This followed Prime Minister Tony Abbott’s comments last November that those same turbines were “growing like mushrooms”, and were expensive and unreliable.

Abbott’s office, advised by wind-hating business types such as Maurice Newman, is taking charge of the current review of the renewable energy target, appointing yet another climate science skeptic in Dick Warburton, who has said he believes nuclear is the only valid alternative to coal, as its chief.

It all appears to be a massive blow to the ambitions of many international and local wind farm developers. Right now, the biggest project under development is the part-completed 270MW Snowtown 2 project in South Australia. A few wind farms are under construction in NSW — all financed pre-2013 — while Pacific Hydro received funding  from the Clean Energy Finance Corporation for a 47MW addition to its Portland project.

The 200MW of wind energy to help meet the ACT government’s ambitious 90% renewable energy target, might be the only other new wind farms added to the market over the next four to five years, apart from an extension to Pacific

New Zealand company TrustPower, which is building Snowtown 2, has another seven wind farms ready to go in Australia, but indicated last month to analysts that few, if any, had a chance to be developed if the RET was severely diluted. A cut in the fixed target from 41,000GWh to 27,000GWh, a widely tipped outcome, could mean that only two of these wind farms will be cost efficient enough to be built by 2019.

“Little wonder that industry insiders say staff are either looking for opportunities overseas, or in different technologies.”

RES Australia, a subsidiary of UK-based RES Group, said a $450 million wind farm ready to build — and with strong community and council support — in Victoria, would not go ahead if the RET was changed. RES Australia development manager Daniel Leahy said in a statement on Monday:

“We are concerned that the government may be considering a reduction of the RET on a false premise it will save consumers money — when in reality, cutting the RET will demonstrably increase our energy bills in the long term.”

Australia’s biggest home-grown renewable energy companies, Pacific Hydro and Infigen Energy, now invest more money in international projects than they do in Australia. Pacific Hydro is focused on South America, particularly Brazil and Chile, where wind energy is undercutting the cost of fossil fuels in Brazil and solar energy is also competing with coal in Chile. Infigen is investing in new solar projects in the US, which are competing with gas-fired projects for new generation.

The situation at state level is no better – apart from South Australia, which accounts for around 40% of Australia’s wind farm developments to date, is likely to meet its 33% renewable energy target six years ahead of schedule.

The Victorian industry has been held back by planning changes introduced by former Premier Ted Baillieu, NSW has appointed a new planning minister who describes wind turbines as “hideous”, as Queensland has not installed a single wind turbine in its state since the 12-MW wind farm at Windy Hill project on the Atherton Tablelands was built 15 years ago. (Apart from a couple of small turbines on Thursday Island, and one at the CSIRO research centre in Newcastle, they are the only wind turbines north of Sydney).

The Queensland state government shows no inclination of doing any more, arguing that the RET should be scrapped altogether. Western Australia is fighting back against renewable energy developments, and industry people think it will be at least five years until a new wind farm is constructed in that state.

There are a couple of “mega projects” that could get developed in the right conditions. These include the 600MW Ceres project in South Australia, and Hydro Tasmania’s plans for a possible 600MW project on King Island. Other nearer term options include the Hornsdale wind project in South Australia.

For most undeveloped wind projects, including the combination of antipathy from state and federal conservative governments, delays and deferrals in key policies such as the RET, the proposed dismantling of the CEFC and the def-funding of the Australian Renewable Energy Agency paints a bleak picture.

And by the time that the policy environment could change, large scale solar — at least projects built to a 10-50MW scale — could be the most attractive option for renewable energy developers. This would be due to scale, project delivery, speed of construction, acceptance by residents, and finally on pricing – with solar costs likely to fall towards wind energy prices, and have the advantage of producing during the day, when the energy value is higher.

It’s a bleak prospect. Little wonder that industry insiders say staff are either looking for opportunities overseas, or in different technologies.

*This article was originally published at RenewEconomy

Get a free trial to post comments
More from Giles Parkinson

Advertisement

We recommend

From around the web

Powered by Taboola

5 comments

Leave a comment

5 thoughts on “This may be as good as it gets for Australian wind energy

Leave a comment