Australian renewables law to spark wave of wind projects

Australian wind farm developers are expected to waste little time pushing ahead with billions of dollars worth of projects after a law committing Australia to generating 20 per cent of its energy from renewable sources by 2020 was passed through parliament this week.

The law, which comes into effect from January 1 next year, is expected to trigger a wave of investment in wind-farms, with some 15,000MW of wind capacity estimated to be in the development pipeline.

However, promoters of other renewable energy sources such as geothermal, solar and marine energy fear the so-called "20/20 target" will be swamped by wind farm developments and certificates generated from small scale solar PV.

Their calls for a portion of the Renewable Energy Target (RET) to be reserved for emerging baseload technologies went unheeded, much to their frustration.

But Australia's largest wind farm developers, AGL Energy, Origin Energy, Pacific Hydro, and Infigen Energy, were quick to celebrate what one senior executive described as "the dawn of a new era" for the industry. All said they would act quickly on projects which had been prepared, but not yet finalised or financed in the absence of legislation.

"This is the most significant week for the renewable energy industry," said Andrew Richards, the head of corporate affairs for Pacific Hydro, which intends to expand its wind portfolio from 130MW to 600MW over the next five years.

Michael Fraser, the CEO of AGL Energy, the largest renewable energy company in the country, said that the company was now poised for rapid expansion. " We've got around A$1 billion [in wind farm projects] ready to go, and well over $2 billion more in the pipeline," he said, adding that AGL would expect to invest around $7 billion in renewable energy over the next decade.

Rapid expansion is expected right across the wind energy industry, according to Grant King, chief executive of Origin Energy, who estimated that more than 6000MW of wind capacity will be built in the next 10 years with Origin expecting to account for up to one third of that new capacity.

The company recently bought a 1,400MW project development pipeline from Windpower, and expects to give the go-ahead for its 484MW Stockyard Hill windfarm in Victoria in coming months.

Another major project waiting for the passage of the RET was Australia's largest proposed wind-farm, a 1,000 MW project near Broken Hill in New South Wales, which will be developed by Epuron, Australia's Macquarie Group, and the Portguese firm Martifer.

Miles George, chief executive of wind-farm specialist Infigen Energy, said that wind energy was likely to dominate the Australian renewables sector, edging out other technologies. "Wind energy is the most competitive form of utility scale energy," he said. "We expect wind to get lion share of the market, around 70 per cent."

He added that Infigen alone had 1,000MW of projects deliverable over next 5 years at a cost of around $2.5 billion, and expects the first of those to be ready in 2010/2011.

Others predict the wind industry could grab as much as 80 per cent of the renewables market, with much of the rest being taken up by small scale solar PV, which is awarded a multiplier of five renewable energy certificates (RECs) per MW under Australia's incentive scheme.

However, the expected dominance of wind and small scale solar technologies has dismayed those working on geothermal and large scale solar projects, who had managed to convince Opposition politicians to support a banding of the RET that would ensure one quarter of ther target had to be delivered by emerging baseload technologies, but failed to gain the support required to see the clause pass it into law.

The head of the Australian Geothermal Association Susan Jeanes said the legislation in its current form could set back the emergence of such technology by many years, even though it is emerging as a cost effective subsitute for coal, which dominates the Australian energy market.

"It's hard to understand why it is not being seen as a very important insurance policy," she said.