Corporates chase renewables

Business News
Thursday 14/6/2007 Page: 7

Pacific Energy has agreed to pay about $4 million in cash and scrip for its 50 per cent interest.

LISTED company Pacific Energy Ltd has become the newest entrant to Western Australia's renewable energy sector, which is underpinned by a state government policy of quadrupling the state's use of `green' energy. Pacific announced last week the acquisition of a 50 per cent shareholding in Spiritwest Bioenergy Pty Ltd.

SpiritWest is pursuing the development of a 46-megawatt power station at Neerabup, north of Wanneroo and is one of three groups in WA aiming to develop biomass projects, which use plantation residue as the fuel for power stations. The SpiritWest project was instigated by Beacon Consulting's Cliff Jones, who is continuing to pursue the development of a 50MW biomass project near Albany. The third player is Western Australia Biomass Pty Ltd, a joint venture between investment bank Babcock and Brown and US company National Power. The JV has encountered vocal community opposition to its plans for a 40MW power plant near Bridgetown.

The SpiritWest acquisition was Pacific Energy's first deal since a major restructuring last year, under which former Kvaerner Engineering president John Fletcher was appointed chairman and Perth dealmaker Ian Middlemas became deputy chairman. The restructuring also included the recruitment of managing director Adam Boyd, formerly with GRD Ltd subsidiary Global Renewables, and general manager Nenad Ninkov, who held senior roles at Western Power. Mr Boyd said the SpiritWest project, budgeted to cost about $110 million, was ideally placed to help meet the state government's new renewable energy targets.

In May, Premier Alan Carpenter announced that 20 per cent of energy on WA's main electricity grid should be from renewable sources by 2025, up from about 5 per cent currently. Mr Boyd said this meant the state would have to commit to a 46MW renewable energy project every 18- 20 months. Pacific Energy's initial goal was to win a Synergy tender for the supply of renewable energy.

Its main competitors in the tender are Western Australia Biomass, which is still trying to gain environmental approval, and two wind farm proposals. Mr Boyd said biomass could be used to supply baseload power, in contrast to the intermittent supply from wind farms. He said the SpiritWest project's location in Perth's northern corridor was another plus, as it could stabilise the electricity network and reduce the need for transmission upgrades.

Pacific Energy's partner in the Spirit West project is investment group Perpetual Ltd, which agreed in 2005 to acquire a 50 per cent interest. Pacific Energy has agreed to pay about $4 million in cash and scrip for its 50 per cent interest, subject to the project reaching defined milestones. The vendor was Perth bioenergy Holdings Pty Ltd, a company set up by Mr Jones to develop the project.

Mr Jones also established Great Southern bioenergy Holdings Pty Ltd, which is seeking to establish two biomass-fuelled 50MW units near Albany. Mr Jones believes the renewable energy sector would get a big boost if the state government backed up its policy with legislation, as this would lift the value of renewable energy credits payable to power project.