Industry jockeys to cash in on renewables targets

Australian
25/09/2007 Page: 23

THE Queensland Treasury looks to be the immediate winner from rising government enthusiasm for wind and solar energy, set free by Prime Minister John Howard's declaration on renewable energy targets. Industry sources speculate that a portfolio of wind assets owned by the Queensland Government will have risen in value by around $50 million to $400 million in the wake of Mr Howard's target to have 15 per cent of all energy demand supplied from renewable sources by 2020.

Energy retailers Origin Energy and AGL are expected to head a list of bidders to be finalised this week, and to make the best offers, given their ability to make use of renewable energy certificates that will come with ownership of the wind assets. The certificates will be complemented by the proposed carbon trading scheme, and broadly encourage the use of renewable energy technologies now under development.

"Generators of renewable energy will gain certificates for each unit of energy they produce, which retailers of energy will be required to buy to comply with the scheme legislation," an AGL spokesman said. "Based on latest independent market operator load forecasts in the national energy market, and the South West Interconnected System, the federal Government's aims would amount to about 17 per cent of national energy output by 2020 " Shares in energy companies were in mixed demand yesterday, with AGL down to $16, Origin Energy down 13c to $10.15 and Babcock and Brown Wind Partners up 7c to $1.78.

Other wind energy producers have reacted cautiously to the Government's plans, calling it a step in the right direction but suggesting a 20 per cent share instead of 15 per cent. Pacific Hydro, operator of wind farms on the southern Victorian coast and owned by fund manager IFM, welcomed the proposal to unity targets and legal frameworks nationally. "Australia has incredible renewable energy resources, including wind, solar and geothermal energies that are available right across the country, so having one set of rules makes sense for business and ensures that all of our sites can be considered in the same context," said Andrew Richards, executive manager, government and corporate affairs, at Pacific Hydro.

Under the Government's proposal, all existing and committed state and federal schemes would contribute to Australia sourcing 15 per cent, or 30,000 gigawatt hours, of its energy a year from renewable sources by 2020, up from about 10 per cent today. Big energy retailer Origin Energy has access to wind-generated power but does not own its own farms, while AGL Energy has wind farms under development in South Australia and Victoria. It has the $236 million Hallett farm under development in South Australia and has announced plans for a $600 million wind farm complex at Macarthur in Victoria.

Potential bidders for the Queensland portfolio of assets are thought to include Epuron Pty Ltd, Transfield Services, Viridis, Babcock and Brown Wind Partners, one of the Allco vehicles, and International Power. The Queensland assets are a mixture of coal-fired thermal, wind and hydro power generation assets. There are wind farms at Windy Hill near Ravenshoe in the state's north, the Emu Downs farm in Western Australia and Toora in the south Gippsland region of Victoria. Other wind farms are the Starfish Hill wind farm near Cape Jervis and the Mount Millar wind farm on the Eyre Peninsula, both in South Australia. The biggest of the assets up for sale is Emu Downs, which generates 80 megawatts of electricity from 48 turbines.

In total, installed wind energy capacity is a little over 800 megawatts, while a further 5500 megawatts is proposed, according to figures from industry lobby group Auswind. Pacific Hydro's Richards said his company had been calling for a national target of 20 per cent by 2020 and 30 per cent by 2030. "While all of this is very achievable, the national clean energy target of 15 per cent by 2020 will maintain the current momentum with the advantage of drawing these schemes up into a national regulatory framework," he said. "As with most of these initiatives, the devil will be in the detail, so we look forward to working with the federal and state governments on building a single national approach to renewable energy and ultimately on the transition to a national emissions trading scheme."