Wallaby gets second wind in energy renewal

Australian
Monday 18/2/2008 Page: 29

IN Bill Calcraft's first international career the term "renewable energy" meant training hard enough to put in a powerful second-half for the Wallabies. The premiership-winning flanker for Sydney club Manly had enough energy to play 21 games for the national rugby union team and be in the Grand Slam tour of the UK in 1984. Today an Australian Test cap sits on a sideboard in Calcraft's office in London beneath a few photos of Wallaby line-ups, but next to it is another trophy, a "Renewable Energy Award" sponsored by Euromoney and Ernst & Young.

Calcraft, 48, is now a private equity investor specialising in operating renewable energy assets, mostly wind power in Europe, and he believes the industry in Australia is underperforming badly. "It is really quite sad to see Australia trailing behind other developed countries in something as important as this," Calcraft says. "Australia is in a very lucky position with all the coal and other resources it has, but it also has fantastic wind resources and we can take advantage of the fact that the Europeans have already done much of the trial and error work (in developing the industry)."

We have been well behind global thinking and there still seems to be this old-fashioned attitude that getting serious about this is some sort of greenie thing. That is rubbish. This is about a serious engineering industry and sophisticated investors. There is over $100 billion invested in it and that is not play money or just charity. That is serious investment by global institutional investors and all these new wind farms are not being built by accident. A hell of a lot of research and financial muscle goes into it. Renewable energy, especially wind power is not a 'future industry' it is a 'now industry' and a very, very commercially driven one.

"I'm deadly serious about it and I'm not exactly what you would call a greenie or a hippie." If you did want to call Calcraft a hippie you probably would not do it to his face. With the broken nose, twisted fingers and pop-out teeth of a rugby veteran, he has conservative political views and is adamant that his interest in the industry `'is commercially driven rather than climate driven."

As a managing director in the renewable energy fund of the German insurer and investor Allianz he has helped build a portfolio of more than 350 million ($566 million) in wind farms in Germany and Italy, with more expansion planned. Much of his time is spent travelling across Europe to seek new investments and stay in touch with his fund's 250-megawatt portfolio, which includes some of the biggest onshore turbines in the world. With `wing spans' of more than 100m, they could comfortably reach from goal line to goal line on any rugby field in the world.

A law and commerce graduate before his Wallaby career, Calcraft played the last of his three Tests against Argentina in 1986 and then spent two years at Oxford studying politics, philosophy and economics and captaining the university rugby team. He returned to Sydney to work briefly for the controversial stockbroker Rene Rivkin before going back to the UK to take up investment banking. His wife Una is English they first met during the Grand Slam tour and their children Darcy, 16, and Kit, 11, have English accents and dual passports.

Calcraft's first contact with the wind industry came in 2001 when he became a director of a Belgian engineering company that had been bought by Allianz. Since then he has helped to build Allianz's own collection of renewable energy assets. "A lot of institutional money is trying to invest in renewables so people have often struggled to find vehicles for doing that. The best way is often to directly buy and manage your own assets," he says. "We are watching solar, wave power, geothermal... all of that but at the moment wind is the one that is up and running and can give you commercial scale.

"The early industry in Germany and Denmark was driven by retail investors buying into a small farm, maybe even a single turbine at a time, and some of that early investment did not perform well because they hadn't done the right research on things like wind conditions. "Now it's institutional investors and the whole thing is a lot more professional with better analytics. The attraction for investors is that these are low-yielding infrastructure assets with extremely steady returns.

No matter how volatile the debt and equity markets might get, these assets will keep giving you project returns of something like 7 per cent and that stability is very, very attractive to pension funds and superannuation funds. "The beauty for Australia is that it has much better wind conditions than a place like Germany and we can learn from the mistakes they have already made. They have developed much more efficient turbines and systems for predicting the wind... they have also found the ideal is to have about 20 per cent of your total electricity production coming from wind," Calcraft says.

"In Denmark and northern Germany they have gone much higher than that and it can create problems on your grid. Stick to about 20 per cent and it works fantastically as part of the overall mix. "The critics in Australia are still going on about wind turbines being inefficient and needing subsidies and higher costs.

But the price of wind power has already got to the stage where it is competitive and on good projects it can be cheaper than most other sources. "The wind doesn't blow all the time, of course, but it's just a matter of managing that variability as you plan your overall balance of energy sources. "And people seem to forget the tens of billions of dollars in tax breaks and other subsidies that have gone into coal and nuclear energy taxpayers in Europe are still going to spend decades paying massive amounts to clean up nuclear energy plants. "The big issue is to get the balance right between different sources of power and wind just have to have a big part in that."