Origin acquires Wind Power

Australian
Thursday 7/5/2009 Page: 23

Origin Energy, Australia's second-biggest electricity and gas retailer, has acquired Wind Power, more than tripling its potential wind capacity to benefit from regulations supporting renewable energy. Along with existing sites and options, the purchase increases Origin Energy's prospective capacity by 1460 MWs to more than 2000MW. Developing all the projects may cost as much as $4.4 billion based on an Origin Energy estimate of typical wind ventures.

Australia wants renewable sources to account for 20% of electricity supplies by 2020 to help tackle global warming. The regulations, which the Clean Energy Council estimates will trigger more than $20 billion of new investment, deliver extra revenue for producers using wind, sun or wave energy and compel power retailers to sell more electricity from such sources.

"Origin Energy have realised they've got a liability under the renewable energy target, so with that getting firmed up, I suspect this is something they've been looking at for a while," said Jason Mabee, a utilities analyst at RBS Group Australia. The acquisition "definitely makes sense", he said.

Origin Energy would not comment on the purchase price, said Michelle Zahra, a spokeswoman in Sydney. Andrew Newbold, a director of Melbourne-based Wind Power, also wouldn't give the price. "Given they're all just development projects, I wouldn't have thought it's that substantial," RBS's Mabee said. Wind Power's ventures in Victoria state include the intended 484MW Stockyard Hill project near Ballarat, which Origin Energy said was one of the most competitive of its kind in Australia.

The most advanced project was the 38MW Lexton venture, which had won planning approval, Mr Newbold said. Origin Energy estimated last January that each MW of wind energy capacity cost between $2.5 million and $3 million to install. Mr Zahra would not say whether that range applied to the Wind Power projects. Origin Energy has windfarm sites with 60MW of capacity and options on as much as 500MW of capacity from Conergy's Epuron unit.

Wind Power, which was previously closely held, had developed more than 300MW of windfarms in Victoria that had since been sold, Mr Newbold said. Those windfarms represented about half of the operating capacity in the state, he said. Australia's renewable energy target regulations set a goal of 45,000 gigawatt-hours of renewable energy generation by 2020, more than four times existing production of about 9500 gigawatt-hours.