Thursday, 7 January 2010

Doubts don't stop start to wind farm

Hobart Mercury
Monday 28/12/2009 Page: 2

TASMANIA'S $350 million Musselroe windfarm is finally under construction, after more than four years of delays and uncertainty about its future. An advertisement in the Mercury on Boxing Day by Tasmanian renewable energy company Roaring 40s advises that the Musselroe windfarm on Tasmania's far northeast tip has "substantially commenced". It warns summer visitors to the North-East that some access tracks have been closed near Lemons Beach and the Cape Portland Wildlife Sanctuary.

So far, new roads into the vast Cape Portland farm estate have been constructed, giant concrete foundation pads for the towering wind turbines built, the windfarm's control building completed and some electricity cabling work commenced. State Government spokeswoman Margaret Lindley confirmed yesterday the long awaited project was "definitely going ahead". She said more than $30 million had already been spent at the remote site, 140km northeast of Launceston, in preparatory work. But the financial viability of the Musselroe project remains in doubt.

It is understood Roaring 40s has not yet locked in sale prices or power uptake contracts with power companies for the 130 MWs of green electricity that will be produced from Musselroe. Nor have contracts for the parallel sale of the valuable renewable energy credits (RECs) attached to every unit of wind energy generated yet been signed. Six months ago, the State Government conceded Roaring 40s was having trouble financing the Musselroe project because of the global credit squeeze.

Rising prices for the wind turbines and their 90m-high supporting towers - Musselroe will have 56 wind turbines - have not helped. The sale price for RECs is considered critical to Musselroe's long-term viability. The value of these credits has recently fallen from more than $50 each to less than $30, largely due to the popularity of residential solar hot-water system rebate scheme. The commercial success of the Musselroe windfarm relies on each REC certificate generated being able to be sold to industrial manufacturers and coal-fired power stations for between $50-60 each to offset polluting carbon emissions.

Crashing values for renewable energy credits were recently blamed for the collapse of a proposed $800 million windfarm project in Victoria. Another $28 billion worth of windfarm projects across Australia remain under a cloud. Pressure is mounting on the Rudd Government to remove its $1600 subsidy for each home solar hot-water system installed. Until firm contracts for the sale of the windfarm's electricity production or RECs are in place, Roaring 40s is expected to continue having trouble raising capital. State Energy Minister David Llewellyn confirmed last night that the financial viability of the Musselroe windfarm was not yet certain.