AGL shelves wind farms

Summaries - Australian Financial Review
24 February 2011, Page: 6

AGL Energy has placed $2 billion of wind farm investments on ice and a hiatus in new projects may last years, due to a soft and damp market for Renewable Energy Certificates. Managing director Michael Fraser indicated that AGL Energy will continue with projects under construction but will hold off committing to any new wind projects until the price recovered.

Last year, prices were depressed and new investments stalled after heavy subsidies for the installation of household rooftop solar systems saw a flood of certificates come onto the market. However, modifications to the certificate scheme that took effect on January 1 address a design flaw and split the renewable energy target between small scale and industrial scale projects. Mr Fraser said there will still be a massive amount of development.

Despite changes to the regulations, certificates are still trading for just over $30.00 each, while prices needed to justify new projects are $60.00 and $65.00. The investment freeze will leave projects on hold, such as the 300 MW Coopers Gap project in Queensland and the 150 MW Barn Hill and 99 MW Hallett 3 projects in South Australia. General manager Australia for renewable energy project developer, Pacific Hydro, Lane Crocket, says there is a "stand off" in the market with project developers refusing to sell certificates at current prices and retailers not requiring new supplies. He says the sale of New South Wales state retailers TRUEnergy may also lead to some earlier contracting.