Monday, 13 June 2011

SA renewable energy hopes left up in air

Adelaide Advertiser
1 June 2011, Page: 67

PLANS to unlock wind power to generate thousands of MWs from the Eyre Peninsula have received a blow with a crucial rule change being rejected by the key regulatory body. RenewablesSA Commissioner Tim O'Loughlin said the ruling blocked a new incentive for companies to develop one of Australia's best wind resources and it was "flawed".

Developers had hoped the change would mean consumers would underwrite part of the estimated $613 million cost to build a transmission line from Port Augusta to Eyre Peninsula. "We think this is a blinkered and short sighted decision", Mr O'Loughlin said. He said South Australia was by far the most affected by the ruling, as other states did not have the same opportunity to tap high quality wind resources at the edge of the national grid.

A RenewablesSA Green Grid report had identified a potential 2000 MW of wind power on Eyre Peninsula, compared to the state's existing installed wind power capacity of 1018 MW. At the moment, wind farm developers pay the full cost of ElectraNet installing a transmission line. The suggested rule change would have allowed a wind farm developer to contribute to the cost of the transmission line based on a portion of the projected 2000 MW that they expected to produce. Remaining costs would be recouped by ElectraNet for consumers as other developers came on line.

Mr O'Loughlin said most developers would not now risk such a large investment up front. The Australian Energy Market Commission was originally asked by the Ministerial Council on Energy in 2010 to consider allowing energy generators to have consumers partially underwrite transmission line costs. Its draft determination "stunned everybody by saying we don't want to look at any of the five options", Mr O'Loughlin said. The options were variations on consumers bearing some of the initial costs.

Mr O'Loughlin argued that the cost of building wind farms under existing grid lines was continually rising as the best wind generation sites were already taken and new, tougher rules on siting turbines closer to housing were making them less economic. "In Eyre Peninsula, what you've got is an area with lots of wind that's the size of Tasmania with the population of 55,000 people. "There are ideal sites in sparsely populated inland areas", he said.

The draft determination would now receive submissions, including one by Mr O'Loughlin with Acciona Energy, Transfield Services, Origin Energy and Pacific Hydro. But Mr O'Loughlin said the final ruling which is due to be made by June 30 was unlikely to be changed. He believed the need for extra renewable energy would eventually make the economics work for Eyre Peninsula.

"They say they don't want to subject consumers to the risk of having to pay for surplus transmission capacity", Mr O'Loughlin said. "My complaint is that they don't recognise the opposite set of risks which is the opportunity of tapping resources like Eyre Peninsula and the rising cost of wind power production in the existing framework".