Wednesday, 29 May 2013

Wind investment could hedge rising power prices: Vestas
15 Apr 2013

Increasing wind investment in Australia so renewable energy accounts for at least 20% of the country's energy mix would help hedge against rising power prices, according to the chief of the world's biggest wind power company.

Ditlev Engel, chief executive officer of Denmark-based Vestas Wind Systems, said utilities had been taking on wind power to hedge the unpredictability of gas prices because the cost of the wind was easier to predict and guarantee.

"I think you see a lot of utilities saying well it's a good idea to have 20%, 30% of our portfolio in wind", Mr Engel said. Speaking to Business Spectator's KGB, Mr Engel said the fundamentals of the wind power sector were strong despite price falls since the global financial crisis.

In the wake of the global financial crisis, the price on the emissions trading scheme in Europe plunged from €30 to €4 and gas prices in the US fell from $US12 to $US3. Other factors contributing to a "perfect storm" engulfing the wind sector included stagnant economic growth and the absence of public dialogue on the impact of renewables in the face of eurozone woes.

But energy security was an issue for governments and they should avoid depending on gas for fuel, particularly given the difficulty and cost of transporting it, he said. "If you take the shale gas in the US, it costs about $3 to $4 dollars in the US and the landed cost in Asia is about $12, $13", he said.

"I can tell you at $12, $13 wind is by far more competitive. We just have to remember that a lot of infrastructure investment has to go in there in order to exploit the gas as well".

Meanwhile, when the huge investment in wind power, particularly in storage and batteries, paid off it "could break the very important price barrier for renewables" and reduce Australia's dependency on other countries.

"The most risky thing you can do I think in any business is to say we are here today, disregard technology development and say that we're going to be here in 10 years from now", he said.