Grant cut steals wind from AGL venture

Adelaide Advertiser
Wednesday 17/2/2010 Page: 63

UP TO $340 million of investment in wind-driven energy for regional South Australia is at risk following changes to the Federal Government's Renewable Energy Target scheme, AGL Energy said yesterday. Hallett 3 and 5, which are planned for sites near Burra in the state's north, will involve the construction of 25 and 38 wind turbines respectively. The two projects, which are part of AGL Energy's five-part program, are estimated to be worth about $340 million and are both in the pre-development phase.

However, yesterday AGL Energy Project manager Tim Knill said a collapse in the price of renewable energy certificates had made the two projects unviable. "They are really driving down the price of RECS which is reducing the investment in large scale renewable energy projects," Mr Knill said. The RET program, which was devised to ensure 20% of Australia's energy consumption came from renewable sources by 2020, has suffered a setback due to changes made by the Federal Government to include its $8000 solar rebate program.

The renewable energy certificates are currently trading at about $30 compared to the $50 or more in the first half of last year. "They (RECS) are part of the financial model and the income stream for the project, so if there is something like domestic solar hot water which is driving down the price we believe there is a distortion in that market," Mr Knill said. "Until there is a change I don't think these projects are going to be viable."

Mr Knill said incentives for renewable energy projects levelled the playing field for companies attempting to compete with traditional fossil fuels. "We'll continue to work on the development but we won't take it to the board until we have a project that is viable and meets requirements and meets the requirements of the board." AGL Energy has said the benefit to the region of the Hallett project would total $1 billion once all stages are complete - a figure likely to be dented if the two final farms are shelved.

Mayor of the regional council of Goyder, Peter Mattey, said if the projects did not go ahead, the local community would likely suffer. "They (the windfarms) have been a significant economic benefit during the construction phase because they are using local contractors and they use local businesses," he said. Meanwhile, SA transmission operator ElectraNet said it would conduct a feasibility study with the Australian Energy Market Operator into increasing transfer capability between the state and the national grid.