www.climatespectator.com.au
3 May 2012
Origin Energy made big news in the Australian renewables sector yesterday by signing onto the biggest renewable energy power purchase agreement ever contracted in this country-the 270MW Snowtown II wind farm in SA. It represented an almost perfect rebuttal to criticisms by others in the renewable energy sector that the company was playing games to undermine the Renewable Energy Target by holding off on entering into PPAs to create the impression the target could not be met.
But on the same day, Origin Energy CEO Grant King undid this favourable publicity by delivering a presentation where he suggested the level of the RET be reduced by more than a fifth-from 45,000 GWs to 35,000 GWs in 2020. In the chart reproduced below, King argued that because electricity demand growth has dropped dramatically, we need far less renewable energy than initially projected to achieve the 20% by 2020 renewables target.
The implications for the large-scale renewables sector from following King's line of argument would be devastating. The current target for large scale renewables (LRET) such as wind and biomass is 41,000GWh by 2020, which he suggests should be lowered to 27,000GWh. Based on current legislation, Green Energy Markets estimates that we need to connect 1000MW of large scale renewables to the grid in 2014 (equivalent to about 4 Snowtown II's) and then 1500MW for each subsequent year to 2020. This adds up to a total of 10,000 MWs.
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Showing posts with label REC. Show all posts
Showing posts with label REC. Show all posts
Saturday, 5 May 2012
Thursday, 29 March 2012
AGL buys rights to mega wind farm
www.smh.com.au
23 Mar 2012
AGL Energy expects to start work next year building a 282-turbine, 300- MW ( MW) wind farm at Silverton, NSW, after acquiring the development rights for an unspecified sum, estimated at tens of millions of dollars. The $750 million project, acquired from Epuron and Macquarie Capital, adds to AGL Energy's already-significant 389 MW wind portfolio in Australia.
Silverton could eventually become the largest wind farm in the Southern Hemisphere, with concept approval for a further 316 wind turbines in subsequent stages which could lift the capacity at the site to 1000 MW, subject to the capacity of the electricity network.
Deutsche Bank energy analyst John Hirjee said there was a ''reasonable likelihood'' that the first stage at Silverton would be developed, but subsequent stages would depend on the state of the market for Renewable Energy Certificates and carbon pricing from 2015.
The viability of major renewable projects has been hamstrung by an oversupply of large-scale RECs, generated by domestic solar panels and hot water systems before the renewable energy regulations were tightened.
''We see development of Silverton as a valuable in-house option for AGL Energy when oversupply eases,'' Mr Hirjee said. ''The company has previously indicated its RECs obligation is covered to 2015, around the time Silverton could commence production. We see further wind farm developments as consistent with AGL Energy's strategy of developing renewable energy assets in-house.''
AGL Energy managing director Michael Fraser said today the Silverton acquisition showed AGL Energy's ''ongoing commitment to developing Australia's leading privately owned portfolio of renewable energy assets, in which we have invested $3 billion over the past five years".
Draft New South Wales government planning guidelines for wind farms, announced late last year, could make further stages at Silverton harder to develop. The guidelines emulate restrictive wind farm regulations introduced in Victoria, which impose a buffer zone within which residents have a right of veto on new wind developments. Submissions on the draft guidelines closed last week.
Clean Energy Council Policy Director, Russell Marsh, warned if the final guidelines were too restrictive they could chase up to $6 billion of new wind farm investments away from NSW, generating 4000 jobs and providing clean power for the equivalent of more than two million homes.
23 Mar 2012
AGL Energy expects to start work next year building a 282-turbine, 300- MW ( MW) wind farm at Silverton, NSW, after acquiring the development rights for an unspecified sum, estimated at tens of millions of dollars. The $750 million project, acquired from Epuron and Macquarie Capital, adds to AGL Energy's already-significant 389 MW wind portfolio in Australia.
Silverton could eventually become the largest wind farm in the Southern Hemisphere, with concept approval for a further 316 wind turbines in subsequent stages which could lift the capacity at the site to 1000 MW, subject to the capacity of the electricity network.
Deutsche Bank energy analyst John Hirjee said there was a ''reasonable likelihood'' that the first stage at Silverton would be developed, but subsequent stages would depend on the state of the market for Renewable Energy Certificates and carbon pricing from 2015.
The viability of major renewable projects has been hamstrung by an oversupply of large-scale RECs, generated by domestic solar panels and hot water systems before the renewable energy regulations were tightened.
''We see development of Silverton as a valuable in-house option for AGL Energy when oversupply eases,'' Mr Hirjee said. ''The company has previously indicated its RECs obligation is covered to 2015, around the time Silverton could commence production. We see further wind farm developments as consistent with AGL Energy's strategy of developing renewable energy assets in-house.''
AGL Energy managing director Michael Fraser said today the Silverton acquisition showed AGL Energy's ''ongoing commitment to developing Australia's leading privately owned portfolio of renewable energy assets, in which we have invested $3 billion over the past five years".
Draft New South Wales government planning guidelines for wind farms, announced late last year, could make further stages at Silverton harder to develop. The guidelines emulate restrictive wind farm regulations introduced in Victoria, which impose a buffer zone within which residents have a right of veto on new wind developments. Submissions on the draft guidelines closed last week.
Clean Energy Council Policy Director, Russell Marsh, warned if the final guidelines were too restrictive they could chase up to $6 billion of new wind farm investments away from NSW, generating 4000 jobs and providing clean power for the equivalent of more than two million homes.
Monday, 17 October 2011
$24.9m energy deal
Canberra Times
8 Oct 2011, Page: 2
Renewable energy company CBD Energy will buy Victorian-based energy retailer Neighbourhood Energy from Alinta Energy for $24.9 million. The deal will give CBD Energy access to Neighbourhood Energy's 65,000 mostly Victorian customers. The acquisition meant the company was now a retailer and generator of renewable energy-or vertically integrated-which positioned it to challenge major energy market players, CBD Energy managing director Gerry McGowan said. Neighbourhood Energy will be able to buy Renewable Energy Certificates generated by CBD Energy, representing extra income. Its shares closed up 1.2¢, or 14.6%, at 9.4¢.
8 Oct 2011, Page: 2
Renewable energy company CBD Energy will buy Victorian-based energy retailer Neighbourhood Energy from Alinta Energy for $24.9 million. The deal will give CBD Energy access to Neighbourhood Energy's 65,000 mostly Victorian customers. The acquisition meant the company was now a retailer and generator of renewable energy-or vertically integrated-which positioned it to challenge major energy market players, CBD Energy managing director Gerry McGowan said. Neighbourhood Energy will be able to buy Renewable Energy Certificates generated by CBD Energy, representing extra income. Its shares closed up 1.2¢, or 14.6%, at 9.4¢.
Monday, 5 September 2011
Singapore embraces clean technologies
Weekend Australian
20 August 2011, Page: 8
WHILE Australia continues to haggle politically about how we intend to confront the issue of a cleaner energy future and whether we should lead or wait to follow, many of the world's largest corporations, such as GE and Schneider Electric, have decided to push on regardless. At the same time, Singapore has decided to lead and embrace clean technologies not just for its own future but to also position itself as a clean energy hub for business and innovation globally.
The Singapore government has heavily backed the clean technology industry in recent years with the goal of creating 18,000 jobs and generating $S3.4 billion (S2.7bn) towards the nation's GDP by 2015. According to the deputy CEO of the Solar Energy Research Institute of Singapore, Armin Aberle, this includes 7000 skilled jobs in the engineering sector within cleantech. German-born Aberle worked for more than a decade at the University of New South Wales in research and development before he was attracted to Singapore's strong emphasis on cleantech a couple of years ago.
He says the skilled jobs coming online in the clean energy sector which include solar power, fuel-cells, wind power, energy efficiency and carbon services offer excellent the opportunities for engineers and scientists. "Things are developing rapidly and the prospects of achieving the 2015 targets are good. Singapore is always interested in attracting and grooming global talent", Aberle says.
He says Southeast Asia is booming and poised to continue to do so for many years, largely as the result of an emerging well-off middle-class that drives demand for services and goods. "The fundamentals for manufacturing are also steadily improving in the region, and thus the prospects for continued growth are good. He says Singapore is a late starter in cleantech, but if the government sees the potential in an idea, things move quickly. "While four years ago the renewable energy sector in the country was almost non-existent, the cleantech sector is now a key pillar of the economic agenda.
Contact Singapore's executive director Ng Siew Kiang says that as "cleantech gains prominence and popularity on a global scale, we expect there will be more qualified professionals with the necessary skills who will not only fill these new jobs, but will also be catalysts who continue to drive the industry forward".
According to Aberle, SERIS is set up like a research company and needs to secure a large part of its annual budget from industry and via public R&D grants. As such, SERIS collaborates closely with industry and has been able to secure millions of dollars of research funding every year.
"We have attracted large contracts from industrial clients in Singapore, the Asia Pacific and Europe", he says. Collaborative work has included projects with the Norwegian company Renewable Energy Corporation, which operates a world-class integrated solar manufacturing plant in Singapore for the production of silicon wafers, solar cells and PV modules.
In one project, RECs set about further enhancing the efficiency of its silicon wafer solar cells with future-oriented processing technology and techniques together with the scientific support of SERIS. "As a result of the technical innovations from this R&D project, RECs also expects to achieve significant production cost reductions, which will help bring down solar module prices and speed up the development of solar markets", Aberle concludes.
20 August 2011, Page: 8
WHILE Australia continues to haggle politically about how we intend to confront the issue of a cleaner energy future and whether we should lead or wait to follow, many of the world's largest corporations, such as GE and Schneider Electric, have decided to push on regardless. At the same time, Singapore has decided to lead and embrace clean technologies not just for its own future but to also position itself as a clean energy hub for business and innovation globally.
The Singapore government has heavily backed the clean technology industry in recent years with the goal of creating 18,000 jobs and generating $S3.4 billion (S2.7bn) towards the nation's GDP by 2015. According to the deputy CEO of the Solar Energy Research Institute of Singapore, Armin Aberle, this includes 7000 skilled jobs in the engineering sector within cleantech. German-born Aberle worked for more than a decade at the University of New South Wales in research and development before he was attracted to Singapore's strong emphasis on cleantech a couple of years ago.
He says the skilled jobs coming online in the clean energy sector which include solar power, fuel-cells, wind power, energy efficiency and carbon services offer excellent the opportunities for engineers and scientists. "Things are developing rapidly and the prospects of achieving the 2015 targets are good. Singapore is always interested in attracting and grooming global talent", Aberle says.
He says Southeast Asia is booming and poised to continue to do so for many years, largely as the result of an emerging well-off middle-class that drives demand for services and goods. "The fundamentals for manufacturing are also steadily improving in the region, and thus the prospects for continued growth are good. He says Singapore is a late starter in cleantech, but if the government sees the potential in an idea, things move quickly. "While four years ago the renewable energy sector in the country was almost non-existent, the cleantech sector is now a key pillar of the economic agenda.
Contact Singapore's executive director Ng Siew Kiang says that as "cleantech gains prominence and popularity on a global scale, we expect there will be more qualified professionals with the necessary skills who will not only fill these new jobs, but will also be catalysts who continue to drive the industry forward".
According to Aberle, SERIS is set up like a research company and needs to secure a large part of its annual budget from industry and via public R&D grants. As such, SERIS collaborates closely with industry and has been able to secure millions of dollars of research funding every year.
"We have attracted large contracts from industrial clients in Singapore, the Asia Pacific and Europe", he says. Collaborative work has included projects with the Norwegian company Renewable Energy Corporation, which operates a world-class integrated solar manufacturing plant in Singapore for the production of silicon wafers, solar cells and PV modules.
In one project, RECs set about further enhancing the efficiency of its silicon wafer solar cells with future-oriented processing technology and techniques together with the scientific support of SERIS. "As a result of the technical innovations from this R&D project, RECs also expects to achieve significant production cost reductions, which will help bring down solar module prices and speed up the development of solar markets", Aberle concludes.
Thursday, 26 May 2011
Debate refuses to blow over
Australian
16 May 2011, Page: 29
IF all the wind farms on the drawing boards in Australia are actually built, they will require a capital outlay of about $25 billion plus billions more for high voltage transmission systems to link them to the power grid. A decade ago, just a few MWs of wind capacity was available nationally; if the full list of proposals is delivered, there would be a large increase from the 2000 MW capacity of 2010.
The Energy Supply Association of Australia's yearbook reveals there are 106 wind developments in various stages of construction and planning, with a total capacity of 12,300 MWs equal to all the present power generation in Queensland, the second largest state supply system.
Credit agency Fitch Ratings, in its annual review of the east coast power industry, forecasts that $10.5bn should be spent between now and 2015 on building wind farms in five states. The rush to wind power, it says, will be led by Victoria (2335 MW), followed by South Australia (1132 MW), NSW (923 MW), Tasmania (568 MW) and Queensland (341 MW).
The main driver for wind development is the federal government's renewable energy target, designed to see 20% of all electricity consumed coming from zero emission resources by 2020. The trend will be further reinforced if the government can succeed in introducing a carbon price. The RET system is structured to produce tradeable Renewable Energy Certificates that are the currency for suppliers. They receive both the RECs price and the selling price for wholesale energy in the east coast market.
Without the mandated use of renewable energy and the RECs value, wind farmers would be unable to beat generators using brown coal, black coal and gas for a place in the market. The biggest problem for wind farm developers is that, as a result of the government's inclusion of support for rooftop solar systems in the RET structure, the RECs market is glutted and its values are low, resulting in the incentive to build large scale renewable generation being undermined.
At present prices, the best the wind generators can get in the market is about $35 per MW on average from the wholesale pool as well as as from RECs, whereas they need $100 to $110 to be commercially viable. As a result, about $4bn worth of wind farm projects are stalled and the renewables industry is fretting that the 2020 target may not be attainable.
Price is not the only factor troubling wind developers. The fast expansion of wind farm construction has created a rising tide of community concern in rural areas. The Senate, whose community affairs reference committee is investigating the social and economic impact of rural wind farms, has received 884 submissions, many of them from people riled by the intrusion of wind generation into the countryside. When South Australia's Premier Mike Rann travelled to the state's mid north recently to open a new farm, he was greeted by demonstrators waving placards saying "We can't sleep".
Peta Ashworth, group leader of the CSIRO Science into Society project, told the Senate committee at a hearing in Canberra that public acceptance is a critical factor for the successful deployment of wind power. Opponents cited landscape change, visual amenity, noise impacts and poor local consultation by project managers as their key concerns. "It appears for wind to be successfully deployed, planning processes that are transparent and participatory from an early stage will be required", she said.
Developers, the Clean Energy Council and environmental lobbyists argue, in turn, that there is strong community support in regional areas for wind farm projects, and that standards and guidelines for development are among the most stringent in the world, that no adverse health effects have been scientifically demonstrated for people living near wind turbines and that there is no evidence wind generation reduces property values.
Approval processes, however, are mostly in the hands of state and territory jurisdictions and Victoria's new Coalition government, for example, is reassessing the rules for wind developments and has said it will give local councils more say in the process. Greenpeace told the committee that the potential for wind power was "enormous", claiming that government policy could be used to drive wind development much faster than at present, aiming for wind generation alone to meet 21% of demand by 2020, with the closure of 8500 MW of coal fired power plants.
Union Fenosa Wind Australia, a Spanish owned company, which has "well progressed" plans to build 1330 MW of wind capacity in Victoria and NSW, says global improvements in the technology are "continuing apace". Its development manager, Thomas Mitchell, has told the Senate in a submission that technological improvements in the past decade have made mechanical noise from turbines "almost undetectable". For farmers, he says, hosting wind generation provides a resource that can co exist with other commercial operations, and for many offers a means of drought proofing their business.
16 May 2011, Page: 29
IF all the wind farms on the drawing boards in Australia are actually built, they will require a capital outlay of about $25 billion plus billions more for high voltage transmission systems to link them to the power grid. A decade ago, just a few MWs of wind capacity was available nationally; if the full list of proposals is delivered, there would be a large increase from the 2000 MW capacity of 2010.The Energy Supply Association of Australia's yearbook reveals there are 106 wind developments in various stages of construction and planning, with a total capacity of 12,300 MWs equal to all the present power generation in Queensland, the second largest state supply system.
Credit agency Fitch Ratings, in its annual review of the east coast power industry, forecasts that $10.5bn should be spent between now and 2015 on building wind farms in five states. The rush to wind power, it says, will be led by Victoria (2335 MW), followed by South Australia (1132 MW), NSW (923 MW), Tasmania (568 MW) and Queensland (341 MW).
The main driver for wind development is the federal government's renewable energy target, designed to see 20% of all electricity consumed coming from zero emission resources by 2020. The trend will be further reinforced if the government can succeed in introducing a carbon price. The RET system is structured to produce tradeable Renewable Energy Certificates that are the currency for suppliers. They receive both the RECs price and the selling price for wholesale energy in the east coast market.
Without the mandated use of renewable energy and the RECs value, wind farmers would be unable to beat generators using brown coal, black coal and gas for a place in the market. The biggest problem for wind farm developers is that, as a result of the government's inclusion of support for rooftop solar systems in the RET structure, the RECs market is glutted and its values are low, resulting in the incentive to build large scale renewable generation being undermined.
At present prices, the best the wind generators can get in the market is about $35 per MW on average from the wholesale pool as well as as from RECs, whereas they need $100 to $110 to be commercially viable. As a result, about $4bn worth of wind farm projects are stalled and the renewables industry is fretting that the 2020 target may not be attainable.
Price is not the only factor troubling wind developers. The fast expansion of wind farm construction has created a rising tide of community concern in rural areas. The Senate, whose community affairs reference committee is investigating the social and economic impact of rural wind farms, has received 884 submissions, many of them from people riled by the intrusion of wind generation into the countryside. When South Australia's Premier Mike Rann travelled to the state's mid north recently to open a new farm, he was greeted by demonstrators waving placards saying "We can't sleep".
Peta Ashworth, group leader of the CSIRO Science into Society project, told the Senate committee at a hearing in Canberra that public acceptance is a critical factor for the successful deployment of wind power. Opponents cited landscape change, visual amenity, noise impacts and poor local consultation by project managers as their key concerns. "It appears for wind to be successfully deployed, planning processes that are transparent and participatory from an early stage will be required", she said.
Developers, the Clean Energy Council and environmental lobbyists argue, in turn, that there is strong community support in regional areas for wind farm projects, and that standards and guidelines for development are among the most stringent in the world, that no adverse health effects have been scientifically demonstrated for people living near wind turbines and that there is no evidence wind generation reduces property values.
Approval processes, however, are mostly in the hands of state and territory jurisdictions and Victoria's new Coalition government, for example, is reassessing the rules for wind developments and has said it will give local councils more say in the process. Greenpeace told the committee that the potential for wind power was "enormous", claiming that government policy could be used to drive wind development much faster than at present, aiming for wind generation alone to meet 21% of demand by 2020, with the closure of 8500 MW of coal fired power plants.
Union Fenosa Wind Australia, a Spanish owned company, which has "well progressed" plans to build 1330 MW of wind capacity in Victoria and NSW, says global improvements in the technology are "continuing apace". Its development manager, Thomas Mitchell, has told the Senate in a submission that technological improvements in the past decade have made mechanical noise from turbines "almost undetectable". For farmers, he says, hosting wind generation provides a resource that can co exist with other commercial operations, and for many offers a means of drought proofing their business.
Monday, 16 May 2011
Solar scheme use surges ahead
Canberra Times
5 May 2011, Page: 2
Businesses and households are signing up in droves to the ACT's feed in tariff scheme with 868 new solar panel connections made to the electricity grid during the first quarter of this year. This compares with 485 connections made during the December 2010 quarter. The scheme pays ACT households a premium price for electricity they generate on their rooftop solar panels and divert into the distribution grid and has awarded more than $4.4 million since its inception in March 2009.
The latest Independent Competition and Regulatory Commission report says that interest in renewable generators has ballooned in the ACT since the Federal Government decided to reduce payments made under the Renewable Energy Certificate scheme. During the March quarter ActewAGL Energy received 1552 new applications from households and businesses wanting to connect their solar panels to the electricity grid up from 895 requests the previous quarter.
Environment Minister Simon Corbell said the results highlighted Canberra's strong interest in renewable energy. "We have seen a big surge this quarter and we are looking to see whether this continues", he said. Mr Corbell said the premium rate for micro generation would remain unchanged at 45.7¢ per kW this financial year to ensure stability for consumers and the renewable energy industry.
The average revenue reaped by an ACT resident signed up to the scheme was $407 during the March 2010 quarter which is dramatically higher than the average of $190 received during the June 2009 quarter. There are currently 4404 renewable generators connected to the distribution network. The Clean Energy Council recently issued the top 20 solar postcodes in Australia but no ACT suburbs made the cut. Caloundra City in Queensland took out the top spot. Clean Energy Council chief executive Matthew Warren said tariffs and rebates had encouraged Australian households to switch to solar.
5 May 2011, Page: 2
Businesses and households are signing up in droves to the ACT's feed in tariff scheme with 868 new solar panel connections made to the electricity grid during the first quarter of this year. This compares with 485 connections made during the December 2010 quarter. The scheme pays ACT households a premium price for electricity they generate on their rooftop solar panels and divert into the distribution grid and has awarded more than $4.4 million since its inception in March 2009.
The latest Independent Competition and Regulatory Commission report says that interest in renewable generators has ballooned in the ACT since the Federal Government decided to reduce payments made under the Renewable Energy Certificate scheme. During the March quarter ActewAGL Energy received 1552 new applications from households and businesses wanting to connect their solar panels to the electricity grid up from 895 requests the previous quarter.
Environment Minister Simon Corbell said the results highlighted Canberra's strong interest in renewable energy. "We have seen a big surge this quarter and we are looking to see whether this continues", he said. Mr Corbell said the premium rate for micro generation would remain unchanged at 45.7¢ per kW this financial year to ensure stability for consumers and the renewable energy industry.
The average revenue reaped by an ACT resident signed up to the scheme was $407 during the March 2010 quarter which is dramatically higher than the average of $190 received during the June 2009 quarter. There are currently 4404 renewable generators connected to the distribution network. The Clean Energy Council recently issued the top 20 solar postcodes in Australia but no ACT suburbs made the cut. Caloundra City in Queensland took out the top spot. Clean Energy Council chief executive Matthew Warren said tariffs and rebates had encouraged Australian households to switch to solar.
Thursday, 17 March 2011
Clean energy industry warns of boom bust
Australian
Monday 14/3/2011, Page: 7
AUSTRALIA'S clean energy industry is facing a boom bust cycle as depressed green energy prices forced the owners of the nation's biggest baseload renewable energy project to call in receivers. New South Wales Sugar Milling Co-operative chief executive Chris Connors has blamed lower renewable energy prices from the government's "botched" renewable energy legislation for the financial failure of the joint venture cogeneration project between Sunshine Renewables and Delta Energy.
Nationwide, wind farm projects have been stymied by low prices for the Renewable Energy Certificates that are supposed to be a key income stream for the projects sparking fresh warnings of a boom bust cycle related to the government's renewable energy target scheme of 20% by 2020. Critics say the RET is "simply a government created market".
Underlining this, International Power Australia estimates 61% of the 1400 MWs of wind generation that have been built or promised since 2008 will be used to help meet contracts with state governments, often for taxpayer funded water desalination plants. Mr Connors said green energy prices were depressed because the solar credit scheme which subsidises households that install solar panels had led to a glut of 30 million RECs. Ferrier Hodgson, appointed receivers and managers two weeks ago, said the plants would run as normal and there would not be a large number of job losses as they were mostly automated.
On Friday, RECs prices were almost $36, well below the price of $45 to $50 that renewable energy companies say is needed to underwrite new investments in the absence of a carbon price. This is despite the government's move to deal with the glut of RECs last year by splitting large scale renewable projects and small scale projects into two separate markets. National Generators Forum executive director Malcolm Roberts said the RET was "simply a government created market" that required retailers to buy more expensive energy.
Pacific Hydro corporate and government affairs executive manager Andrew Richards said there was a significant backlog of shovel ready wind farm projects, but developers struggled to lock in the power purchase agreements needed to finance them. There would be a need to build new projects in the future, because while energy retailers have been banking the glut of cheap RECs, these are expected to be used by about 2014 to 2015. "We just hope the industry is still here and able to deliver", Mr Richards said. "You don't want a situation where you bottom out in the cycle as we are now and everybody has to build wind farms in a hurry, because that's going to shoot the prices up".
It was unfortunate "that's been the history of the industry, the boom bust cycle", while industry wanted sustainable growth. Clean Energy Council chief executive Matthew Warren said uncertainty about the carbon price was weighing heavily on RECs prices. But he did not expect a boom-bust situation "at this stage" as industry knew what its needs would be. A spokesperson for Climate Change Minister Greg Combet said the RET was always designed to complement a carbon price to drive clean energy investments.
Monday 14/3/2011, Page: 7
AUSTRALIA'S clean energy industry is facing a boom bust cycle as depressed green energy prices forced the owners of the nation's biggest baseload renewable energy project to call in receivers. New South Wales Sugar Milling Co-operative chief executive Chris Connors has blamed lower renewable energy prices from the government's "botched" renewable energy legislation for the financial failure of the joint venture cogeneration project between Sunshine Renewables and Delta Energy.
Nationwide, wind farm projects have been stymied by low prices for the Renewable Energy Certificates that are supposed to be a key income stream for the projects sparking fresh warnings of a boom bust cycle related to the government's renewable energy target scheme of 20% by 2020. Critics say the RET is "simply a government created market".
Underlining this, International Power Australia estimates 61% of the 1400 MWs of wind generation that have been built or promised since 2008 will be used to help meet contracts with state governments, often for taxpayer funded water desalination plants. Mr Connors said green energy prices were depressed because the solar credit scheme which subsidises households that install solar panels had led to a glut of 30 million RECs. Ferrier Hodgson, appointed receivers and managers two weeks ago, said the plants would run as normal and there would not be a large number of job losses as they were mostly automated.
On Friday, RECs prices were almost $36, well below the price of $45 to $50 that renewable energy companies say is needed to underwrite new investments in the absence of a carbon price. This is despite the government's move to deal with the glut of RECs last year by splitting large scale renewable projects and small scale projects into two separate markets. National Generators Forum executive director Malcolm Roberts said the RET was "simply a government created market" that required retailers to buy more expensive energy.
Pacific Hydro corporate and government affairs executive manager Andrew Richards said there was a significant backlog of shovel ready wind farm projects, but developers struggled to lock in the power purchase agreements needed to finance them. There would be a need to build new projects in the future, because while energy retailers have been banking the glut of cheap RECs, these are expected to be used by about 2014 to 2015. "We just hope the industry is still here and able to deliver", Mr Richards said. "You don't want a situation where you bottom out in the cycle as we are now and everybody has to build wind farms in a hurry, because that's going to shoot the prices up".
It was unfortunate "that's been the history of the industry, the boom bust cycle", while industry wanted sustainable growth. Clean Energy Council chief executive Matthew Warren said uncertainty about the carbon price was weighing heavily on RECs prices. But he did not expect a boom-bust situation "at this stage" as industry knew what its needs would be. A spokesperson for Climate Change Minister Greg Combet said the RET was always designed to complement a carbon price to drive clean energy investments.
Monday, 28 February 2011
Calls for renewable energy enquiry not supported by facts
Clean Energy Council
22 February 2011
The Clean Energy Council has responded to claims by Shadow Environment Minister Greg Hunt that $113 million in renewable energy credits had been "scrapped" in 2010, saying calls for an enquiry into the Renewable Energy Target scheme were not supported by the facts.
Renewable Energy Certificates (RECs) are an incentive designed to support the renewable energy industry by bridging the gap between the cost of black and green energy. Clean Energy Council Policy Director Russell Marsh said RECs invalidated by the Renewable Energy Regulator in 2010 were nothing out of the ordinary.
"This occurred as part of standard compliance procedures, which were tightened last year by Parliament to maintain the high standards of the renewable energy industry and to protect consumers", Mr Marsh said. "Invalidated credits do not equal lost or wasted money. If declared invalid for reasons of non compliance they can be re activated once the issue has been rectified".
Renewable Energy Regulator Andrew Livingston told a Senate estimates hearing on Monday that more than 3 million Renewable Energy Certificates (RECs) had been cancelled. Mr Livingston's testimony referred to a 10 year period and the cancellations represent 3.5% of the total number of RECs created during this period. RECs are cancelled for a variety of reasons, from incorrect paperwork and IT lodgement errors to the company creating the RECs asking for them to be cancelled.
"In 2010 1.1 million RECs were invalidated, representing 3.2% of the total created. Although numerically higher than in previous years, this figure is proportional to the number of solar power systems being installed. "There were more than 100,000 solar power systems installed in 2010, which is more than the rest of the decade put together.
"The Regulator is strictly enforcing the standards and that is entirely appropriate. The compliance system is working well and comparisons with the Federal Government's Home Insulation Program are not warranted", Mr Marsh said.
For more information, contact the Clean Energy Council's Media Manager Mark Bretherton on 0413 556 981 or 03 9929 4111.
22 February 2011
The Clean Energy Council has responded to claims by Shadow Environment Minister Greg Hunt that $113 million in renewable energy credits had been "scrapped" in 2010, saying calls for an enquiry into the Renewable Energy Target scheme were not supported by the facts.Renewable Energy Certificates (RECs) are an incentive designed to support the renewable energy industry by bridging the gap between the cost of black and green energy. Clean Energy Council Policy Director Russell Marsh said RECs invalidated by the Renewable Energy Regulator in 2010 were nothing out of the ordinary.
"This occurred as part of standard compliance procedures, which were tightened last year by Parliament to maintain the high standards of the renewable energy industry and to protect consumers", Mr Marsh said. "Invalidated credits do not equal lost or wasted money. If declared invalid for reasons of non compliance they can be re activated once the issue has been rectified".
Renewable Energy Regulator Andrew Livingston told a Senate estimates hearing on Monday that more than 3 million Renewable Energy Certificates (RECs) had been cancelled. Mr Livingston's testimony referred to a 10 year period and the cancellations represent 3.5% of the total number of RECs created during this period. RECs are cancelled for a variety of reasons, from incorrect paperwork and IT lodgement errors to the company creating the RECs asking for them to be cancelled.
"In 2010 1.1 million RECs were invalidated, representing 3.2% of the total created. Although numerically higher than in previous years, this figure is proportional to the number of solar power systems being installed. "There were more than 100,000 solar power systems installed in 2010, which is more than the rest of the decade put together.
"The Regulator is strictly enforcing the standards and that is entirely appropriate. The compliance system is working well and comparisons with the Federal Government's Home Insulation Program are not warranted", Mr Marsh said.
For more information, contact the Clean Energy Council's Media Manager Mark Bretherton on 0413 556 981 or 03 9929 4111.
Tuesday, 22 February 2011
Green Power puts the power back in your hip pocket
The Saturday Age
12 February 2011, Page: 10
With more than 800,000 residential and nearly 40,000 business customers, the scheme is good value, writes Paddy Manning.
There wouldn't be too many green things that hundreds of thousands of people cough up extra for, year in, year out. GreenPower is one. That's probably because most people realise their greatest contribution to climate change is turning on the lights, aircon, TV and every other thingamajig at home.
If you choose, without waiting for the galling politics of a carbon price to play out, you can negate your own personal contribution to climate change and command the energy industry to invest in renewables simply by paying a bit more about 25%, or $500 a year for 100% GreenPower.
And many do. Established in 1997, by June last year GreenPower counted 802,628 residential customers and 39,300 commercial customers. Against the previous year, that represented a 15% fall at the household level but a 22% increase among business customers, who use more power.
There are good reasons why household interest might have waned: retail electricity prices are going up by half; uncertainty about how GreenPower fits in with the government's renewable energy target and proposed emissions trading scheme; and the competition regulator has censured some operators for misleading advertising. It's understandable there is a degree of confusion, even cynicism, about GreenPower. It's unwarranted. GreenPower is a robust scheme that is in limbo and needs some love. Is it good value for money, though?
As a customer I had no idea, until I began researching this article, whether the extra 5.5¢ per kW Origin Energy charges my family for 100% GreenPower at home on top of the 17.35¢ per kW base rate is a fair price. My 5.5¢ per kW is equivalent to $55 per MW well above the market price of Renewable Energy Certificates (RECs), which each represent 1 MW of green electricity and this week traded at about $35 each.
How is the GreenPower price set? Does it reflect the true cost of generating renewable energy? Is it highly profitable for Origin Energy? GreenPower reports on suppliers, customer numbers and the amount of renewable electricity generated. It does not track prices and GreenPower providers don't reveal how much money they're making on the scheme.
Origin Energy, with 396,000 electricity customers, has almost half the market to itself. Origin Energy's executive general manager (policy and sustainability), Carl McGarnish, admits customer interest in GreenPower has dropped but he still sees growth potential. While GreenPower customers are not especially lucrative, he says, they are more loyal they switch utilities less often. Most of Origin Energy's GreenPower customers pay $1 a week extra for 25% renewable energy effectively turning over about $20 million a year. It's still small potatoes.
On rough figures, you'd expect GreenPower to cost between $50-$70 extra per MW. On another calculation, it is twice as expensive as coalfired power. Generation represents half the retail cost (the other half is distribution) so you'd expect a 25% increase. GreenPower needs to be watched, but it doesn't look like they're gouging. For business and government agencies bulk purchasing there is a cheaper way to buy GreenPower from a third party such as Ark Climate, which simply sells RECs plus a margin.
All that is needed to restore confidence in this scheme is for the federal government to stick by its in principle commitment that all GreenPower purchases will be accounted as additional, voluntary abatement, on top of both the renewable energy target and Australia's Kyoto (and post Kyoto) commitments.
Then watch interest surge, paddy.manning@fairfaxmedia.com.au
12 February 2011, Page: 10
With more than 800,000 residential and nearly 40,000 business customers, the scheme is good value, writes Paddy Manning.There wouldn't be too many green things that hundreds of thousands of people cough up extra for, year in, year out. GreenPower is one. That's probably because most people realise their greatest contribution to climate change is turning on the lights, aircon, TV and every other thingamajig at home.
If you choose, without waiting for the galling politics of a carbon price to play out, you can negate your own personal contribution to climate change and command the energy industry to invest in renewables simply by paying a bit more about 25%, or $500 a year for 100% GreenPower.
And many do. Established in 1997, by June last year GreenPower counted 802,628 residential customers and 39,300 commercial customers. Against the previous year, that represented a 15% fall at the household level but a 22% increase among business customers, who use more power.
There are good reasons why household interest might have waned: retail electricity prices are going up by half; uncertainty about how GreenPower fits in with the government's renewable energy target and proposed emissions trading scheme; and the competition regulator has censured some operators for misleading advertising. It's understandable there is a degree of confusion, even cynicism, about GreenPower. It's unwarranted. GreenPower is a robust scheme that is in limbo and needs some love. Is it good value for money, though?
As a customer I had no idea, until I began researching this article, whether the extra 5.5¢ per kW Origin Energy charges my family for 100% GreenPower at home on top of the 17.35¢ per kW base rate is a fair price. My 5.5¢ per kW is equivalent to $55 per MW well above the market price of Renewable Energy Certificates (RECs), which each represent 1 MW of green electricity and this week traded at about $35 each.
How is the GreenPower price set? Does it reflect the true cost of generating renewable energy? Is it highly profitable for Origin Energy? GreenPower reports on suppliers, customer numbers and the amount of renewable electricity generated. It does not track prices and GreenPower providers don't reveal how much money they're making on the scheme.
Origin Energy, with 396,000 electricity customers, has almost half the market to itself. Origin Energy's executive general manager (policy and sustainability), Carl McGarnish, admits customer interest in GreenPower has dropped but he still sees growth potential. While GreenPower customers are not especially lucrative, he says, they are more loyal they switch utilities less often. Most of Origin Energy's GreenPower customers pay $1 a week extra for 25% renewable energy effectively turning over about $20 million a year. It's still small potatoes.
On rough figures, you'd expect GreenPower to cost between $50-$70 extra per MW. On another calculation, it is twice as expensive as coalfired power. Generation represents half the retail cost (the other half is distribution) so you'd expect a 25% increase. GreenPower needs to be watched, but it doesn't look like they're gouging. For business and government agencies bulk purchasing there is a cheaper way to buy GreenPower from a third party such as Ark Climate, which simply sells RECs plus a margin.
All that is needed to restore confidence in this scheme is for the federal government to stick by its in principle commitment that all GreenPower purchases will be accounted as additional, voluntary abatement, on top of both the renewable energy target and Australia's Kyoto (and post Kyoto) commitments.
Then watch interest surge, paddy.manning@fairfaxmedia.com.au
Friday, 7 January 2011
Cash cloud over wind farms
Hobart Mercury
Wednesday 29/12/2010 Page: 20
TASMANIAN wind farm operators are confident planned projects will proceed despite a steep fall in the price of Renewable Energy Certificates. About $1.5 billion of wind farm investments nationwide are under a cloud as the price of certificates has dropped 20% from a high of $36 in October. The certificates are given to the generators of renewable energy and can be sold on the open market to polluters to offset their emissions.
Roaring 40s managing director Steve Symons said the drop would have to be reversed to bolster the industry in the medium term although the planned $450 million Musselroe project remained on track. Federal Government changes to the certificate scheme will see major and minor projects traded in different markets from January 1. "It's not as though we're not going flat out on Musselroe and waiting for the RECs to move, we are at the moment full steam ahead on Musselroe", Mr Symons said. "There's an expectation from the shareholders that we will see the REC price improve as the new scheme works through. "The market needs those certificates to be up around $50 to $60".
The project manager for the proposed 225MW Cattle Hill wind farm, Shane Bartel, said the REC price was not critical but a higher price helped. "Renewable Energy Certificates really do make wind farms happen and any degree of security is really sought after by the industry", he said. Mr Bartel said the Federal Government's target of 45,000GW hours of renewable energy a year by 2020 helped keep the industry going but more was needed.
"The 20% [target] by 2020 that we currently have is fantastic but after that we need something more: either a price on carbon or something else like that". He said the Cattle Hill project was proceeding well, with approvals likely in the first quarter of 2011 and construction near Lake Echo to start in 2012.
Wind Farms Operating:
Proposed Wind Farms:
Wednesday 29/12/2010 Page: 20
TASMANIAN wind farm operators are confident planned projects will proceed despite a steep fall in the price of Renewable Energy Certificates. About $1.5 billion of wind farm investments nationwide are under a cloud as the price of certificates has dropped 20% from a high of $36 in October. The certificates are given to the generators of renewable energy and can be sold on the open market to polluters to offset their emissions.
Roaring 40s managing director Steve Symons said the drop would have to be reversed to bolster the industry in the medium term although the planned $450 million Musselroe project remained on track. Federal Government changes to the certificate scheme will see major and minor projects traded in different markets from January 1. "It's not as though we're not going flat out on Musselroe and waiting for the RECs to move, we are at the moment full steam ahead on Musselroe", Mr Symons said. "There's an expectation from the shareholders that we will see the REC price improve as the new scheme works through. "The market needs those certificates to be up around $50 to $60".
The project manager for the proposed 225MW Cattle Hill wind farm, Shane Bartel, said the REC price was not critical but a higher price helped. "Renewable Energy Certificates really do make wind farms happen and any degree of security is really sought after by the industry", he said. Mr Bartel said the Federal Government's target of 45,000GW hours of renewable energy a year by 2020 helped keep the industry going but more was needed.
"The 20% [target] by 2020 that we currently have is fantastic but after that we need something more: either a price on carbon or something else like that". He said the Cattle Hill project was proceeding well, with approvals likely in the first quarter of 2011 and construction near Lake Echo to start in 2012.
Wind Farms Operating:
- Woolnorth Wind Farm: 62 turbines 140 megawatt (mW)
- Huxley Hill Wind Farm, King Island: 2.45mW.
- Nichols Poultry farm: 225 kilowatt (kW).
- Flinders Island: 80 kW.
Proposed Wind Farms:
- Musselroe Wind Farm 56 turbines,168mW.
- White Rock Wind Farm, 220 turbines, 400mW.
- Cattle Hill Wind Farm 50-75 turbines. 225mW.
Thursday, 30 December 2010
Subsidies put solar panels top
Adelaide Advertiser
Wednesday 22/12/2010 Page: 17
THERE were more than 100,000 solar power systems installed across Australia last year, which is more than in the previous decade combined. Industry group Clean Energy Australia said yesterday rooftop solar photovoltaic systems were becoming the "Hills Hoist" of the 21st century, driven by generous state and federal government subsidies. However, growth in industrial-scale renewable power was "modest" in the year to the end of October, because of policy uncertainty about how the industry would be subsidised.
The group's 2010 report also predicted more than 55,000 jobs would be created in the industry by 2020, up from about 8085 now. About 7817 jobs were expected to be based in SA by 2020, up from 751 now. The increased employment and projected investment of more than $20 billion is being driven by the Federal Government's target to have 20% of the nation's power supplied by renewal sources by 2020.
"Much of this growth will be in regional Australia, creating employment opportunities and an economic boost for towns and communities", the report says. "In 2009-10 alone, clean energy in Australia generated just under $1.8 billion in investment".
The proportion of Australia's electricity production generated by renewable means rose significantly to 8.67%. However, this increase was largely driven by a 15% rise in hydroelectric generation from good rainfall. Growth in industrial power generation was just 210MWs, down from 993MW the previous year. "Policy and investment uncertainty played a major role in the drop in new projects in 2010 compared with the year before", the report says.
"The success of household renewable energy such as solar power and solar hot water in 2009 led to an oversupply of Renewable Energy Certificates (RECs). "With a glut of RECs in the market, the price remained low. For large-scale projects this REC price is critical". South Australia accounts for 9% of the nation's installed renewable capacity at 966MW. The state renewable energy target is to have 33% of SA's power generated by renewables by 2020.
Wednesday 22/12/2010 Page: 17
THERE were more than 100,000 solar power systems installed across Australia last year, which is more than in the previous decade combined. Industry group Clean Energy Australia said yesterday rooftop solar photovoltaic systems were becoming the "Hills Hoist" of the 21st century, driven by generous state and federal government subsidies. However, growth in industrial-scale renewable power was "modest" in the year to the end of October, because of policy uncertainty about how the industry would be subsidised.
The group's 2010 report also predicted more than 55,000 jobs would be created in the industry by 2020, up from about 8085 now. About 7817 jobs were expected to be based in SA by 2020, up from 751 now. The increased employment and projected investment of more than $20 billion is being driven by the Federal Government's target to have 20% of the nation's power supplied by renewal sources by 2020.
"Much of this growth will be in regional Australia, creating employment opportunities and an economic boost for towns and communities", the report says. "In 2009-10 alone, clean energy in Australia generated just under $1.8 billion in investment".
The proportion of Australia's electricity production generated by renewable means rose significantly to 8.67%. However, this increase was largely driven by a 15% rise in hydroelectric generation from good rainfall. Growth in industrial power generation was just 210MWs, down from 993MW the previous year. "Policy and investment uncertainty played a major role in the drop in new projects in 2010 compared with the year before", the report says.
"The success of household renewable energy such as solar power and solar hot water in 2009 led to an oversupply of Renewable Energy Certificates (RECs). "With a glut of RECs in the market, the price remained low. For large-scale projects this REC price is critical". South Australia accounts for 9% of the nation's installed renewable capacity at 966MW. The state renewable energy target is to have 33% of SA's power generated by renewables by 2020.
Wednesday, 10 November 2010
In Eden lies knowledge of trees
Sydney Morning Herald
Saturday 30/10/2010 Page: 14
Clearing forests may enrich those who are doing it, but over the long run it impoverishes the planet as a whole". That's not tree-hugging blather, but a leader in The Economist a few weeks ago. The magazine wants governments to "move fast" to save the world's forests, describing them as "purveyors of water, consumers of carbon, treasure-houses of species... ecological miracles". "Without a serious effort to solve this problem", the leader concluded, "the risk from climate change will be vastly increased and the planet will lose one of its most valuable, and most beautiful, assets. That would be a tragedy".
A map of the world, inside the magazine's special report, coloured Australia bright red - one of a handful of countries, including Brazil and Indonesia, losing more than 500,000 hectares of forest a year since 2005. As climate change accelerates, it makes no sense to be chopping down native forest - the cheapest, largest scale carbon sequestration available. Land-use change (mostly deforestation) accounts for about 15 to 17% of global greenhouse gas emissions - more than all the world's ships, cars, trains and planes.
Afforestation, reforestation and reduced agricultural emissions could, the magazine reported, sequester 40 parts per million of greenhouse gas from the atmosphere by 2050. (We are at 450 ppm and rising; we need to get back to 350 ppm.) Old growth forest maybe especially significant in its ability to suck up carbon. Which is one reason there has been an ecstatic reaction to the peace deal negotiated this month to phase out native forest logging in Tasmania.
A lot of detail needs to be fleshed out, and there is plenty of scope for backsliding, but the immediate focus has switched to the mainland. Can a similar coup be achieved here? Talks are beginning, but it looks hard. At Eden, on the NSW south coast, the Japanese-owned South East Fibre Export woodchip mill is locked in a 40-year fight for survival against conservationists.
Its chief executive, Peter Mitchell, says that SEFE, unlike Gunns, does not have the option of switching to plantation. Too much nearby forest is protected, or is state forest which cannot be converted to plantation. Woodchip prices are down. A value-adding pulp mill is not an option-the region does not have enough water and, at roughly a million tonnes a year, throughput is too small to justify the investment needed. The mill is a major employer in the Eden area, whose economy the federal Labor MP Mike Kelly - also the parliamentary secretary for forestry - describes as tenuous. Parliamentary library research he's done confirms SEFE can't move to a wholly plantation base.
A bright spot for SEFE was a proposal, now before the NSW government, to build a 5MWs biomass plant to burn so-called fines - residues from their own mill, and from nearby sawmills - to generate renewable electricity. At the moment the residues either help power the Bega Cheese factory or are sold as mulch and carted away. Some is wasted. The plant would power the mill and, if excess power was sold on and Renewable Energy Certificates (RECs) generated, it could be a nice little earner.
SEFE estimates that on top of turnover of about $70 million a year, if the biomass plant generated its forecast 31,000MWh a year, sold on at $80/MWh (based on a REC price of $35 and a wholesale electricity price of 5.50/kW) it would pull in about $2.5 million.
Which is not make-or-break. SEFE will survive if the plant does not getup. A key question is whether the local retailer Country Energy, the only logical buyer, will buy power from a controversial project. Mitchell says Country offered SEFE an indicative price a year ago. "They'll buy it", he says, "but they wouldn't sell it as Green Power". Country dodged the question this week, saying it has all the renewable energy it needs for now.
Conservationists fear the Eden biomass proposal is a test case, the thin end of the wedge, which would provide avast new market to prop up native forest logging, just as the economic case for traditional woodchip operations is unravelling. It may seem crazy to log native forest for renewable energy now, but if a carbon price is brought in, and it rises as expected, dragging REC prices up with it, what now seems uneconomic could soon become a major industry. It is a deal breaker for the environment movement if native forest can be burnt to generate "renewable" energy.
"It's the number-one conspiracy theory we get thrown at us", says Mitchell, adding that the REC regime incorporates a "high value test" that prevents logging for the primary purpose of generating energy. NSW environment protection laws prevent use of forest residues for power generation. Mill residues are OK.
Kelly, whose seat of Eden-Monaro takes in both the Snowy Hydro scheme and Infigen Energy's Capital Wind Farm at Bungendore, wants the region to be Australia's renewable energy flagship and is working with the Clean Energy for Eternity movement, which promotes a "50/50 by 2020" emissions reduction target. Kelly is a cautious supporter of the SEFE project as long as it does not use native forest waste, although he supports native forest logging in the region.
The forestry division national secretary of the Construction Forestry Mining and Energy Union, Michael O'Connor, is equally guarded. The union's position will depend on the outcome of collective agreement negotiations at SEFE. "We're not going to support any employer... if they don't have good, safe union jobs. It's a bit like someone you live next door to. If they're rude to you, you're less likely to help them out".
paddy.manning@fairfaxmedia.corm.au
Saturday 30/10/2010 Page: 14
Clearing forests may enrich those who are doing it, but over the long run it impoverishes the planet as a whole". That's not tree-hugging blather, but a leader in The Economist a few weeks ago. The magazine wants governments to "move fast" to save the world's forests, describing them as "purveyors of water, consumers of carbon, treasure-houses of species... ecological miracles". "Without a serious effort to solve this problem", the leader concluded, "the risk from climate change will be vastly increased and the planet will lose one of its most valuable, and most beautiful, assets. That would be a tragedy".
A map of the world, inside the magazine's special report, coloured Australia bright red - one of a handful of countries, including Brazil and Indonesia, losing more than 500,000 hectares of forest a year since 2005. As climate change accelerates, it makes no sense to be chopping down native forest - the cheapest, largest scale carbon sequestration available. Land-use change (mostly deforestation) accounts for about 15 to 17% of global greenhouse gas emissions - more than all the world's ships, cars, trains and planes.
Afforestation, reforestation and reduced agricultural emissions could, the magazine reported, sequester 40 parts per million of greenhouse gas from the atmosphere by 2050. (We are at 450 ppm and rising; we need to get back to 350 ppm.) Old growth forest maybe especially significant in its ability to suck up carbon. Which is one reason there has been an ecstatic reaction to the peace deal negotiated this month to phase out native forest logging in Tasmania.
A lot of detail needs to be fleshed out, and there is plenty of scope for backsliding, but the immediate focus has switched to the mainland. Can a similar coup be achieved here? Talks are beginning, but it looks hard. At Eden, on the NSW south coast, the Japanese-owned South East Fibre Export woodchip mill is locked in a 40-year fight for survival against conservationists.
Its chief executive, Peter Mitchell, says that SEFE, unlike Gunns, does not have the option of switching to plantation. Too much nearby forest is protected, or is state forest which cannot be converted to plantation. Woodchip prices are down. A value-adding pulp mill is not an option-the region does not have enough water and, at roughly a million tonnes a year, throughput is too small to justify the investment needed. The mill is a major employer in the Eden area, whose economy the federal Labor MP Mike Kelly - also the parliamentary secretary for forestry - describes as tenuous. Parliamentary library research he's done confirms SEFE can't move to a wholly plantation base.
A bright spot for SEFE was a proposal, now before the NSW government, to build a 5MWs biomass plant to burn so-called fines - residues from their own mill, and from nearby sawmills - to generate renewable electricity. At the moment the residues either help power the Bega Cheese factory or are sold as mulch and carted away. Some is wasted. The plant would power the mill and, if excess power was sold on and Renewable Energy Certificates (RECs) generated, it could be a nice little earner.
SEFE estimates that on top of turnover of about $70 million a year, if the biomass plant generated its forecast 31,000MWh a year, sold on at $80/MWh (based on a REC price of $35 and a wholesale electricity price of 5.50/kW) it would pull in about $2.5 million.
Which is not make-or-break. SEFE will survive if the plant does not getup. A key question is whether the local retailer Country Energy, the only logical buyer, will buy power from a controversial project. Mitchell says Country offered SEFE an indicative price a year ago. "They'll buy it", he says, "but they wouldn't sell it as Green Power". Country dodged the question this week, saying it has all the renewable energy it needs for now.
Conservationists fear the Eden biomass proposal is a test case, the thin end of the wedge, which would provide avast new market to prop up native forest logging, just as the economic case for traditional woodchip operations is unravelling. It may seem crazy to log native forest for renewable energy now, but if a carbon price is brought in, and it rises as expected, dragging REC prices up with it, what now seems uneconomic could soon become a major industry. It is a deal breaker for the environment movement if native forest can be burnt to generate "renewable" energy.
"It's the number-one conspiracy theory we get thrown at us", says Mitchell, adding that the REC regime incorporates a "high value test" that prevents logging for the primary purpose of generating energy. NSW environment protection laws prevent use of forest residues for power generation. Mill residues are OK.
Kelly, whose seat of Eden-Monaro takes in both the Snowy Hydro scheme and Infigen Energy's Capital Wind Farm at Bungendore, wants the region to be Australia's renewable energy flagship and is working with the Clean Energy for Eternity movement, which promotes a "50/50 by 2020" emissions reduction target. Kelly is a cautious supporter of the SEFE project as long as it does not use native forest waste, although he supports native forest logging in the region.
The forestry division national secretary of the Construction Forestry Mining and Energy Union, Michael O'Connor, is equally guarded. The union's position will depend on the outcome of collective agreement negotiations at SEFE. "We're not going to support any employer... if they don't have good, safe union jobs. It's a bit like someone you live next door to. If they're rude to you, you're less likely to help them out".
paddy.manning@fairfaxmedia.corm.au
Tuesday, 26 October 2010
Stimulus 'failing' energy projects
Australian
Thursday 21/10/2010 Page: 4
THE NSW sugar industry is demanding that the federal government's revamped renewable energy scheme be further amended to salvage jobs on a $220 million renewable energy project.
The New South Wales Sugar Milling Co-operative has set up two cogeneration plants at Condong and Broadwater, in the state's north, that are fuelled by a biomass material left over from crushed sugarcane stalks. But the project is struggling financially because of the low price of Renewable Energy Certificates designed to stimulate green projects, according to the co-operative's chief executive, Chris Connors.
The certificates were trading yesterday at $36.13 on the spot market, far below the $60-$70 price Mr Connors said was needed for his projects to stay viable. In February, the government announced its renewable energy target scheme would be split into two to stop household-level renewable technologies crowding out commercial-scale projects such as co-generation plants. But this split does not take effect until January 1.
Until then, RECs created from technologies such as household solar panels can be "banked" to be traded in the commercial-scale scheme next year. Mr Connors maintains the government's fix has not worked yet as there is still a surplus of RECs related to household solar panels pushing prices down. He wants changes such as bringing forward increases to the fixed yearly target for big-scale renewables production. Jobs are at stake, he said.
The manager of the Broadwater sugar mill, Bill Walker, said having viable co-generation projects was important to the organisation. But Climate Change Minister Greg Combet said the plan to split the scheme would deliver $16 billion in investment in large-scale projects by 2020. Clean Energy Council chief executive Matthew Warren cautioned against making further changes to the government's scheme, arguing this could spook investors and saying short-term assistance was needed instead for projects that could prove viable at a later point.
Thursday 21/10/2010 Page: 4
THE NSW sugar industry is demanding that the federal government's revamped renewable energy scheme be further amended to salvage jobs on a $220 million renewable energy project.The New South Wales Sugar Milling Co-operative has set up two cogeneration plants at Condong and Broadwater, in the state's north, that are fuelled by a biomass material left over from crushed sugarcane stalks. But the project is struggling financially because of the low price of Renewable Energy Certificates designed to stimulate green projects, according to the co-operative's chief executive, Chris Connors.
The certificates were trading yesterday at $36.13 on the spot market, far below the $60-$70 price Mr Connors said was needed for his projects to stay viable. In February, the government announced its renewable energy target scheme would be split into two to stop household-level renewable technologies crowding out commercial-scale projects such as co-generation plants. But this split does not take effect until January 1.
Until then, RECs created from technologies such as household solar panels can be "banked" to be traded in the commercial-scale scheme next year. Mr Connors maintains the government's fix has not worked yet as there is still a surplus of RECs related to household solar panels pushing prices down. He wants changes such as bringing forward increases to the fixed yearly target for big-scale renewables production. Jobs are at stake, he said.
The manager of the Broadwater sugar mill, Bill Walker, said having viable co-generation projects was important to the organisation. But Climate Change Minister Greg Combet said the plan to split the scheme would deliver $16 billion in investment in large-scale projects by 2020. Clean Energy Council chief executive Matthew Warren cautioned against making further changes to the government's scheme, arguing this could spook investors and saying short-term assistance was needed instead for projects that could prove viable at a later point.
Monday, 6 September 2010
Wind farm investment runs out of puff
Age
Tuesday 31/8/2010 Page: 4
INFIGEN Energy says wind farm investment is suffering a "bust" due to complex policy changes and uncertainty over government responses to climate change. But the company whose shares have lost a quarter of their value since June is confident this will become a "boom" within a few years, as power retailers are forced to obtain a growing share of their electricity from renewable sources. The country's biggest specialist wind developer yesterday reported a $73.5 million full-year loss, after asset sales delivered it a $192.9 million profit the year before.
The result comes after Infigen Energy this year abandoned plans to sell wind farms in Germany and the US, underlining the difficult conditions for asset sales in the industry. Amid unconfirmed reports some big investors in the former Babcock and Brown offshoot have been selling down their stakes in the company. Infigen Energy explained its share price fall by pointing to a global decline in renewable energy share prices. "The sentiment towards renewable energy businesses generally has weakened in the last 12 months", said chief executive Miles George. "There's been a reduced interest in climate-change measures and therefore an associated reduced interest in renewable energy stocks generally over the last year, and we haven't been immune to that".
Investor confidence in renewable power was shaken after the lack of progress at last year's Copenhagen Convention, and the deferral of emissions trading in the US. Domestically, smaller players in wind have also been stung by a plunge in the value of Renewable Energy Certificates (REC), issued to wind farm investors, after a boom in small-scale solar power investment flooded the market. Although the federal government moved to increase REC market confidence in June. Mr George said the complex changes were taking time to filter through.
Infigen Energy is banking on a future boom in wind investment, as power retailers scramble to meet a federal government requirement to obtain 20% of their power from renewable sources by 2020. Mr George also said it would consider floating its US wind business in years ahead, after an attempt this year failed to attract a high enough bid. With a growing focus on Australia. Infigen Energy expects to turn a profit in its underlying business in the "medium term" of about three years, as its interest costs start to decline and its production increases. It expects to pay a dividend of at least 2(G, and leave dividends at a similar level until it is consistently posting profits. Mr George's total remuneration rose 44% to $1.44 million over the year, up from $997,000 the previous year.
Tuesday 31/8/2010 Page: 4
INFIGEN Energy says wind farm investment is suffering a "bust" due to complex policy changes and uncertainty over government responses to climate change. But the company whose shares have lost a quarter of their value since June is confident this will become a "boom" within a few years, as power retailers are forced to obtain a growing share of their electricity from renewable sources. The country's biggest specialist wind developer yesterday reported a $73.5 million full-year loss, after asset sales delivered it a $192.9 million profit the year before.The result comes after Infigen Energy this year abandoned plans to sell wind farms in Germany and the US, underlining the difficult conditions for asset sales in the industry. Amid unconfirmed reports some big investors in the former Babcock and Brown offshoot have been selling down their stakes in the company. Infigen Energy explained its share price fall by pointing to a global decline in renewable energy share prices. "The sentiment towards renewable energy businesses generally has weakened in the last 12 months", said chief executive Miles George. "There's been a reduced interest in climate-change measures and therefore an associated reduced interest in renewable energy stocks generally over the last year, and we haven't been immune to that".
Investor confidence in renewable power was shaken after the lack of progress at last year's Copenhagen Convention, and the deferral of emissions trading in the US. Domestically, smaller players in wind have also been stung by a plunge in the value of Renewable Energy Certificates (REC), issued to wind farm investors, after a boom in small-scale solar power investment flooded the market. Although the federal government moved to increase REC market confidence in June. Mr George said the complex changes were taking time to filter through.
Infigen Energy is banking on a future boom in wind investment, as power retailers scramble to meet a federal government requirement to obtain 20% of their power from renewable sources by 2020. Mr George also said it would consider floating its US wind business in years ahead, after an attempt this year failed to attract a high enough bid. With a growing focus on Australia. Infigen Energy expects to turn a profit in its underlying business in the "medium term" of about three years, as its interest costs start to decline and its production increases. It expects to pay a dividend of at least 2(G, and leave dividends at a similar level until it is consistently posting profits. Mr George's total remuneration rose 44% to $1.44 million over the year, up from $997,000 the previous year.
Sunday, 22 August 2010
The wind farm that ate the RET
Business Spectator
Saturday 14/8/2010 Page: 1
In Australia's renewable energy market, fortune favours the quick and the big.
The $1 billion Macarthur wind farm to be built in south-western Victoria is being touted as the most significant renewable energy project in Australia since the Snowy Hydro. But don't expect another project of similar ambition to follow anytime soon, even though there are a couple on the drawing board - there's simply no room left in the market. Macarthur has been a long time in the planning for AGL Energy, it's just been waiting for the opportunity provided by the passage of the Renewable Energy Target.
Just over a year ago, AGL Energy suggested Macarthur would be around 330MW-360MW, but improving technology and the opportunity provided by the passage of the RET means it has been able to upgrade the size of the facility by a quarter over its original estimates.
Instead of using 2.1MW turbines it has used elsewhere. AGL Energy announced on Thursday that it will use new model 3MW turbines manufactured by Vestas, enabling it to boost the size of the plant by 420MW and reduce the number of turbines to 140 from 174, providing a significant saving in operating costs. That's terrific news for AGL Energy and its joint partner in the project. Meridian Energy, and for its suppliers and contractors Vestas and Leighton Holdings; but not so good for others, particularly the independent developers who are finding it difficult to get long-term power purchase agreements to satisfy their financiers.
In a single bound, the Macarthur wind farm takes the size of the committed wind farm pipeline to more than 1000MW. Wilson HTM analyst Jenny Cosgrove says the size of this pipeline - another 150MW from two projects due to be completed this year, another 382MW from five projects in 2011, and the 203MW Collgar wind farm in WA in 2012 - means that the price of renewable energy certificates could remain at current levels of $40/MWh for longer than expected. That's not enough to get most projects off the ground.
Cosgrove says the wind farm pipeline means that LRET is rapidly approaching a balance of supply and demand in 2011-2013, and this is before the excess current banked supply of small-scale RECs, which she estimates to be more than 21 million by end 2010, is transferred into the large-scale RET. "It will take a number of years before this excess supply is absorbed", says Cosgrove. Which means that many other wind farms currently in the planning stage may struggle for a window of opportunity, of even financing, for a few years yet.
Small-scale projects may find enough room, but Macarthur appears to have swallowed the market for large scale projects for the immediate future, and it will make it difficult for other technologies too. This, though, was largely predicted, which is possibly why the proponents of competing technologies dismiss the RET as a "feed-in tariff for wind".
The real test of that estimation will come in years 2016 and beyond, when the RET target will scale up dramatically towards it 2020 target of 41 million MWh. By then, wind might have some serious competition from solar thermal, if Lend Lease is right about the pricing of solar PV, as well as some geothermal projects.
All talk, no action
At least the climate change business is good for convention centres. The 6th annual Climate Change and Business Conference concluded in Sydney this week, one of many such conferences held during the year which have become a proxy for government policy: all talk and little action.
Last year, when it was thought to be a better than even bet that an emissions trading scheme would be legislated, even the heavy emitters turned up to find out what sort of services, technologies and business ideas they could employ to meet their expected abatement targets. This year, they didn't bother. "People are angry", says Jon Jutsen, the founder and executive director of Energetics. "We hear from the scientists about the need for urgency, but bugger all is happening. It's not appropriate any more".
It's not just a carbon price that is missing from the equation. The conference put out a communique noting that Australian and New Zealand could cut emissions by at least 15%, and save money at the same. Much of this could be achieved through a series of complimentary measures that would encourage energy efficiency in buildings and a raft of industries, and rule changes that would allow now technologies and business models to flourish in the energy sector and elsewhere.
Jutsen noted, not for the first time, that the Australian economy is only about 10% efficient and loses 90% of its energy through the supply chain and end uses. Governments are committed to spending some $40 billion in energy infrastructure that continues those losses, but won't make the policy signals for rule changes that lift efficiency and reduce such costs dramatically.
Saturday 14/8/2010 Page: 1
In Australia's renewable energy market, fortune favours the quick and the big.
The $1 billion Macarthur wind farm to be built in south-western Victoria is being touted as the most significant renewable energy project in Australia since the Snowy Hydro. But don't expect another project of similar ambition to follow anytime soon, even though there are a couple on the drawing board - there's simply no room left in the market. Macarthur has been a long time in the planning for AGL Energy, it's just been waiting for the opportunity provided by the passage of the Renewable Energy Target.
Just over a year ago, AGL Energy suggested Macarthur would be around 330MW-360MW, but improving technology and the opportunity provided by the passage of the RET means it has been able to upgrade the size of the facility by a quarter over its original estimates.
Instead of using 2.1MW turbines it has used elsewhere. AGL Energy announced on Thursday that it will use new model 3MW turbines manufactured by Vestas, enabling it to boost the size of the plant by 420MW and reduce the number of turbines to 140 from 174, providing a significant saving in operating costs. That's terrific news for AGL Energy and its joint partner in the project. Meridian Energy, and for its suppliers and contractors Vestas and Leighton Holdings; but not so good for others, particularly the independent developers who are finding it difficult to get long-term power purchase agreements to satisfy their financiers.
In a single bound, the Macarthur wind farm takes the size of the committed wind farm pipeline to more than 1000MW. Wilson HTM analyst Jenny Cosgrove says the size of this pipeline - another 150MW from two projects due to be completed this year, another 382MW from five projects in 2011, and the 203MW Collgar wind farm in WA in 2012 - means that the price of renewable energy certificates could remain at current levels of $40/MWh for longer than expected. That's not enough to get most projects off the ground.
Cosgrove says the wind farm pipeline means that LRET is rapidly approaching a balance of supply and demand in 2011-2013, and this is before the excess current banked supply of small-scale RECs, which she estimates to be more than 21 million by end 2010, is transferred into the large-scale RET. "It will take a number of years before this excess supply is absorbed", says Cosgrove. Which means that many other wind farms currently in the planning stage may struggle for a window of opportunity, of even financing, for a few years yet.
Small-scale projects may find enough room, but Macarthur appears to have swallowed the market for large scale projects for the immediate future, and it will make it difficult for other technologies too. This, though, was largely predicted, which is possibly why the proponents of competing technologies dismiss the RET as a "feed-in tariff for wind".
The real test of that estimation will come in years 2016 and beyond, when the RET target will scale up dramatically towards it 2020 target of 41 million MWh. By then, wind might have some serious competition from solar thermal, if Lend Lease is right about the pricing of solar PV, as well as some geothermal projects.
All talk, no action
At least the climate change business is good for convention centres. The 6th annual Climate Change and Business Conference concluded in Sydney this week, one of many such conferences held during the year which have become a proxy for government policy: all talk and little action.
Last year, when it was thought to be a better than even bet that an emissions trading scheme would be legislated, even the heavy emitters turned up to find out what sort of services, technologies and business ideas they could employ to meet their expected abatement targets. This year, they didn't bother. "People are angry", says Jon Jutsen, the founder and executive director of Energetics. "We hear from the scientists about the need for urgency, but bugger all is happening. It's not appropriate any more".
It's not just a carbon price that is missing from the equation. The conference put out a communique noting that Australian and New Zealand could cut emissions by at least 15%, and save money at the same. Much of this could be achieved through a series of complimentary measures that would encourage energy efficiency in buildings and a raft of industries, and rule changes that would allow now technologies and business models to flourish in the energy sector and elsewhere.
Jutsen noted, not for the first time, that the Australian economy is only about 10% efficient and loses 90% of its energy through the supply chain and end uses. Governments are committed to spending some $40 billion in energy infrastructure that continues those losses, but won't make the policy signals for rule changes that lift efficiency and reduce such costs dramatically.
Wednesday, 21 July 2010
Renewables market REC'd until 2014
www.smh.com.au
July 16, 2010
A massive pool of renewable energy certificates will limit the impact of Australia's new energy laws until 2014, even as the rules inject a welcome dose of long-term certainty into the market. Continued weakness in the cost of the certificates, used as a partial subsidy for clean but expensive power, may slow investment in clean energy that the industry hopes could reach $20 billion by 2020. renewable energy certificates (RECs) flooded the market last year after a supply spurt generated by small solar household installations, squeezing prices of what is a crucial component of wind developers' profit.
This led to parliament last month passing amendments to the nation's renewable energy target scheme, splitting it into programmes handling small-scale and large-scale investments. The Large-Scale Renewable Energy Target will not offer near-term relief for developers, but should benefit renewable energy companies such as AGL Energy and Origin Energy who have stockpiled cheap certificates. "With the current oversupply of RECs likely to carry through into the LRET scheme, the market will remain firmly in surplus for the next two years", said Macquarie analyst Aimee Kaye, "There won't be sufficient investment in renewables until the REC price is close to $65 per MWh".
Law unlikely to boost prices soon
Australia wants a fifth of its electricity to come from renewable energy by 2020, and is pinning its hopes on the certificates to bolster clean energy investment, which the industry-backed Clean Energy Council estimates could reach as much $20 billion by the target date. Australian law compels wholesale power retailers and some generators to buy the certificates - which represent aMW-hour of electricity from a renewable energy project - from green power providers. Worries about the impact of the REC surplus sent shares of the country's top wind power providers Infigen Energy and Transfield Services Infrastructure down than 10% in the week after June's legal revamp, bringing the falls to more than 40% this year.
REC prices are around $40 aMW hour (MWh), with Macquarie Equity Research estimating a glut of about 12.6 million certificates worth $504 million will accumulate by year's end before tapering down to about 1.5 million by 2014. Analysts see the overhang clearing by 2014 when utilities will need to replenish stocks of the certificates. Some retailers have been stockpiling cheaper RECs to meet obligations under the scheme, but eventually this supply will run out. The changes to the scheme, which take effect from Jan 1, 2011 and bar certificates generated by smaller solar water heaters and household solar installations, will trim the excess.
Gone with the wind
The scheme is expected to lead to an additional 7,000 to 9,000MW of wind power generation on top of about 2,000MW now to meet Australia's renewable energy target of 46,000GW-hours (GWh) by 2020. The bulk of this target must be met from large-scale renewable energy projects. Energy firms Origin Energy and AGL Energy have combined wind resources of 4,000MW in the pipeline - double that of Infigen Energy and Transfield at more than 1,000MW each - they can choose to develop when REC prices recover. Based on current power contracts. AGL Energy and Origin Energy, which bought RECs when prices bottomed near $29 per MWh in 2009, have adequate projects and certificates to meet their obligations under the LRET scheme until 2014.
"Retailers would effectively recover the price of the associated green liabilities, plus a small margin, once the load is ascertained", Bank of America-Merrill Lynch wrote in a note. The bank also expects a large shortfall in supply of the certificates to kick in by 2015, possibly driving prices beyond $65 a MWh and raising the value of some clean energy projects. The sweeping change to the laws is a long-term positive factor as it gives investors in large renewable projects more certainty on investment returns.
The Investor Group on Climate Change, which represents some of Australia's largest investment funds with more than $600 billion under management, sees the revised law as opening up an opportunity to invest in the sector. "Discussions have been going on but investors have been sitting on their money", said Nathan Fabian, the group's chief executive. "These changes mean that investment funds will flow, especially as banks will have the confidence to lend, and that's important as it will give funds confidence to provide equity".
July 16, 2010
A massive pool of renewable energy certificates will limit the impact of Australia's new energy laws until 2014, even as the rules inject a welcome dose of long-term certainty into the market. Continued weakness in the cost of the certificates, used as a partial subsidy for clean but expensive power, may slow investment in clean energy that the industry hopes could reach $20 billion by 2020. renewable energy certificates (RECs) flooded the market last year after a supply spurt generated by small solar household installations, squeezing prices of what is a crucial component of wind developers' profit.
This led to parliament last month passing amendments to the nation's renewable energy target scheme, splitting it into programmes handling small-scale and large-scale investments. The Large-Scale Renewable Energy Target will not offer near-term relief for developers, but should benefit renewable energy companies such as AGL Energy and Origin Energy who have stockpiled cheap certificates. "With the current oversupply of RECs likely to carry through into the LRET scheme, the market will remain firmly in surplus for the next two years", said Macquarie analyst Aimee Kaye, "There won't be sufficient investment in renewables until the REC price is close to $65 per MWh".
Law unlikely to boost prices soon
Australia wants a fifth of its electricity to come from renewable energy by 2020, and is pinning its hopes on the certificates to bolster clean energy investment, which the industry-backed Clean Energy Council estimates could reach as much $20 billion by the target date. Australian law compels wholesale power retailers and some generators to buy the certificates - which represent aMW-hour of electricity from a renewable energy project - from green power providers. Worries about the impact of the REC surplus sent shares of the country's top wind power providers Infigen Energy and Transfield Services Infrastructure down than 10% in the week after June's legal revamp, bringing the falls to more than 40% this year.
REC prices are around $40 aMW hour (MWh), with Macquarie Equity Research estimating a glut of about 12.6 million certificates worth $504 million will accumulate by year's end before tapering down to about 1.5 million by 2014. Analysts see the overhang clearing by 2014 when utilities will need to replenish stocks of the certificates. Some retailers have been stockpiling cheaper RECs to meet obligations under the scheme, but eventually this supply will run out. The changes to the scheme, which take effect from Jan 1, 2011 and bar certificates generated by smaller solar water heaters and household solar installations, will trim the excess.
Gone with the wind
The scheme is expected to lead to an additional 7,000 to 9,000MW of wind power generation on top of about 2,000MW now to meet Australia's renewable energy target of 46,000GW-hours (GWh) by 2020. The bulk of this target must be met from large-scale renewable energy projects. Energy firms Origin Energy and AGL Energy have combined wind resources of 4,000MW in the pipeline - double that of Infigen Energy and Transfield at more than 1,000MW each - they can choose to develop when REC prices recover. Based on current power contracts. AGL Energy and Origin Energy, which bought RECs when prices bottomed near $29 per MWh in 2009, have adequate projects and certificates to meet their obligations under the LRET scheme until 2014.
"Retailers would effectively recover the price of the associated green liabilities, plus a small margin, once the load is ascertained", Bank of America-Merrill Lynch wrote in a note. The bank also expects a large shortfall in supply of the certificates to kick in by 2015, possibly driving prices beyond $65 a MWh and raising the value of some clean energy projects. The sweeping change to the laws is a long-term positive factor as it gives investors in large renewable projects more certainty on investment returns.
The Investor Group on Climate Change, which represents some of Australia's largest investment funds with more than $600 billion under management, sees the revised law as opening up an opportunity to invest in the sector. "Discussions have been going on but investors have been sitting on their money", said Nathan Fabian, the group's chief executive. "These changes mean that investment funds will flow, especially as banks will have the confidence to lend, and that's important as it will give funds confidence to provide equity".
Tuesday, 22 June 2010
The burning question of renewable energy
Age
Saturday 19/6/2010 Page: 2
DESPERATE battle is being fought on the sidelines of the government debate about the new renewable energy target (RET) legislation and it is set to resume this week. The fight is about burning native forest timber and calling it renewable energy. The dollar figures involved megawatts of power generated - are small, but the environmental ramifications are huge, and emotions are running high. The federal government, urged on by the Construction, Forestry, Mining and Energy Union, continues perversely to support logging our remaining native forests even though a sagging woodchip market puts no value on the resource.
At the moment, under renewable target rules introduced in 2001, wood waste from native forest can only be burnt for renewable electricity if the trees were logged for a higher-value purpose such as sawmilling. But there are negative public perceptions associated with the use of wood waste from forestry, "considered environmentally destructive," according to a biomass resource appraisal for the Clean Energy Council. 'A common misconception is that bioenergy production will become a lucrative primary end use for wood and trigger a land-clearing bonanza.
Unfortunately, the fact that all timber production in Australia is governed by a strict and comprehensive regulatory framework to ensure environmental sustainability is often overlooked. This framework ensures that forest resources cannot be exploited for any form of wood production and wood waste bioenergy targets could be achieved without harvesting a single extra tree from 'business as usual' production." It is true that, up to now, not many renewable energy certificates (REC) have been generated from wood waste. According to the official register, just 1.2 million RECs over the past decade, or 5% of a total 24 million. But with the RET target rising from 2% by 2010, to 20% by 2020, the market opportunity will be significantly bigger.
The Clean Energy Council expects 7% of the RET, or 3000GW hours of renewable electricity, could be generated from wood waste by 2020, of which 40MWs of electricity generation capacity could be fired by native forest resource. It estimates 2.2 million tonnes of native forest wood waste - roughly a quarter of the total native forest logged annually - could be used. On the ABC's 7.30 Report on Thursday, Greens senator Christine Milne warned of this "massive loophole." Next week she will again move an amendment to remove native forest "furnaces" from the definition of renewable energy.
Depending what happens with the legislation, and if Milne's amendment fails, as expected, the final say may well lie with electricity retailers and other wholesale energy buyers (liable to buy a proportion of the power they use - rising to 20% by 2020 - from renewable sources). As of Thursday, conservation groups had written commitments from 11 electricity retailers, confirming they would not buy renewable energy certificates generated from burning native forest wood waste. They were: AGL Energy, Country Energy, EnergyAustralia, Origin Energy, TRUEnergy, Australian Power and Gas, Click Energy, ActewAGL Energy, Red Energy, Simply Energy and Victoria Electricity. That's a good chunk of the market.
Some have left themselves a little wiggle room: TRUEnergy states blankly that it will only use "commercially viable, environmentally responsible energy generation assets." And there are omissions: neither Integral Energy nor Tasmania's Aurora Energy have given commitments. The Energy Retailers Association of Australia is going to try to come up with an industry-wide policy. The fear is that, under present international carbon accounting rules, which allow Australia to ignore greenhouse gas emissions from forestry, generators burning heavily subsidised native timber generally supplied by state forestry agencies at a loss to the taxpayer-will sell power falsely designated as "carbon neutral" and "renewable," undercutting genuinely clean energy rivals. And they will get an extra subsidy to boot, in the form of a steady stream of RECs.
In Tasmania, Victoria and New South Wales, proposals are being developed to tap in to this new income stream, which could transform the market for woodchips. The industry test case i s a proposal by South East Fibre Exports to build a 5.5MW biomass-fired power station at the huge woodchip mill at Eden in NSW. The plant would consume 57,700 tonnes of wood waste a year, drawn from its own forest operations and from nearby sawmills, to generate about 31GW hours of electricity, of which 9GW hours would power the mill and 22GW hours would be sold to the grid.
Majority owned by Japanese company Nippon Paper, SEFE hopes to spend $19 million on the power station, creating 30 jobs during construction and six permanently. SEFE chief executive Peter Mitchell says the proposal only stacks up because the mill has the waste at hand. "Even with the RECs, if you were to harvest waste in native forest for power generation, the returns aren't there."SEFE's proposal, currently with the NSW government, claims savings of 7508 tonnes of greenhouse gas a year under the current Kyoto Protocol carbon accounting rules, which do not count emissions from logging or burning the wood.
The Soutli-East Region Conservation Alliance submission counters that this claim is misleading and says wood-fired power is 6.4 times more greenhouse intensive than coal-fired power. It estimates that logging to supply the Eden mill is responsible for 18 million tonnes of greenhouse gas emissions. The revenue from RECs could make a real difference to the viability of native forest logging operations. Australian National University economist Judith Ajani, author of The Forest Wars, says Australia has a historic opportunity to end native forest logging.
"We had the choice not to go into chip exporting in the 1960s... that's what's driven the forest conflict for four decades," she says. "We're now facing that same choice today, whether to facilitate native forest resources moving into the electricity and biomass feedstock markets, or not. "If they choose to stove into these new markets - they are big markets - then we are facing another lost opportunity to resolve Australia's forest conflict."
paddy.manning@fairfaxmedia.com.au
Saturday 19/6/2010 Page: 2
DESPERATE battle is being fought on the sidelines of the government debate about the new renewable energy target (RET) legislation and it is set to resume this week. The fight is about burning native forest timber and calling it renewable energy. The dollar figures involved megawatts of power generated - are small, but the environmental ramifications are huge, and emotions are running high. The federal government, urged on by the Construction, Forestry, Mining and Energy Union, continues perversely to support logging our remaining native forests even though a sagging woodchip market puts no value on the resource.At the moment, under renewable target rules introduced in 2001, wood waste from native forest can only be burnt for renewable electricity if the trees were logged for a higher-value purpose such as sawmilling. But there are negative public perceptions associated with the use of wood waste from forestry, "considered environmentally destructive," according to a biomass resource appraisal for the Clean Energy Council. 'A common misconception is that bioenergy production will become a lucrative primary end use for wood and trigger a land-clearing bonanza.
Unfortunately, the fact that all timber production in Australia is governed by a strict and comprehensive regulatory framework to ensure environmental sustainability is often overlooked. This framework ensures that forest resources cannot be exploited for any form of wood production and wood waste bioenergy targets could be achieved without harvesting a single extra tree from 'business as usual' production." It is true that, up to now, not many renewable energy certificates (REC) have been generated from wood waste. According to the official register, just 1.2 million RECs over the past decade, or 5% of a total 24 million. But with the RET target rising from 2% by 2010, to 20% by 2020, the market opportunity will be significantly bigger.
The Clean Energy Council expects 7% of the RET, or 3000GW hours of renewable electricity, could be generated from wood waste by 2020, of which 40MWs of electricity generation capacity could be fired by native forest resource. It estimates 2.2 million tonnes of native forest wood waste - roughly a quarter of the total native forest logged annually - could be used. On the ABC's 7.30 Report on Thursday, Greens senator Christine Milne warned of this "massive loophole." Next week she will again move an amendment to remove native forest "furnaces" from the definition of renewable energy.
Depending what happens with the legislation, and if Milne's amendment fails, as expected, the final say may well lie with electricity retailers and other wholesale energy buyers (liable to buy a proportion of the power they use - rising to 20% by 2020 - from renewable sources). As of Thursday, conservation groups had written commitments from 11 electricity retailers, confirming they would not buy renewable energy certificates generated from burning native forest wood waste. They were: AGL Energy, Country Energy, EnergyAustralia, Origin Energy, TRUEnergy, Australian Power and Gas, Click Energy, ActewAGL Energy, Red Energy, Simply Energy and Victoria Electricity. That's a good chunk of the market.
Some have left themselves a little wiggle room: TRUEnergy states blankly that it will only use "commercially viable, environmentally responsible energy generation assets." And there are omissions: neither Integral Energy nor Tasmania's Aurora Energy have given commitments. The Energy Retailers Association of Australia is going to try to come up with an industry-wide policy. The fear is that, under present international carbon accounting rules, which allow Australia to ignore greenhouse gas emissions from forestry, generators burning heavily subsidised native timber generally supplied by state forestry agencies at a loss to the taxpayer-will sell power falsely designated as "carbon neutral" and "renewable," undercutting genuinely clean energy rivals. And they will get an extra subsidy to boot, in the form of a steady stream of RECs.
In Tasmania, Victoria and New South Wales, proposals are being developed to tap in to this new income stream, which could transform the market for woodchips. The industry test case i s a proposal by South East Fibre Exports to build a 5.5MW biomass-fired power station at the huge woodchip mill at Eden in NSW. The plant would consume 57,700 tonnes of wood waste a year, drawn from its own forest operations and from nearby sawmills, to generate about 31GW hours of electricity, of which 9GW hours would power the mill and 22GW hours would be sold to the grid.
Majority owned by Japanese company Nippon Paper, SEFE hopes to spend $19 million on the power station, creating 30 jobs during construction and six permanently. SEFE chief executive Peter Mitchell says the proposal only stacks up because the mill has the waste at hand. "Even with the RECs, if you were to harvest waste in native forest for power generation, the returns aren't there."SEFE's proposal, currently with the NSW government, claims savings of 7508 tonnes of greenhouse gas a year under the current Kyoto Protocol carbon accounting rules, which do not count emissions from logging or burning the wood.
The Soutli-East Region Conservation Alliance submission counters that this claim is misleading and says wood-fired power is 6.4 times more greenhouse intensive than coal-fired power. It estimates that logging to supply the Eden mill is responsible for 18 million tonnes of greenhouse gas emissions. The revenue from RECs could make a real difference to the viability of native forest logging operations. Australian National University economist Judith Ajani, author of The Forest Wars, says Australia has a historic opportunity to end native forest logging.
"We had the choice not to go into chip exporting in the 1960s... that's what's driven the forest conflict for four decades," she says. "We're now facing that same choice today, whether to facilitate native forest resources moving into the electricity and biomass feedstock markets, or not. "If they choose to stove into these new markets - they are big markets - then we are facing another lost opportunity to resolve Australia's forest conflict."
paddy.manning@fairfaxmedia.com.au
Monday, 7 June 2010
The gold rush on our rooftops
Business Spectator
Wednesday 2/6/2010 Page: 1
Last year it was solar hot water systems and heat pumps that flooded the market for renewable energy certificates; this year it is rooftop solar photovoltaic power systems. According to an analysis from broking house Wilson HTM, nearly two thirds of the 2.1 million RECs issued during May (a monthly record) came from solar PV, due mostly to the generous gross feed-in tariffs in NSW and a burst of interest from Queensland.
Indeed, from virtually nothing three years ago, when just 15MW of solar power was installed in the country, Australia now has a $1 billion a year solar PV industry that is growing at a phenomenal rate. In January, Wilson HTM analyst Jenny Cosgrove predicted some 69MW of solar energy would be installed in Australia in 2010. Last month, she lifted that prediction to 100MW and already believes that will undershoot the final tally. Other industry insiders predict it could be as high as 130-150MW.
All this is having a marked impact on the price of RECs, Australia's most significant environmental market. The flood of certificates created in May has forced the price of RECs down by nearly 20% in the past month, from around $45 to $38. "There now seems little doubt that due to solar PV, the REC market will be oversupplied in 2010, as it was in 2009," Cosgrove says.
The weakness is exacerbated by market apprehension about the passage of the revised Renewable Energy Target legislation through the Senate. That legislation is designed to separate small scale solar from large scale installations: a successful passage would offer stability to the RECS price, but failure would see RECS slump to even lower levels than the $28 plumbed last year – and would force the postponement of several billion dollars of wind farm investments.
The rush to rooftop solar is not hard to understand. In NSW, the gross feed in tariff of 66c per kW hour means that a $3000 investment into a 6kW rooftop solar package - already greatly reduced by the RECs scheme and a 40% slump in module costs in the last 18 months as the as the global industry gains economies of scale - can be repaid in little over two years.
That slump in module prices - and predictions that they could fall a similar amount over the next two years - is also making people realise that solar PV - even without tariffs - could turn out to be a useful hedge against rising energy prices. If you include up front capital costs, solar PV over its lifetime already produces energy well below peak costs now offered by some energy retailers, and solar just happens to produce most energy at the same time as peak production. A smart household would use the grid as a baseload back-up and for cheaper energy in low peak periods at night.
Solar PV is forecast to hit 'grid parity' in some European countries and US states within the next year or two. A recent report by US-based GTM Research estimates that global demand for PV will reach 11.2GW in 2010, a rise of 58% over last year. Germany will account for nearly half that, before demand falls as the rate of feed-in tariffs declines, but it is expected to remain the largest national market for another three years, by which time five countries are expected to install 1000MW per year.
A bigger question for Australia is that if effective feed-in tariff, or another broad based market mechanism, can be so successful in creating a gold rush in the small scale PV market, should similar mechanisms, possibly extending to tax incentives of loan guarantees, be deployed in areas where Australia has the opportunity to establish global leadership, such as solar thermal or geothermal, where the pace of development into new technologies is not really being accelerated by the various flagship programs and one-off grants. As for solar PV, the rush to install panels on household rooftops is not extending to the vast areas offered by business and industrial locations.
Some in the solar industry are suggesting a system of capped feed in tariffs like that proposed in India to help meet their ambitious targets of 22GW of solar power by 2022. Having a cap, it is said, encourages innovation and cost effective projects, and might avoid the boom/bust cycle that has marked the industry in other countries as feed-in tariffs are introduced and then cut according to the political cycle.
Wednesday 2/6/2010 Page: 1
Last year it was solar hot water systems and heat pumps that flooded the market for renewable energy certificates; this year it is rooftop solar photovoltaic power systems. According to an analysis from broking house Wilson HTM, nearly two thirds of the 2.1 million RECs issued during May (a monthly record) came from solar PV, due mostly to the generous gross feed-in tariffs in NSW and a burst of interest from Queensland.
Indeed, from virtually nothing three years ago, when just 15MW of solar power was installed in the country, Australia now has a $1 billion a year solar PV industry that is growing at a phenomenal rate. In January, Wilson HTM analyst Jenny Cosgrove predicted some 69MW of solar energy would be installed in Australia in 2010. Last month, she lifted that prediction to 100MW and already believes that will undershoot the final tally. Other industry insiders predict it could be as high as 130-150MW.
All this is having a marked impact on the price of RECs, Australia's most significant environmental market. The flood of certificates created in May has forced the price of RECs down by nearly 20% in the past month, from around $45 to $38. "There now seems little doubt that due to solar PV, the REC market will be oversupplied in 2010, as it was in 2009," Cosgrove says.
The weakness is exacerbated by market apprehension about the passage of the revised Renewable Energy Target legislation through the Senate. That legislation is designed to separate small scale solar from large scale installations: a successful passage would offer stability to the RECS price, but failure would see RECS slump to even lower levels than the $28 plumbed last year – and would force the postponement of several billion dollars of wind farm investments.
The rush to rooftop solar is not hard to understand. In NSW, the gross feed in tariff of 66c per kW hour means that a $3000 investment into a 6kW rooftop solar package - already greatly reduced by the RECs scheme and a 40% slump in module costs in the last 18 months as the as the global industry gains economies of scale - can be repaid in little over two years.
That slump in module prices - and predictions that they could fall a similar amount over the next two years - is also making people realise that solar PV - even without tariffs - could turn out to be a useful hedge against rising energy prices. If you include up front capital costs, solar PV over its lifetime already produces energy well below peak costs now offered by some energy retailers, and solar just happens to produce most energy at the same time as peak production. A smart household would use the grid as a baseload back-up and for cheaper energy in low peak periods at night.
Solar PV is forecast to hit 'grid parity' in some European countries and US states within the next year or two. A recent report by US-based GTM Research estimates that global demand for PV will reach 11.2GW in 2010, a rise of 58% over last year. Germany will account for nearly half that, before demand falls as the rate of feed-in tariffs declines, but it is expected to remain the largest national market for another three years, by which time five countries are expected to install 1000MW per year.
A bigger question for Australia is that if effective feed-in tariff, or another broad based market mechanism, can be so successful in creating a gold rush in the small scale PV market, should similar mechanisms, possibly extending to tax incentives of loan guarantees, be deployed in areas where Australia has the opportunity to establish global leadership, such as solar thermal or geothermal, where the pace of development into new technologies is not really being accelerated by the various flagship programs and one-off grants. As for solar PV, the rush to install panels on household rooftops is not extending to the vast areas offered by business and industrial locations.
Some in the solar industry are suggesting a system of capped feed in tariffs like that proposed in India to help meet their ambitious targets of 22GW of solar power by 2022. Having a cap, it is said, encourages innovation and cost effective projects, and might avoid the boom/bust cycle that has marked the industry in other countries as feed-in tariffs are introduced and then cut according to the political cycle.
Thursday, 22 April 2010
New Projects Slow To Get Started
Australian
Monday 19/4/2010 Page: 26
AUSTRALIA'S environmental markets may well have surged in recent months, but this is yet to translate into m any of the new projects they are designed to finance. The price of renewable energy certificates has jumped to a recent high of $48, and closed last week around $46, nearly 60% above the lows reached last year as RECs from solar hot water heaters flooded the market. The price has recovered after the federal government flagged changes to the renewable energy target (RET), fixing the price of RECs for small-scale installations, but keeping them separate from the main market for utility-scale projects.
But developers are still unwilling to commit themselves to projects until the final legislation is seen and passed, and analysts are now concerned that the legislation may be held up by a packed budget session, the healthcare package, possible Henry tax review legislation, and the election. The upshot might be that the government has precious little to show for its efforts in renewable technology by the time the next election comes around.
Almost all the developments announced in the past two years have been driven by state-based desalination plants. Deutsche Bank noted last week that only two the 206 MW Collgar wind farm and the 27MW Racecourse Mill bagasse co-generation plant had reached financial close this year thanks to the RET.
Wind farm developers, particularly those independent of the major electricity retailers, will rely on high REC prices to generate a suitable return for capital invested, particularly in the absence of a carbon price. However, it was interesting to see industry fund REST and UBS Asset Management buy Collgar before it was even built. The investment is the first in the renewable sector for either firm.
There is still a big surplus of RECs but the price is being supported by the fact that in the long term, there may not be enough developments built to meet demand, a situation that would force energy retailers to pay a non-deductable penalty price of $ 65, effectively putting a relatively high floor price on the certificates. Analysts say there is also a perception that having intervened once to rescue a flailing REC price, the government would be prepared to do so again.
Monday 19/4/2010 Page: 26
AUSTRALIA'S environmental markets may well have surged in recent months, but this is yet to translate into m any of the new projects they are designed to finance. The price of renewable energy certificates has jumped to a recent high of $48, and closed last week around $46, nearly 60% above the lows reached last year as RECs from solar hot water heaters flooded the market. The price has recovered after the federal government flagged changes to the renewable energy target (RET), fixing the price of RECs for small-scale installations, but keeping them separate from the main market for utility-scale projects.
But developers are still unwilling to commit themselves to projects until the final legislation is seen and passed, and analysts are now concerned that the legislation may be held up by a packed budget session, the healthcare package, possible Henry tax review legislation, and the election. The upshot might be that the government has precious little to show for its efforts in renewable technology by the time the next election comes around.
Almost all the developments announced in the past two years have been driven by state-based desalination plants. Deutsche Bank noted last week that only two the 206 MW Collgar wind farm and the 27MW Racecourse Mill bagasse co-generation plant had reached financial close this year thanks to the RET.
Wind farm developers, particularly those independent of the major electricity retailers, will rely on high REC prices to generate a suitable return for capital invested, particularly in the absence of a carbon price. However, it was interesting to see industry fund REST and UBS Asset Management buy Collgar before it was even built. The investment is the first in the renewable sector for either firm.
There is still a big surplus of RECs but the price is being supported by the fact that in the long term, there may not be enough developments built to meet demand, a situation that would force energy retailers to pay a non-deductable penalty price of $ 65, effectively putting a relatively high floor price on the certificates. Analysts say there is also a perception that having intervened once to rescue a flailing REC price, the government would be prepared to do so again.
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