$800 million wind farm in doubt
AGL Energy says its plans to build the $800 million Macarthur wind farm in western Victoria are under ”enormous pressure” because of a collapse in the price of renewable energy certificates, which is threatening the entire industry.
AGL managing director Michael Fraser warned yesterday that the project was just one of many wind farms that might not go ahead if the Federal Government could not tackle the level of uncertainty facing renewable energy investors.
The threat highlights the risk to $30 billion of expected investment in renewable energy needed to reach a Federal Government target of 20 per cent of Australia’s power from renewable sources by 2020.
To encourage green investment in the absence of a price on carbon, energy companies receive renewable energy certificates in return for producing green power.
But the value of the certificates has almost halved, from near $60 to about $30, since the Government issued them to people who install solar hot water systems and other products that do not generate power. Those certificates are issued because the home owner is not using ”dirty” power – and the solar power used instead is counted in the 20 per cent renewable energy target.
Mr Fraser yesterday launched a sweeping attack on the policy, calling the Government’s approach a ”fraud” that threatened the industry’s ability to meet the 2020 target.
The oversupply of certificates had caused investment in renewable energy to stop, he said.
”The reality is that you’ve seen virtually no new announcements around large-scale investments in the renewable sector from anybody for months now,” he said.
In September, Solar Systems, the company that planned to build the world’s biggest solar power station, near Mildura, was placed in receivership, a victim of the difficulty raising loans in the global financial crisis. Its 154-megawatt solar farm would have powered 45,000 homes.
The 350-megawatt Macarthur wind farm, about 50 kilometres from Hamilton, with a planned 150 turbines 90 metres tall – making it the southern hemisphere’s biggest – was expected to create 500 jobs during its three-year construction and power 150,000 homes. Mr Fraser said up to seven other wind farms being considered by the company were under threat.
The only new wind farms AGL would definitely build were those required under contracts to the Victorian and South Australian governments to supply power to desalination plants. ”Beyond that, you simply won’t see us invest until this issue gets resolved,” he said.
Mr Fraser’s comments come after the Council of Australian Governments last month launched an inquiry into the fall in the certificates’ price. Its report is expected soon.
The renewable energy industry has called for a regulator – a ”carbon bank” – to act like the Reserve Bank, intervening and buying up certificates when the price is threatened by market fluctuations.
Mr Fraser cast strong doubt on Australia’s capacity to meet the target of 20 per cent renewables by 2020, saying the volatility of the market in certificates would create a ”boom and bust cycle” in renewable investment.
”By definition we are not going to see investment in renewable electricity generation when we are creating renewable certificates from technologies that don’t produce electricity,” he said.
AGL is the country’s largest renewable energy operator and developer.
Clancy Yeates
The Sydney Morning Herald
23 December 2009
Tags: Wind power, Wind energy
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