Pacific Hydro may scrap hundreds of millions of dollars of wind power projects in Victoria because of the State Opposition’s pledge to abandon plans for a new renewable energy scheme.
Garry Weaven, executive chairman of Industry Funds Services, owner of PacHydro, said the company’s Portland development faced shelving, and the Opposition’s policy made contracts for wind farms impossible to find. “Portland is under very serious consideration now,” Mr Weaven said. “Until that announcement by (Opposition Leader) Ted Baillieu the answer was yes (it would be built).”
Mr Baillieu announced last month that he would scrap the Government’s new Victorian Renewable Energy Target scheme if he won the election.
PacHydro’s attitude had changed as a result. “The answer now is ‘not necessarily’ and we’ve got it under the microscope,” Mr Weaven said.
“It was a ‘yes’ due to VRET (announced in July) but before that it was very marginal.”
He said getting purchase contracts from energy retailers had proved impossible for the Portland project because of the reduction of the Federal Government’s renewables scheme. After VRET was announced, PacHydro was prepared to commit $165 million to the next stage of the Portland development.
“We were happy to do that whether someone gave us a PPA (power purchase agreement) or not because we knew they have to give us one in due course,” Mr Weaven said.
The prospect of a Liberal government scrapping VRET had made power retailers even more wary about signing such agreements, he said.
Mr Baillieu described Mr Weaven’s statements as “bizarre”, and said that Industry Funds Services was having second thoughts about the price it paid for PacHydro last year after a bidding war with Spanish infrastructure group Acciona.
Getting PPAs for Portland had always been difficult for PacHydro, Mr Baillieu said. “Everyone is acutely aware they’ve been struggling to secure the power contracts.”
The company committed to the first stage, the 30-megawatt Yambuk project, without a PPA. Not having PPAs makes it hard for companies to get bank finance to build wind farms as there is no certainty of revenue.
Mr Weaven said it was not only Portland that faced being abandoned. PacHydro might walk away from the planned Yaloak and Crowlands wind farms also. Speaking about the Opposition policy, he said it was “an incredibly irresponsible thing to do”.
Peter O’Connell, chief executive of Babcock & Brown Wind Partners, said the renewables industry would be better served by an expansion of the national scheme rather than a state-based initiative. “It’s extremely difficult to get a new wind farm up in Australia,” he said.
Babcock has two projects in NSW that might not go ahead because of the drying-up of the Commonwealth scheme.
A spokeswoman for Australian Gas Light, which has committed to build a $230 million hydro power station in Bogong, said the abolition of VRET would not destroy the economics of the project. “These are long-life assets and we made a decision based on what’s viable over a 30-year period,” she said.
by Rod Myer
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