Hydro Tasmania chief executive Roy Adair believes the higher electricity prices resulting from the imposition of a carbon price can make the long-awaited Musselroe Bay wind farm a goer.
Mr Adair told the Energy Users Association of Australia Tasmanian Energy Forum the Hydro was hoping a start could be made on the 168-megawatt project by mid-year.
“We’ve had a look at the economics and where we see electricity prices and where we could have an economic power-purchase agreement for it,” he said.
“We believe, provided we get the right contract prices, that we’re confident the project should be able to proceed during the course of 2011.”
Roaring 40s, a joint venture between Hydro Tasmania and China Light and Power, would require project finance for the $400 million wind farm.
Mr Adair said most wind developments were premised on the likelihood of a carbon price in the future.
“The issue here is that this is zero-emissions electricity and the power-purchase agreements will be structured in recognition [of] that,” he said.
Mr Adair said the quality of the wind resource at Musselroe Bay on the north-east tip of Tasmania would contribute to the viability of the project.
Hydro would have a comparative advantage when a carbon price was introduced.
Mr Adair said when a carbon price was introduced, estimated to be about $25 a tonne, the price of electricity would go up to reflect the rise.
“We will be the beneficiary of that because that is a national electricity price,” he said.
“We will get more for our product and our emissions position hasn’t changed.”
Mr Adair said the introduction of a price on carbon or a cap and trade scheme would both have benefits for Hydro.
He said Hydro had zero emissions per megawatt hour of production compared with 1.3 tonnes of carbon dioxide emissions per megawatt hour from the Victorian brown-coal station Hazelwood.
“That value is not currently recognised but a carbon price mechanism would recognise that,” he said.
He said any increased return from the Hydro would be passed on to the Government.
“Any form of abatement [easing of prices] to consumers is an issue for Government,” he said.
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