State-owned energy generator Hydro Tasmania has reassured taxpayers and the energy sector it has the financial capacity to wholly finance its latest wind farm project.
Hydro chief executive Roy Adair reacted angrily to suggestions yesterday that Hydro Tasmania could not fund from its own balance sheet the necessary $400 million investment in its Musselroe wind farm.
Earlier, the Tasmanian Liberal opposition had claimed the $400m announcement by Hydro Tasmania was premature and risky.
Mr Adair rebuffed the suggestion, saying the hydroelectricity and wind power company had made a $100m profit last year and held more than $5 billion of assets.
“If we were a publicly listed company, we would be in the top 50 companies by size on the Australian stock exchange,” Mr Adair said.
“We can project-finance Musselroe at any time, or we can finance and build it on our balance sheet.”
But Mr Adair acknowledged most of the funds for the project would flow from the imminent sale of a 75 per cent stake in its two other Tasmanian wind farms, at Bluff Point and Studland Bay in the state’s northwest.
He said a sale announcement was imminent – “before Christmas” – after Hydro Tasmania was “flooded” with interest in its partial wind farm asset offload, announced in September.
Mr Adair would not discuss the likely price of its 75 per cent stake in the two Woolnorth wind farms.
But he said interest had been keen from financial groups, such as private equity and superannuation funds, and from energy companies wanting to add a renewable energy asset to their portfolios.
“We’ve developed a wind development model following the disaggregation of our (former subsidiary) Roaring 40s: that we didn’t need to hold 50 per cent of any wind farm, provided we had developed and built them, and continued to provide the operational and management services to them,” Mr Adair said.
“We also decided we effectively didn’t need to keep our capitalisation at above 50 per cent; that we didn’t need majority ownership. So we think that a partner that might be looking for a steady return might find that (purchase option) attractive.”
Mr Adair would not name the preferred bidder. But he said potential buyers would exclude any energy generating company already competing in the National Electricity Market in competition with Hydro Tasmania. He agreed it was unusual to announce the green light for the new Musselroe wind farm on Tuesday, before the Woolnorth sale was confirmed.
But Mr Adair said the timing of supply contracts at favourable prices with Danish turbine supplier Vestas had made it preferable to announce Musselroe’s go-ahead this week.
“We wish to get Musselroe moving, because we (have) very competitive contract prices with the turbine supplier, so we therefore had to move to capitalise on those – to financially close the project in a way that was advantageous to us,” Mr Adair said.
Musselroe, on Tasmania’s farthest northeast tip, will be the third wind farm built and operated by Hydro Tasmania.
It will be the largest wind project yet undertaken by HT, with 56 three-megawatt wind turbines with a total capacity of 168MW – enough to power 50,00 homes – to be constructed by mid-2013.
Work on the wind farm will start this month, providing more than 200 jobs during the 18-month construction phase.
The first stage of the project will involve constructing the 50km transmission line connecting the development at Cape Portland with the network at Derby, starting later this month.
The schedule is to have the tower sections delivered to the site late next year, and the turbines arriving from Europe and being lifted into position starting in early 2013. The wind farm is expected to be completed and operating by July 2013.
The wind farm will meet the electricity needs of up to 50,000 homes, and reduce greenhouse gas emissions by about 450,000 tonnes annually.
Mr Adair said the purchaser of Woolnorth’s two wind farms – generating a total of 140MW from 62 turbine towers – would also be offered first refusal on a stake in the Musselroe project.
Hydro Tasmania also confirmed that it had plans for additional wind farms on the drawing board once Musselroe – in the planning stage for seven years, awaiting favourable Renewable Energy Certificate prices – was completed.
The biggest other wind farm proposed for Tasmania is a private project in the central highlands near Bothwell at Lake Echo on land owned by entrepreneurial farmer Peter Downie.