May 8, 2012

Origin Energy resurrects its Ballarat wind farm

Matt Chambers, From: The Australian, 9 May 2012

Origin Energy has put what would be Australia’s biggest wind farm, a $1 billion project at Stockyard Hill, Ballarat, back on the agenda but is searching for other parties to build and own it.

Last week, chief executive Grant King said Origin was advancing development of Stockyard Hill, which had been on the backburner since last year because of a glut of renewable energy certificates that made wind farm development uneconomic.

In response to a Dow Jones Newswires story yesterday saying the company was studying both selling and building the project, Origin confirmed it did not necessarily see itself as the builder of the project.

“Origin recently commenced a process through which it will assess a range of options to ensure the wind farm’s optimal development,” a spokeswoman said. “This involves seeking proposals from third parties interested in supplying wind turbines, constructing the wind farm on Origin’s behalf or providing equity for the wind farm’s development while Origin supports it through a power purchase agreement.”

Origin’s interest in supporting wind farms through an electricity purchase agreement rather than owning and building them was illustrated last week when it signed up to to a 15-year purchase of wind power from New Zealand’s Trustpower.

Under that agreement, Origin will underpin a new 270MW windfarm in South Australia at Snowtown, known as Snowtown II, by taking all of the power that it generates.

Origin has very little of its own wind power capacity but has a number of power purchase agreements with wind farms.

Stockyard Hill was approved under the Brumby Labor government and has escaped a 2km exclusion zone that has since been put in place in Victoria.

The federal government last year granted approval for the wind turbines, associated onsite infrastructure and the construction of an external powerline and terminal station.

Last week, Mr King said Stockyard Hill could provide between 300MW and 500MW of electricity.

Origin needs to secure renewable power under government targets designed to make 20 per cent of national power renewable by 2020.

Mr King has pointed out that the fixed targets were set and locked in on 2009 projections, which means that if they are reached, renewables will actually supply 28 per cent of power based on lower power demand forecasts made since then.

Based on this, he has called for a reduction of the targets to reduce costs for building expensive additional capacity.

Wind energy has struggled to compete with cheaply available coal and natural gas and its economics have not been helped by problems with the government’s renewable energy certificate subsidy scheme.

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