The state government has recommended approval for what could be one of Australia’s biggest wind farms, but continued uncertainty in the renewables sector may see the project added to the 6000 megawatt-strong “pile of wind farms” currently approved, but stalled, industry figures say.
The recommendation for approval of the Epuron Yass Valley Wind Farm by the NSW Department of Planning and Environment clears the way for the Planning and Assessment Commission to make its final decision on the wind farm.
While industry figures say the news is positive, it does not mean the wind farm will be built.
“We’ve lost count of these announcements,” said Ric Brazzale, managing director of Green Energy Trading.
“It’s an important part of the process, but this approval just adds to the 6000-megawatt pile of wind farms currently stalled.”
The battle for new projects is obtaining finance and power purchase agreements: contracts with energy companies to sell electricity and large-scale generation certificates (LGCs).
Large-scale generation certificates are used by Renewable Energy Target-liable entities to meet compliance obligations based on the volume of electricity they purchase each year.
Mr Brazzale said the difficulty in sealing power purchase agreements is tied to the long-embattled context of renewable energy in Australia.
“They can’t raise finance because banks and financiers don’t want to go anywhere near these contracts unless they are contracted with energy retailers,” he said.
“So, why don’t financiers do it? The reason is, they are yet to gain confidence that the legislative underpinning is going to be stable,” he said. “We’ve heard from Greg Hunt and that helps, but if you want retailers and financiers to change, you need the Prime Minister to come out and say unequivocally, ‘We are not going to reduce the target.'”
Solar Council chief executive John Grant agreed that any “drought” in renewables investment will only be reversed with increased positive sentiment from the government.
“Large scale projects are all built on policy, stability and confidence, but the entire renewable energy market has been massively disrupted by the federal government’s review and slashing of the Renewable Energy Target.”
Mr Grant’s concern is that, despite having a new Prime Minister, “nothing has changed”.
“No moves have been made by the federal government to ensure that certainty and policy stability is returned to the sector,” he said. “It’s a double-edged sword. If power companies don’t build projects they will be slugged with a charge equivalent, which has a real post-tax value of $93 per large-scale generation certificate.”
Mr Grant said liable entities are using that fact to go back to the government and say they cannot build the projects to meet the target in the time permitted.
“Their argument will be, if the federal government doesn’t slash the Renewable Energy Target again, then that price will be passed through to consumers and everyone will be paying for capacity that was never built,” he said.
At its proposed capacity of 124 turbines, the Yass Valley Wind Farm would have the capacity to power more than 130,000 homes each year, however the government’s recommendation suggests a significant reduction in the project’s scale, down to 79 turbines.
Epuron executive director Martin Poole said despite the recommended reduction “attitudes everywhere have improved” towards wind energy, since Prime Minister Malcolm Turnbull took the leadership.
“It is important that NSW demonstrates its commitment to maximising the local jobs and expertise that flow from the transition to a cleaner electricity sector.”
Mr Brazzale estimates that processes contracting for large-scale generation certificates in the ACT, Western Australia, South Australia and Victoria suggest “there are probably more than 1000 megawatts of projects that could be committed over the next year or so.”
Despite being enough to power around 430,000 homes annually, Mr Brazzale said that figure is nowhere near enough to meet the large-scale renewable energy target by 2018.
“We need four times that level to ensure we meet the 2018 target, which obviously we’re not going to achieve. That’s why the LGC price is high, because it’s reflecting that the market is not going to meet the target.”
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