Kiwi wind farm developer Tilt Renewables has advised shareholders not to expect any go-aheads on new projects in Australia for the foreseeable future as it struggles with grid issues that are severely curtailing output at its new $650 million wind farm in Victoria.
Chairman Bruce Harker told the Tilt annual shareholder meeting that the Australian market had proved much riskier than anticipated, pointing to the technical problems preventing the Dundonnell wind farm bringing its full 330 megawatts of capacity online.
New project decisions will be “challenging” until investors are provided with information from the energy market operator on exactly how a new project can reach full capacity, he said.
Tilt had to slash earnings guidance last month after Dundonnell was unexpectedly hit by a curtailment order by the Australian Energy Market Operator, even after the project had previously secured full certification and the wind farm was operating exactly as expected.
The setback is only one among several impacting new wind and solar farms across the National Electricity Market as AEMO grapples with multiple technical issues arising from the rapid increase on the grid of variable renewable energy generation.
The problems have triggered curtailment orders for some projects, while others are unable to get as much generation to their customers as anticipated due to network congestion. Other ventures have suffered long delays in securing a connection into the grid.
Kerry Schott, chairwoman of the Energy Security Board, said earlier this week investors were seeing their revenues “really being bashed around” because of the transmission problems. Grid issues are a key reason cited by the Clean Energy Council in a steep plunge in investment in large-scale renewable energy projects in the June quarter to the lowest for more than three years.
The Dundonnell project in western Victoria is currently operating at about 130 MW of capacity and is working with AEMO on step-ups in capacity later this year but has no definite date for coming fully online, chief executive Deion Campbell said.
He said that while AEMO’s latest Integrated System Plan confirms the core opportunity in the Australian market, with 26 gigawatts of additional grid-scale renewables likely to be installed over the next 20 years, there are “significant challenges” in the current market, requiring urgent reforms.
Tilt is aiming for the June quarter of 2021 to reach financial close on its next Australian project, the 400MW Rye Park wind farm north of Yass in NSW, but as of today sees no path to meeting AEMO’s new technical requirements for the turbines, which are not achievable by any available turbines, Mr Campbell said.
Mr Campbell and Mr Harker also voiced concerns about the New Zealand government’s proposal for a huge pumped hydro project at Lake Onslow in central Otago, which would have 5000 gigawatt-hours a year of storage but which they said could deter independent investment and interfere with a well-functioning market.
“We are not sure that pumped hydro over a 70-year life is going to have an unchallenged future, so I think the government needs to tread carefully,” Mr Campbell said.
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