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Professional jealousies and business rivalries simmer below the surface and are often not contained. They run in the geothermal industry between the hot fractured rock brigade and those chasing shallower and cooler resources in sedimentary aquifers; between submerged and surface ocean energy technologies; between the various solar thermal and photovoltaic (PV) arrays; and among the myriad algae developers and rival biofuel technologies.
But the biggest schism highlighted in the past week is between "the intermittents" (the wind industry) and the "baseload" renewables (most of the rest). They and their lobbyists gathered in Canberra to fight over the mechanics of the new 20 per cent renewable energy target. The intermittents, backed by the weight of the country's largest utilities, won handsomely.
Which means that the passage of the RET provides a green light for as much as $20 billion of wind projects over the next decade, but little in the form of certainty for competing technologies.
The wind developments are likely to be rolled out with some alacrity, as the quick and the nimble might be able to take advantage of a 10-15 per cent slump in global turbine prices caused by the global financial crisis and the prospect of new manufacturers coming to Australia to challenge the dominance of Vestas and Suzlon.
Among the first to be built will be the first stage of the massive Silverton wind farm near Broken Hill, backed by Epuron, Macquarie and Martifer. There are plans for up to 600 turbines, with a capacity of up to 1500 megawatts and a cost of up to $3bn or more.
Pacific Hydro plans to install about 500MW in the next five years, starting with the next stage of its Portland wind farm, while Infigen Energy and Transfield Services both see the potential to develop 1000MW of wind farms over the next five years.
But the lion's share of wind-farm developments are expected to come from the large energy generators and utilities Origin and AGL.
They are expected to each account for a third of the wind-farm developments -- or a spend of about $6bn-$7bn each over the next seven to 10 years. Origin's first project under the new RET will likely to be the 484MW Stockyard Hill wind-farm project in Victoria, AGL's will probably be the 350MW Macarthur wind farm, also in Victoria.
Origin and AGL are feeling vindicated by their early move to carbon-lite generation, and are in the happy position of holding many of the levers that will drive new energy investments in the coming decade. They will be major buyers of renewable energy certificates, and both have large development portfolios in wind and gas-fired generators, and more than a passing interest in geothermal.
Geothermal gets hot under the collar
THE geothermal sector is the most aggrieved by the structure of the RET and the refusal to entertain a "banding" mechanism that would have reserved up to a quarter of the target to emerging baseload technologies.
Most forecasts predict between 70 and 80 per cent of the RET will be taken up by wind-farm developments. In theory, that would leave 2000 to 3000MW of capacity for energy sources such as geothermal, but the industry is not certain the structure of the RET can provide the price certainty to finance developments.
Despite being widely touted as the most likely successor to coal as the provider of baseload power, Susan Jeanes, the head of the Australian Geothermal Association, says the RET decision could set the industry's development back by years.
Geothermal companies, of which there are several dozen, will have to rely on a rapidly dwindling $50 million drilling support program, and share the relatively modest $300m that will soon be doled to a handful of geothermal, wave and biomass projects under the Renewal Energy Demonstration Program. This compares to $2.4bn of funding for the development of carbon capture and storage and $1.5bn for a solar flagships program.
"We could go a lot faster if the market could see that RET revenue could be factored into a business plan," she said. "Each company will be affected by it in a different way. Some of them haven't even got to the point where it could be factored in, but the real concern is the geothermal industry not being provided long-term policy certainty."
Big guns backing off
DESPITE saying several months ago geothermal could prove a "superior" long-term solution to meet its RET targets, AGL and Origin appear to have cooled their enthusiasm.
Michael Fraser, the CEO of AGL, said last week that he saw geothermal playing a role at the "back end of next decade". This is despite predictions from some geothermal producers that projects could be brought into production by 2011.
Interestingly, AGL has a stake in Torren Energy, whose shares jumped 50 per cent last week after it announced surveys pointing to a major hot-rock energy resource near Port Augusta.
Origin Energy CEO Grant King said it was not clear that geothermal resources could be developed at a cost or a scale that would make them truly competitive. "It is still worth betting money that you can do it, but it won't be clear next week or next month. Maybe in five years."
King's cautious approach may have something to do with the problems of the Innamincka geothermal joint venture with Geodynamics, which may be further delayed as the partners contemplate how to solve chemical reactions that have caused an eruption and may lead to its abandonment. Geodynamics shares slumped 15 per cent on the news on Friday.
Good news for some
ONE sector particularly pleased with the structure of the RET is the waste coalmine gas (WCMG) industry, which will now be able to use the scheme to generate credits from existing operations.
For takeover target Energy Developments, this translates into more than $20m in revenue from its German Creek and Moranbah North power projects, pretty much matching the revenue it was receiving from the NSW-based NGACS scheme before uncertainty about its future caused a slump in the price of certificates.
ENE's share price has followed the legislative uncertainty over the treatement of WCMG, falling from more than $3 a share in late last year, to a nadir of $1.20 earlier this year. That slump attracted interest from a buyout consortium led by Archer Capital, but the RET decision has helped ENE declare that the indicative bidding range of $2.40 to $2.80 a share was no longer in the ballpark and called off discussions.
ENE says, however, that talks continue with another party. The outcome of those talks might have to wait until the final design of the CPRS, and if ENE can convince the government to increase the amount of WCMG power generation allowable under the RET so new projects can participate.
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