Investors are reluctant to put their money into new wind farms, leading to a backlog of 67 proposed or approved projects yet to be built, eclipsing the 58 in operation.
A Weekend Australian analysis shows there are only two wind farms under construction in South Australia, two in NSW and one in Victoria, amounting to just 918 megawatts of capacity.
Some of this power has been bought by the ACT and will not be available to meet the commonwealth’s renewable energy target of 33,000 gigawatt hours by 2020.
It appears investors have been spooked by policy uncertainty, despite an RET subsidy of almost $80 a megawatt hour, which comes on top of the $40-$60 a MW/h that generators are typically paid for participating in the National Electricity Market.
The head of Bloomberg New Energy Finance Australia, Kobad Bhavnagri, said the RET architecture was problematic and the target either had to be extended or the policy lengthened to give long-term certainty for investors. “Australia lacks a credible emissions reduction policy,” he said.
However, Oliver Yates, chief executive of the Clean Energy Finance Corporation, the federal government’s green bank, said after an 80 per cent decline in activity, he expected wind farm construction to pick up this year, with renewable companies taking on more risk and diversifying investment structures.
“We are absolutely seeing a strong pick-up in terms of companies sorting out their finance to get started before the end of the year,” he said. “We have an ample pipeline of project opportunities to meet the current renewable energy target — in fact, perhaps 30 wind farms and 20 large-scale solar farms is about all we’ll need.”
Wind contributes just over 4 per cent of Australia’s electricity generation, representing about 30 per cent of renewable generation. In South Australia, wind accounts for 34 per cent of power generation. The CEFC had invested $259 million in wind at June last year, including finance for projects in Victoria and NSW.
At the Hornsdale wind farm near Jamestown, 200km north of Adelaide, foundations are being poured and turbines erected for a 105-turbine project costing about $800m. Neoen Australia managing director Franck Woitiez said he intended to invest three times the value of Hornsdale in Australian renewable energy by 2020, equating to $2 billion in assets.
This week, the SA government gave final approval for DP Energy Australia to build the nation’s second largest wind and solar farm in Port Augusta, about 300km north of Adelaide, involving 59 wind turbines and 400ha of solar panels.
The $680m farm will power about 200,000 homes and save 470,000 tonnes of carbon emissions each year, the company said.
Australian Industry Group principal national adviser Tennant Reed said Australia was unlikely to meet its 2020 RET.
“There’s a lot of wind farm projects with planning approval and all the pieces in place except for finance,” he said. “The electricity retailers used to underpin most projects with long-term power purchase contracts, but they no longer have the same appetite for risk and investment.”