Renewable Energy Target deal clears way for $450 million wind farm investment

A $450 million deal to build Australia's third-largest wind farm marks the "first green shoots" of a revival in the clean energy industry after this week's passage in the Senate of a reduced renewable energy target (RET).

The 240-megawatt Ararat Wind Farm in south-western Victoria will now proceed with financing from developer Renewable Energy Systems (RES), turbine-maker General Electric and two other backers.

"Everyone's been waiting for a resolution of the RET," Matt Rebbeck, chief operating officer of RES Australia, told Fairfax Media. "Everyone's been waiting for certainty because certainty is what brings the investment."

The investment had been on hold for about 18 months as the Abbott government sought to cut the RET despite a pre-election promise to leave it unchanged. On Tuesday, the Senate approved a reduction by about one-fifth of the previous target of 41,000 gigawatt-hours of renewable energy supply by 2020 to 33,000 GW-hours.

The Ararat project, which will supply enough electricity to power 123,000 households, is almost twice the size of the entire investment in large-scale clean energy in Australia last year after new spending all but froze.

Geoff Culbert, GE's president and CEO for Australia, predicted as much as 6000 megawatts of new capacity - or about 25 times the size of the Ararat project - would be needed to meet even the reduced 2020 target. 

"We ourselves are looking at a pipeline of investments that without RET certainty, we couldn't proceed," Mr Culbert said.

The investment is expected to generate as many as 285 jobs and inject about $8 million into a local community already facing tougher times as advancing dry conditions dent the rural economy.

"We're in trouble, very much," Ararat mayor Paul Hooper said. "Eighteen of the past 23 years have been sub our long-term rainfall."

"The opportunity for 42 landowners to drought-proof their properties is of enormous benefit to them," Mr Hooper said, adding that there had been "zero complaints" about the proposal for about 75 of the 3.2 MW wind turbines from locals.

$10 billion to come

Clean Energy Council chief executive Kane Thornton welcomed the venture as 'the first green shoots for renewable energy" in the country.

"We expect that approximately $10 billion of investment and thousands of jobs will be created in wind and solar farms by the renewable energy target over the next five years, as well as hundreds of medium-sized projects," he said.

Swiss-based Partners Group will own 40 per cent of the venture, with Canadian pension fund OPTrust holding 30 per cent stake, GE 25 per cent and RES 5 per cent.

"If we can replicate that in some form in other sites, we would very much like to help build a number of these assets over the next few years,"  Stan Kolenc, managing director of OPTrust, said.

The partners said they expected to have no difficulty addressing issues raised by the new Wind Farm Commissioner, a controversial position created by the government to secure minor party support for the RET cut in the Senate. "We're positive about how this is going to play out," GE's Mr Culbert said.

The main political parties welcomed the Ararat announcement but used the opportunity to blame each other for the impasse.

"We are delighted that renewable energy projects are going ahead following the government's action to fix problems with the RET created by Labor," a spokesman for Environment Minister Greg Hunt said. "This project has overwhelming support from the local community."

Mark Butler, the Opposition climate change spokesman, said "Labor would have preferred Tony Abbott had kept his promise not to change the RET".

"Local Liberal MP Dan Tehan should be ashamed it took his government so long to come to an agreeable position, effectively holding up the creation of nearly 300 jobs in his own electorate," he said.