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Australia

Australia

Market status: Australia - Pro-renewables new government moves to shore up wind

The rate of installed wind capacity in Australia continued to slow over 2010 and Clean Energy Council (CEC) figures show only 167MW of installed capacity was added last year, against an increase of 400MW in 2009 and 800MW in 2008.

Market status report: AustraliaThe rate of installed wind capacity in Australia continued to slow over 2010 and Clean Energy Council (CEC) figures show only 167MW of installed capacity was added last year, against an increase of 400MW in 2009 and 800MW in 2008.

But the government has moved to arrest the collapse in the price of Australian renewable energy certificates (RECs) – the main instrument for achieving the country's renewable-energy target of 20% by 2020.

The price of RECs began falling in 2009, from around A$45-50 (US$45.60-51) – the estimated price needed for large-scale wind projects to obtain finance – to less than A$30 after the market was saturated with RECs for small-scale solar hot water projects, heat pumps and rooftop solar schemes.

The spike in small-scale renewables and collapse in the REC price drove investors to shelve projects. The government introduced amendments in late June that split the RET into two parts, starting January 1: the small-scale renewable energy scheme and the large-scale renewable energy target (LRET).

The LRET, covering large-scale projects including wind farms, commercial solar and geothermal, will deliver the majority of the 2020 target at around 41TWh.

The move brought immediate dividends. AGL Energy, Australia's largest retail energy supplier, announced it would revive around A$1.6 billion of planned investment in wind, including a proposed A$800 million 420MW Macarthur wind farm in the state of Victoria. This, when completed, will be one of the largest in the southern hemisphere.

Other investors, including Pacific Hydro, which has around A$1.5 billion in planned investment across three sites, said they would wait to assess the impact of the renewable-energy target amendments before pressing ahead. By the end of 2010, RECs were trading at around A$28.

Elsewhere, Origin Energy's Stockyard Hill project near Ballarat, also in Victoria, received planning approval and will comprise 157 turbines with an installed capacity of between 314MW and 471MW, depending on the size of the turbines installed. This was followed by approval of Renewable Energy Australia's 247.5MW project in Ararat, Victoria, which will comprise 75 turbines, and the green light for Windlab and Investec Bank's 206MW Collgar project in the state of Western Australia, which is expected to begin operating in late 2011.

Meanwhile, after years of delay, the introduction of a carbon-pricing scheme in Australia over the next three years now looks nearly certain after the establishment of a minority Labour-led government backed by the Greens following the tightly fought August federal election.

An emissions trading scheme could help unlock the nearly A$50 billion of investment needed in renewable-power generation to enable Australia to reduce its carbon emissions by a minimum of 5% below 2000 levels by 2020, and potentially by as much as 25%.

With the backing of the Greens, Prime Minister Julia Gillard has now established a powerful cross-party climate-change committee holding that a carbon price is needed to cut carbon pollution. The committee will try to establish either an emissions trading scheme, a carbon tax or a combination of both.

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