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Australia

Australia

Infigen warns Australian election makes for 'very weak' market

AUSTRALIA: Infigen Energy has struck a cautious note as it revealed widening losses and warned of policy uncertainty in the run-up to Australia's federal election.

Tony Abbott's Liberal Party may change policy tack
Tony Abbott's Liberal Party may change policy tack

The developer cautioned that the "regulatory environment continues to be challenging", with the upcoming federal election "exacerbating the uncertainty to a point where the market for new renewable energy project development is very weak".

This means that "the appetite to contract existing assets is poor", the firm added.

This has depressed the large-scale generation certificate spot price to low A$30s level. However, average Australian prices are expected to be around the same as last year due to contract escalation and a higher carbon price.

In March the Climate Change Authority stuck with its renewable energy target (RET) to generate 20% of its energy from renewable sources by 2020. However, Infigen said: "Vested interests in the fossil fuel generation sector continue to lobby forcefully to reduce the RET."

The centre-right Liberal Party is ahead in the polls, and if it won in the September election there could be a change in policy direction, with party leader Tony Abbot having ramped up the anti-wind rhetoric.

Infigen's net loss for the year to 30 June was A$80 million (US$ 71.9 million), but this included a non-cash impairment of A$58.4 million due to a write down in the value of US assets. Discounting this, the loss was A$21.6 million, a A$34.3 million improvement on the year before.

Revenue showed an upward trend, climbing 7% to A$286 million, and earnings before interest, tax, depreciation and amortisation increased by 13% to A$158.2 million.

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