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Australia

Analysis: Wind industry calm over new Australian government

AUSTRALIA: Despite Australia voting in a right-wing government that could be seen as a threat to wind energy, the industry remains hopeful of future support.

Australia's new PM, Tony Abbot, will review rather than scrap renewable energy target
Australia's new PM, Tony Abbot, will review rather than scrap renewable energy target

On 7 September, Australia went to the polls and turfed out the largely wind-supportive Labour government in favour of the Liberal coalition led by Tony Abbott. Even before the election, some of the rhetoric from leading liberal politicians was anti-renewables and climate change.

The Liberal Party pledged to remove the year-old carbon tax, close down the publicly funded A$10 billion (US$ 9.2 billion) Clean Energy Finance Corporation (CEFC) and review the renewable energy target (RET), although it did not say it would scrap it.

Australia's RET is a federal government policy designed to ensure that at least 20% of electricity is sourced from renewable sources by 2020. The 12-year old policy has cross-party support and legislation includes a two-yearly review, next due in 2014.

"The incoming coalition government has demonstrated its commitment to renewable energy through its ongoing support for the current renewable energy target, which is the primary driver of projects in the sector in Australia," said Kane Thornton, CEO of renewables industry body the Clean Energy Council.

However, the regular review cycle is creating unwelcome uncertainty among investors, according to Vestas' director of public affairs Asia Pacific region, Ken McAlpine. "The last review took six months, and the government [took] three months to respond. That almost constant review turns investors off."

Wind energy will benefit Australia, argued McAlpine. "Once we are over the issues with policy uncertainty we'll see the fundamentals come through," he said. These advantages may be seeing wind projects win through in Australia despite the impending removal of the carbon tax, he added.

The CEFC has already backed wind farms since it started investing earlier this year, including A$37.5 million towards the 107MW Taralga project in New South Wales and A$50 million refinancing of the 420MW Macarthur wind farm. Financing of the fourth phase of the Portland wind farm has just been announced. "There's no doubt they have been able to get projects off the ground earlier," said McAlpine, who believes that projects would have found funding elsewhere in time.

The timing of the removal of the carbon tax and closure of the CEFC is also uncertain. While the Liberal government would like to act quickly, Labour and the Greens hold sway in the Senate until July 2014, according to the Australian electoral system. Wind energy in Australia is still seen as attractive. New Zealand-based TrustPower, owners of the Snowtown project north of Adelaide, is still interested in Australian wind farm investment, whoever runs the government.

"There are a number of renewable investors and they keep coming back for more," said McAlpine.

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