Recession-exacerbated difficulties, such as securing power supply contracts needed as a prerequisite for obtaining finance, a massive and cheap non-renewables sector and political indecision over carbon emissions trading legislation, are marring wind's otherwise leading position in the Australian renewables market.
But the substantially upgraded RET target agreed in legislation in August 2009, requiring 20% of electricity to be generated from renewables by 2020, appears to have spurred a substantial jump in project proposals. Some of these may lapse at the feasibility study stage, however, says Felicity Sands, policy analyst from renewables trade body the Clean Energy Council (CEC).
According to Sands, there are 6.7GW of wind farms under development either with planning approval or seeking it. A further 6.4GW are under evaluation, including wind farms undergoing feasibility studies, she adds. This total is about a 25% increase in pipeline data compared to 12 months ago.
The Australian Bureau of Agricultural and Resource Economics shows an even larger jump in the projects pipeline, from 6.4GW across 42 wind farms in October 2008, to 10.6GW, or 71 wind farms, in October 2009.
Installed capacity rate slips
However, the rate of increase of installed wind capacity appears to be slowing, reflecting a mid-decade decline in activity arising from industry pessimism over persistently weak statutory renewable energy targets.
Total installed capacity at the end of 2009 was 1.7GW, roughly an additional 400MW on top of the 1.3GW in place at the end of 2008, and falling short of predictions by about 5-10%. This contrasts with 2007-2008's installed capacity increase of 800MW to 1.3GW. For this year, only about 300MW is expected to come into operation of the 496MW of wind farms under construction (see table).
Wind electricity in Australia costs about twice as much as that from conventional sources such as brown coal, but would become more competitive if carbon costs are priced into the generation market. A senate vote on the government's carbon trading legislation, the pollution reduction scheme (CPRS), was rescheduled until last November as part of a deal with the opposition in order to pass the new RETs. It was again rescheduled after climate-change sceptic Tony Abbott took over as leader of the opposition Liberal Party in September. He is yet to announce his party's position on CPRS but has previously favoured carbon-reduction policy based on better land use and energy efficiency. The government also faces opposition from Green politicians saying that CPRS targets are too weak. The Greens have also developed draft feed-in tariff legislation, although this seems unlikely to succeed.
Another possible problem for the wind sector is the provision in the RET to price tradable renewable energy certificates (RECs) for small-scale solar plants, wind turbines and other minor renewable energy sources at up to five times their market value, creating RECs that do not actually relate to a unit of green energy generated. This provision will be phased out in 2015, but a report from investment bank UBS says the policy will divert investment away from large-scale wind farms for the next few years.
Following a critical senate subcommittee report, the Council of Australian Governments (COAG) is now considering whether to recommend raising the RET to compensate, requiring more renewable electricity to be generated across the board. However, the government insists that steeply rising demand for electricity means wind will not be disadvantaged by phantom RECs.
New installations online
PROJECT OWNER MW
Operational in 2009
New South Wales
Waubra Acciona 192
Capital Wind Farm Infingen Energy 141
Cullerin Range Origin Energy 30
Portland Stage 3 Pacific Hydro 44
Planned operational in 2010
Hallett Stage 2 AGL 71
Clements Gap Pacific Hydro 57
Lake Bonney Stage 3 Infinigen Energy 39
Musselroe Roaring 40s 129