Australia

Australia

Support needed to match Asia policy

AUSTRALIA: Australia's wind industry is at risk of losing out to Asian manufacturers due to policy uncertainty, the small size of the market and the strong Australian dollar.

Business is difficult for local manufacturers as they compete with Asian players offering a potentially cheaper import product. But the greatest risk to Australia's industry is the lack of long-term policy certainty, delegates were told at last month's Clean Energy Week conference.

Jorn Hammer, managing director of Vestas Australia, said Australia is probably one of the countries in the Asia-Pacific region with the highest political risk to the wind industry.

"Australia has all that is needed to drive a domestic wind industry: fantastic wind resource and the raw materials and skills to build the turbines," said Russell Marsh, policy director at industry body the Clean Energy Council.

"What is missing is the consistent long-term policy framework to enable the investments to be made in the domestic industry. Without it we do risk losing out to the growing industry in Asia - which is explicitly driven by strong, long-term supportive policies."

Australian company Keppel Prince Engineering manufacturers wind towers at its plant in Victoria and, despite the uncertain outlook, general manager Steve Garner is positive about the future.

Garner said that while the high Australian dollar is really hurting, the industry needs to support home-made equipment because the renewable energy target (RET) of 20% renewables by 2020 was sold on the basis of jobs for Australia.

Garner said the difference between the cost of Australian towers and those from Asia is around 10%, but this represents only a 1-2% increase over the cost of an entire project. Project developers are still wary of the element of risk associated with buying their products from China, he continued.

Garner added that one Chinese manufacturer plans to use some Keppel Prince towers in one of its Australian projects in order to include Australian manufactured equipment.

Marsh, however, said it is unfair to expect developers to only seek out Australian-made technology. Rather, the government needs to show support and provide certainty for the industry.

Conflict of interests

This uncertainty lies in the short-term nature of the RET and an inherent conflict between its goals of stimulating the Australian economy through local industry on the one hand and delivering renewable energy at least cost on the other.

There is potential for the components of wind turbines to be developed and built in Australia, says Marsh, but the industry needs more than the short-term view of the market currently provided through the RET.

A more certain future, he says, lies in long-term support through a carbon price and more certainty around the RET.

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