Australia - Capacity set to rise amid policy uncertainty

Australia: Australia's overall installed capacity is set to jump by 30% in the next 12 months, with a number of major projects expected to come online, including the 420MW Macarthur windfarm, which will become the southern hemisphere's largest.

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Such an upswing in developments reaching maturity would normally point to buoyant market conditions, but with a federal election scheduled for 14 September, the mood in the wind power industry is muted as it absorbs the specter of another year of political risk.

Market sentiment ended 2012 on a positive note, following the release of a favourable government review into the country's renewable energy target (RET). The RET remains the primary driver of wind projects in Australia, and to date has enjoyed rare bi-partisan political support. It mandates 20% of Australia's electricity generation be sourced from renewable sources by 2020.


Australia's Climate Change Authority, which was charged with conducting the biennial review of the RET last year, made several key recommendations in its report to government. These included retaining the fixed 41,000GWh target and pushing the RET review process out from two to four years, to avoid the regulatory risk associated with the review process.

The wind industry warmly welcomed the review's key recommendations, and the Clean Energy Council (CEC) said it would "allow the industry to get back to business". With the target in place, the industry believes it is on track to create A$18 billion (US $18.9 million) in investments and 30,000 jobs.

However, the federal government is still yet to adopt the recommendations, and there is mixed support for the RET within opposition party ranks. The federal opposition has also vowed to scrap the country's carbon pricing legislation if elected. Carbon pricing came into effect on 1 July 2012.

Looking only at turbines in the ground, the outlook for 2013 is still a promising one for wind energy in Australia, with the CEC predicting 800MW of capacity will come online. AGL's 140 turbine, A$1 billion Macarthur wind project in Victoria is due to start generating in March. Hydro Tasmania's 168MW Musselroe wind farm is expected to be completed mid year, as is the first project to use GE turbines in Australia, the 55MW Mumbida project near Geraldton in Western Australia.

Several larger projects have recently been proposed, including 600MW projects on both King Island and an equally large project planned for South Australia's Yorke Peninsula is slowly progressing. These ambitious projects point to a growing confidence in the Australian wind market.

Restrictive permitting processes are still problematic in the most populated states. Victoria's planning laws require a two kilometre setback distance between wind turbines and homes. It is unclear whether Queensland and New South Wales - which currently has draft wind guidelines - will introduce similarly restrictive planning policies for wind projects this year, when those state governments respond to localised planning concerns.

Australia's installed capacity currently stands at 2.57GW, up from 2.2GW last year. South Australia remains the most impressive state for wind, hosting approximately half of the country's installed capacity. In 2012, wind supplied around 24% of that state's overall electricity generation.

australia capacity pie

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