The only hurdle left for it to clear is approval from federal environment minister, David Kemp, for turbine installation at Yambuk, one of four proposed sites to be developed as part of the project. That decision is expected by the middle of this month.
Pacific Hydro's Jeff Harding describes the state government go-ahead for the 120 turbine project as a "significant milestone for the development of the wind industry in Australia." It will see NEG Micon 1.5 MW turbines installed at four sites in Victoria's south west.
"The Portland Wind Energy Project is just one of many wind power proposals that could bring Victoria's wind energy capacity to 1000 MW by 2006," according to acting premier John Thwaites. "If all these developments go ahead, more than ten per cent of all electricity generated in Victoria would come from wind power." Today it is less than one per cent.
The PWEP is the most ambitious wind project ever seen in the southern hemisphere. Development is planned at Cape Bridgewater, Cape Nelson and Cape Sir William Grant, all to the south west of Portland, and at Yambuk, east of Portland and close to Pacific Hydro's existing 14 turbine Codrington wind farm.
Under the PWEP proposal, 40 turbines will be located at Cape Bridgewater, 39 at Cape Nelson, 21 at Cape Sir William Grant and 20 at Yambuk. The three Cape projects will be connected to the Alcoa Smelter sub station, owned by Alcoa, while the Yambuk site will be plugged into the Powercor network. The project is expected to create 2000 jobs in Victoria, generate enough electricity to supply the needs of more than 113,000 Victorian homes, and offset the creation of 800,000 tonnes of CO2 emissions a year.
"The state government decision is tremendous on several fronts," says Pacific Hydro's Roy Adair. "It's tremendous for the local community, of which our surveys found that 90% were in favour of the project. It's tremendous for regional Australia, where 400 direct and 1600 indirect jobs will be created. Thirdly, it is absolutely brilliant for the Australian environment and wind industry."
Pacfic Hydro is still negotiating power purchase agreements with "two to three retailers." It says "several options" are being considered. There are two market drivers for the project: Australia's Mandated Renewable Energy Target legislation (MRET), introduced in April 2001, under which 2% of Australia's electricity must come from renewable sources of energy by 2010; and legislation obliging power retailers to offer customers green electricity at a premium. Both markets -- the mandated market and the customer-driven market -- are facilitated by trade in green certificates. One renewable energy certificate is issued for every MWh of green power produced.
Make or break
The final federal decision on Yambuk will make or break the PWEP. Under the Commonwealth's Environment Protection and Biodiversity Conservation Act, final authority on this site rests with the federal environment minister because it is in an area known to be inhabited by the Orange-bellied Parrot, a critically endangered migratory bird species. Although just 20 of the PWEP turbines will be located there, they provide the critical mass required to establish manufacturing.
"We are keeping our feet on the ground until we have the environment minister's sign-off on Yambuk," says Adair. Following Victoria planning minister Mary Delahunty's decision that the benefits offered by the PWEP "far outweigh" the potential disadvantages, he is, however, optimistic the final outcome will be positive.
Pacific Hydro's plans do have to be slightly modified following Delahunty's order that seven turbines planned for the tip of Cape Bridgewater be removed or relocated because of their visual impact. Adair says these turbines will now be relocated and that Pacific Hydro is seeking state government guidance. "They approved all 120 turbines. However, it is the seven with the highest potential wind yield that we will need to relocate. We are currently working through the minister's report and will thrash out in the course of the next few weeks where these turbines can go."
Share price leap
Pacific Hydro, which saw its share price jump 8.7% following the state government's announcement, hopes to have the final project design completed to coincide with Kemp's decision with a view to beginning construction as soon as it is approved. This would mean the first turbines will be operational by April 2003 -- discussions with two to three retailers are underway about power purchase agreements but Adair says it is still "early days" and no formal agreements have been reached.
NEG Micon is the preferred turbine supplier for the PWEP and for Pacific Hydro's 50 turbine Challicum Hills wind farm, which has already been approved and will be located near the city of Ararat. The Challicum Hills project is planned for a site with slightly lower wind speeds and, because of the economies of scale involved, will only proceed if full approval for the PWEP is given.
NEG Micon has already undertaken pre-feasibility work for setting up the manufacturing plant which forms part of the PWEP, but a decision about where the facility will be has not yet been taken. "Obviously we have to formerly wait for federal approval to go through before pre-feasibility work is accelerated," says the company's Dennis Williams. "We have been looking Australia-wide, but more specifically in Victoria. It will be after the federal decision that we can expect our product people to come out from Denmark to consider specific locations and logistics."
Successful development of the PWEP, and in particular the establishment of the manufacturing plant, will enable Pacific Hydro to cost effectively develop other sites and release the potential for an export industry to Southeast Asia, worth A$100 million a year, says Pacific Hydro boss Jeff Harding. He estimates the company will have at least 500 MW of wind generation in operation by 2005.
If Victoria's state government approval of the PWEP was a strong signal that it is supportive of the wind industry, this impression was further strengthened when Thwaites simultaneously announced the release of the government's long-awaited Policy and Planning Guidelines for the development of wind energy facilities in Victoria.
Strong state support
The guidelines, which indicate strong state support for renewables development and have been widely endorsed by the wind industry, clarify the planning process and are designed to facilitate the development of the industry in the state. In the section on evaluating a project's impact on visual amenity, the guidelines suggest: "Consideration of the visual impact of a proposal should be weighted having regard to the government's policy in support of renewable energy development." Wind development should be excluded from areas reserved under the National Parks Act and all wind projects over the size of 30 MW should go before the state planning minister, they add.
From community-based environment group ATA, Rachel Ollivier says the guidelines demonstrate that the Victorian government is prepared to take a balanced approach when deciding on wind facilities. The Australian Wind Energy Association's Grant Flynn agrees: "They provide a guidance for developers, local government and the community for where and how wind farms should be built."