Monopoly market barrier

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Australian wind developer Energy-Vision says it can only feasibly develop 10 MW of its proposed 104.4 Coronation wind farm, even though it gained unanimous approval from the local council for the 58-turbine project, 20 kilometres north of Geraldton in Western Australia. Energy-Visions says electricity network owner Western Power Corporation's (WPC) "unworkable" network access regime makes it impossible to proceed with the whole development. WPC is the state government owned, vertically integrated electricity utility.

Western Australia has no electricity market and is not part of the National Electricity Market. The state's electricity sector is currently undergoing a reform being conducted by the Electricity Reform Task Force, which should be complete by January 2005. According to the Western Australian Office of Energy the proposed Renewable Energy Access Regime was approved by the WPC board in February 2002 and is a transitional regime expected to be in place for only around two years. The access regime is intended to ensure that WPC can maintain the "energy balance" of renewable energy across the South West Interconnected Network.

If proposed changes to the state's network access regulations are approved by the state's parliament, the regime will become the over-arching policy governing renewable energy access to the grid. Under the proposal, renewable developments that are larger than 10 MW are considered outside of the access regime and would need to be assessed by WPC to determine whether a connection to the network is possible.

Energy-Visions' Raoul Abrutat says that if implemented the access regime in effect places a 10 MW cap on individual private sector projects. He adds there is also a potential limit on the number of small renewable generators (up to 10 MW) allowable under the regime, as once the number of renewable generators reaches an overall trigger point of 35 MW, the access regime will be internally reviewed. The 35 MW represents around 1% of Western Australia's installed capacity, which is considered large enough to affect WPC's ability to manage the system.

It is unclear at this stage how the regime will be reviewed or what the WPC assessment criteria for projects larger than 10 MW entails. The regime also requires that renewable plant operators select their own customers to match their project's annual output. This means that developers must enter into bilateral agreements with individual customers in order to sell their electricity. WPC is considering seeking expressions of interest from private developers to supply it with blocks of electricity.

Abrutat says the regime contains "no bankable conditions" and its status as a transitional regime is affecting project viability. Due to the regulatory barriers, there is no point in Energy-Vision issuing a tender for turbine supply since bidders cannot obtain the information they need to respond to it. Peter Hawken of the Office of Energy says the regime will probably change over time and was currently "awkward" for developers.

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