Under MRET, electricity retailers purchase renewable energy certificates (RECs) to demonstrate they are complying with the MRET requirement. "The biggest challenge facing the renewables industry, including wind, is the collapse of REC prices following over supply of RECs," says Brazzale. He points out that investors are racing to benefit from MRET before the target is met, with 650 MW of wind projects now under construction. Once these are complete, just 300 MW of grid connected projects are required to reach the 2010 target.
Yet again, 2005 was a record year for Australia's wind industry with just over 366 MW of capacity added. Spread across nine projects, with more than 60% built in South Australia, the addition increased the country's cumulative total by over 95% from 380 MW at the end of 2004 to around 746 MW by the end of 2005.
The two biggest projects both feature 1.65 MW turbines from Denmark's Vestas -- the 91 MW Wattle Point wind farm, developed by Meridian Energy & Wind Farm Developments in South Australia and the 90 MW Alinta Walkaway wind farm in Western Australia developed by Renewable Power Ventures, a joint venture between Babcock & Brown, National Power Partners and Carbon Solutions. Vestas 2 MW machines were also used in Hydro Tasmania's 66 MW Cathedral Rocks development in South Australia. In all, the Danish firm, which also opened its A$9 million (EUR 5.65 million) blade factory in Portland, Victoria last year, supplied just over 276 MW. German rival Enercon was the other main supplier, equipping Tarong Energy's 70 MW Mount Millar wind farm in South Australia using its 2 MW machine.
By the end of this year, cumulative wind capacity is expected to reach 788 MW at the very least, representing about $1 billion in capital expenditure, says Dominque la Fontaine of the Australian Wind Energy Association, now known as Auswind. Others, such as Brazzale, estimate cumulative capacity will top 1000 MW. "However growth beyond this would be highly unlikely without further market based incentives such as an increase in federal renewable energy targets or state based measures," La Fontaine says. With the expected flurry of permit applications submitted last year -- some 800 MW is estimated to have been approved in 2005 -- the number of projects now in the public domain, be it those which have secured planning approval, those under construction, or those still at the feasibility stage, totals well over 5000 MW, but most of these are unlikely to progress without legislative changes, she notes.
La Fontaine argues that a national level of at least 600 MW of new annual capacity is required for the renewable energy industry to continue growing. "Annual installation of new capacity substantially below this level will be insufficient to maintain current employment and development activity," she says.
So far Victoria is the only state government to announce plans for state specific legislation to replace the national MRET program. If adopted, the Victoria regulation will double the proportion of renewable energy the state uses to 10% by 2010.
In addition to legislative concerns, transmission and grid capacity issues remain a challenge for the industry, particularly in South Australia where a freeze on generation licences has been implemented by the Essential Services Commission.