Last year's Auswind conference in Sydney was a sombre affair, but what a difference a year can make. This time Australia was host to Global Windpower 2006, billed as the industry's premier event. The mood was buoyant. Some 450-500 delegates and 30 exhibitors made the trip to Adelaide, South Australia, a modest number compared to the 3600 delegates at the last Global Windpower conference in Chicago in 2004, but great compared to any previous event held in Australia.
Whether the conference and exhibition deserved its "global" billing is another matter. Officially 28 countries were represented, but Australians and Australian issues dominated the event, held September 18-21. Europe and the US barely got a mention and the Asian presence was modest, though both China and India won good slices of platform time. As booming markets, they contributed much to the good spirits in Adelaide along with the general feeling that Australia's fledgling wind market is not going into the downward spiral prophesised a year ago.
The change of heart has little to do with Australian government support, still missing at federal level, nor with "An Inconvenient Truth," the hit film on climate change by former US vice president Al Gore -- cited more than 20 times by speakers at the conference as a case for more renewable energy. Energising delegates were two developments: the decision by the state governments of South Australia and Victoria to take matters into their own hands to safeguard markets following the federal government's abandonment of Australia's Mandatory Renewable Energy Target (MRET); and the success that Australian companies with wind power expertise are already having following their shift of focus from the domestic market to Asia.
Aware that public awareness about climate change is at an all time high -- with or without a bit of extra help from Al Gore -- fighting talk was everywhere. Climate change is "the most dangerous and perverse effect in the world today," proclaimed Greg Bourne of Australia's branch of the World Wildlife Fund and the chairman of Sustainability Energy Victoria, in his keynote address.
"It's a challenge that is a greater threat to us than terrorism," said Mike Rann, premier of South Australia. He was followed by his state energy minister, Patrick Conlon, labelling it a "clear and present danger." South Australia is home to 51%, or 388 MW, of Australia's installed wind power capacity, with a further 1849 MW in the pipeline, be it at feasibility stage or currently under construction. "Our target is to have twenty per cent of electricity to come from renewable energy sources by 2014 -- the highest in Australia -- and we're backing it in law," said Rann. "Four and a half years ago there were no wind farms in South Australia, now we are leading the way."
For Victoria the target is 10% by 2016, up from 4% previously. Since the hike was announced in July, two projects totalling 274 MW by overseas developers have already been given the go ahead (Windpower Monthly, September 2006). The new target was also the encouragement Pacific Hydro needed to commit A$165 million to the next stage of its Portland development. "We were happy to do that whether someone gave us a power purchase agreement or not because we knew they have to give us one in due course," said Garry Weaven, executive chairman of Industry Funds Services (IFS) which bought Pacific Hydro after a bidding war with Spanish infrastructure group Acciona last year. Pacific Hydro now plans to invest over A$500 million in new wind farm developments in Victoria over the next five years, Weaven said. In addition, it is investing A$1.5 billion in new hydro and wind farm developments in North America, Latin America and Fiji.
Blessing in disguise
While many took the opportunity to criticise the federal government while praising state government initiatives, Mark Kelleher of Roaring 40's boldly stated that the inconvenient truth may well be that the federal government's lack of action on MRET is a blessing in disguise. "It has forced Australian companies to get out into the international market." Roaring 40s, a joint venture between Hydro Tasmania and CLP Power Asia, is just one company to have abandoned projects in Australia to concentrate efforts on the Asian market instead.
Like many speakers, Kelleher expressed his anger at federal environment minister Ian Campbell's controversial decision to block the planning permit for Wind Power Pty's A$220 million 104 MW wind farm at Bald Hills in Victoria's South Gippsland on the grounds it might pose a threat to one endangered orange bellied parrot every one thousand years. While Campbell has since agreed to rethink the decision (Windpower Monthly, September 2006), Kelleher noted: "That was so extreme an example of what not to do." Roaring 40s, he added, now plans "to be the leading renewable energy developer in Asia and Oceania."
Wind Prospect's Michael Vawser agreed, saying it's all about turning lemons into lemonade. "We have had to consolidate," he said. "Slumps have happened before and the challenge is to harness the expertise we have built up. There is a dearth of wind expertise in Asia Pacific wind hotspots and that's where Australian expertise can kick in. You either see it as a growth opportunity or go into meltdown. So we have redeployed some of our development personnel from Australia to China, Hong Kong, New Zealand and Canada." Hydro Consulting, Econnect, Australia Power & Water and PB Power are just some of the other Australian wind power firms to have done the same.
India and China
"The global market has changed and Australian industry is at a critical point," added Mike O'Neill of RES UK. The two overseas markets the Australian industry should be looking to are undoubtedly India and China, several speakers made clear. While India, with 5340 MW of installed wind power by the end of March 2006, is already ranked as the world's fourth biggest market, its potential remains huge -- the government wants an additional 5000 MW of wind capacity by 2012 (Windpower Monthly, September 2006).
China, though, is the market on everybody's lips. With policies in place and targets for 5000 MW of wind power capacity by 2010, 15,000 MW by 2015 and 30,000 MW by 2020, it is set to be the market for the next decade. As such, China warranted a dedicated session devoted to Chinese issues at the conference. While the targets are high, the market conditions in China require companies to go the extra mile if they want to succeed (Windpower Monthly, September 2006). The industry's leading manufacturers are all setting up factories in China to ensure they get a piece of the action -- Chinese law requires 70% local content for wind farm equipment, a condition deliberately designed to foster growth of a domestic Chinese turbine manufacturing industry.
Even so, the near term prospects for non-Chinese firms looks good. "The largest barrier [to wind development in China] is the lack of their own know-how," said Gao Hu of the Energy Resource Institute. Currently there are 17 active Chinese wind turbine manufacturers but none of them produce machines bigger than 750 kW in capacity, although Goldwind, the leading domestic manufacturer, has built a single 1.2 MW prototype. This leaves the megawatt machine class door wide open, at least for now.
"The only way China will be able to leapfrog the rapid technology developments from overseas will be through acquisition," said IW Power's James Pennay. "Chinese are not afraid of acquiring foreign companies and are certainly competent at dealing with sophisticated technology. This is clearly shown through the surprise purchase of IBM by Lenovo recently and who expected that?" Indeed, the conference coincided with an issue of Newsweek which asked "Who's afraid of China?" The question was clearly playing on some minds: it was put to manufacturers during a panel discussion. A long, grim silence was the answer, until Thorbjørn Rasmussen of Vestas Asia Pacific finally taking the plunge, simply shrugging it off to say it is a given risk in the global market: "Yes, it is true. It's just part of the game." Dan Kofoed Hansen of Suzlon added: "The threat of China going abroad is far, far into the future." Chinese turbine manufacturers will emerge first domestically before they are able to be players on the international market, he said.
Space for all
Meanwhile, there is enough potential in China to keep everyone happy for now, according to Li Junfeng of the Chinese Renewable Energy Industries Association. Official figures indicate that China's wind resource provides potential for up to 253 GW of onshore wind development and 750 GW offshore. But Gao said further research is required when it comes to knowing where wind plant should be built to meet even existing targets. "Wind resource assessment is a large barrier China is facing," he said. "There is not enough data available for planning and project development."
Even so, the wind market in China -- and indeed the world -- is huge and that was the overriding message of the conference. What is more, the money required is ready and waiting. "Wind projects are bankable and renewables are here to stay," said Nick Gardiner of Fortis Bank. The bad news, he contended, is technology risk. Manufacturers, he said, are often "long on talk and short on action."
Keng Hwee Tan of BNP Paribas agreed. To back projects, banks want to see evidence that project developers will use quality contractors that are on budget and on time, that the chosen wind turbines have a good track record and good maintenance contracts, that wind speed measurements are devoid of the inflation which has so often been present in the past, that land issues are properly addressed, including community concerns, and above all that an attractive revenue framework exists. Banks, the financial panel agreed, are financing more wind development, but at the same time they are becoming more sophisticated in assessing their risks as lenders.