Review of the Australian wind industry 2011

Transcription

1 windenergy Review of the Australian wind industry 2011 Report prepared by Heather Barry, Sherrin Yeo 2011 Garrad Hassan Pacific Pty Ltd

2 Disclaimer This report shall be for the sole use of the Clean Energy Council for whom the report is prepared. The report is subject to the terms of the written agreement between the Clean Energy Council and Garrad Hassan Pacific Pty Ltd and should not be relied on by third parties for any use whatsoever without the express written authority of Garrad Hassan Pacific Pty Ltd. The report may only be reproduced and circulated in accordance with the Document Classification and associated conditions stipulated in this report, and may not be disclosed in any public offering memorandum without the express written consent of Garrad Hassan Pacific Pty Ltd. Garrad Hassan Pacific Pty Ltd does not provide legal, regulatory, tax and/or accounting advice. The recipient must make its own arrangements for advice in these areas. This report has been produced from information at the date of this report and, where applicable, information relating to dates and periods referred to in this report. The report does not imply that any information is not subject to change, which may occur in any of the circumstances, operations, financial condition, prospects, creditworthiness, status or affairs of any matter or entity referred to in the report. Acceptance of this document by the Client is on the basis that Garrad Hassan Pacific Pty Ltd are not in any way to be held responsible for the application or use made of the findings of the results from the analysis and that such responsibility remains with the Client.

3 Contents 1 EXECUTIVE SUMMARY 1 2 CURRENT STATE OF THE WIND MARKET IN AUSTRALIA Market penetration Sources of supply for Australian turbines and balance of plant Turbine suppliers Balance of plant supply Market participants 11 3 REGULATORY AND POLICY ENVIRONMENT Market based incentive schemes Renewable Energy Target (RET) Carbon price and Emissions Trading Scheme GreenPower Non-market based schemes Recent changes in state policy Preferred design of programs 16 4 OVERSEAS MARKET TRENDS Changes in global wind capacity Global wind market forecast to Implications for the Australian market 19 5 ECONOMIC ANALYSIS Development and capital costs Forecast Operations and maintenance costs Quality of the wind resource Delivered cost of electricity 25 6 ECONOMIC BENEFITS Local economic benefits Community benefits Wider benefits Employment and investment inflows 27 7 PAYBACK PERIOD AND CARBON ABATEMENT 29 8 OUTLOOK FOR THE INDUSTRY Expected growth in the Australian industry Barriers to deployment/development Technology trends 33 9 REFERENCES 34 APPENDIX I : AUSTRALIAN WIND FARM DEVELOPERS 36

4 1 Executive Summary The Clean Energy Council (CEC) commissioned GL Garrad Hassan (GLGH) to provide a review of the status of the Australian wind industry including a discussion of relevant trends at the global and local levels. GL Garrad Hassan is one of the world s largest independent renewable energy consultancies and provides technical services spanning the entire wind project lifecycle. GLGH has provided technical advice to the Australian wind industry since 1995 and maintains an independent and objective viewpoint, ensured through holding no equity stake in any wind farm development or wind technology. This report provides a summary of the current status of the wind industry in Australia including relevant aspects of the regulatory and policy environment. Global trends are discussed and the implications for the Australian market are explored. A high-level analysis of the economics of Australian wind farms is provided, including considerations relating to capital costs, developments costs, operations and maintenance (O&M) costs, and the delivered cost of electricity. The wider economic benefits of wind energy in Australia are also explored. Indicative calculations relating to carbon abatement and the payback period required to offset the emissions generated during the life of a wind farm project are provided. Finally, commentary is provided on the outlook for the wind industry. The information provided in this report is based on GL Garrad Hassan s knowledge of the wind industry, a database of wind farm developments maintained by GLGH, market reports and desktop research. Status of the wind industry in Australia Policy and regulatory environment The Australian wind energy industry has experienced significant growth over the past decade. Approximately 2120 MW of wind capacity is now installed at 40 wind farms across Australia after starting from a very low base in the early 2000 s. Wind farms make up approximately 3.7 per cent of the total generation capacity in Australia. It is expected that the energy produced by this capacity will be roughly 5770 GWh per annum, or around 2.2 per cent of the country s total consumption. The local industry is poised for substantial additional expansion, with between 50 to 100 new wind farms proposed by a variety of developers, increasing competition in the local turbine supply market, and a policy environment that is providing improved investment certainty. The industry has emerged from a phase of considerable uncertainty during late 2009 and early The key supporting mechanism for wind projects, the Renewable Energy Target (RET) which was implemented in August 2009, was reviewed and modified following a dramatic fall in the Renewable Energy Certificate (REC) price. Importantly, the scheme was split into two separate markets for small-scale and large-scale renewable projects in recognition of the very different dynamics driving these sectors. Consistent policies that result in well designed market based schemes are vital to the success of the wind industry in Australia. The Australian Government is currently proposing to introduce a carbon price, which would increase wholesale electricity prices. In the short to medium term it is unlikely that a carbon price alone will be sufficient to support investment in wind projects and other renewable technologies. It is therefore imperative that support for the industry is continued via a scheme such as the Enhanced Renewable Energy Target (eret) until carbon pricing has reached a level that is sufficient to bridge the gap between the costs of fossil fuel and renewable generation. windenergy Review of the Australian Wind Industry

5 1 Executive Summary Overseas market trends Total global wind turbine installations grew by approximately 22 per cent in This was slower than the average growth of over 35 per cent per annum recorded in the five years preceding 2010 and is attributed to the global financial crisis (GFC) coupled with the long lead time of wind farm projects. The slowdown was particularly pronounced in the European and US markets. Recent forecasts have predicted annual global growth rates of between 15 to 23 per cent per annum over the next five years. Average prices for turbine supply contracts are believed to have fallen by a substantial amount over the past 12 months, possibly in the order of 20 per cent. This fall in prices is attributed to the combination of slower growth in installed capacity, and increased competition in turbine supply. Asian manufacturers, particularly from China and Korea, are becoming increasingly competitive in the global arena. Over the same period, the Australian dollar has strengthened considerably compared to most global currencies. The combination of low turbine prices, demand for new Australian projects and an improved investment environment appear to create a strong case for securing wind turbine supply contracts in Australia at the present time. Economic analysis A range of indicative development costs for Australian wind farms is provided based on GLGH s recent experience with wind farm projects in Australia and around the world. These ranges are largely unchanged from the estimates provided in the 2010 Australian wind industry report, except that the lower end of the turbine price component has been reduced to reflect the fall in average turbine supply contract prices and the strengthening of the Australian dollar over the past year. Cost projections are provided for a number of scenarios based on the experience curve methodology. The delivered cost of electricity produced by a wind farm is dependent on many factors including capital/development costs, O&M costs, lifetime of the project, financing structure of the project, the required rate of equity return, and interest rates. Power Purchase Agreement (PPA) prices in the range of around $ per MWh seem consistent with current conditions in the Australian market, however the required price for any individual project could easily fall outside of this range. Economic benefits, payback period and carbon abatement Wind farm developments offer numerous benefits to the wider economy. These include: the abatement of greenhouse gas emissions, the provision of employment in geographically diverse rural areas, the development of skills and expertise in a sector that is experiencing massive global growth, a potential source of drought-proof and flood-proof income to farmers, flow on economic benefits to rural and regional communities, potential upgrades to local infrastructure, and support/sponsorship of local community organisations. Additionally, unlike fossil fuel generators, wind farms do not consume water in the process of generating electricity. It is estimated that the carbon emissions associated with the life cycle of a modern wind farm in Australia should be abated in well under 1.5 years of wind farm operation. Outlook for the industry It is expected that the Australian wind industry will experience a period of significant growth over the next few years as demand for RECs grows under the eret scheme. However, it is important that a stable investment environment continues well into the future, particularly in the period after the existing eret scheme ceases to stimulate additional investment. Consistency and certainty in the policy and regulatory environment will be key to the long-term success of the industry. Other potential barriers to the long-term viability of the industry include inconsistent/complex planning laws, technical issues related to electricity networks and any decrease in political and community support for the industry. Technology trends towards larger turbines, direct drive trains and permanent magnet generators are expected to continue in the near term. However, the size of onshore turbines in Australia is unlikely to increase significantly in coming years due to transport, landscape and public amenity considerations. windenergy Review of the Australian Wind Industry

6 2 Current state of the wind market in Australia 2.1 Market penetration Since 2005, the total installed capacity of wind farms in Australia has increased by an average of approximately 30 per cent per annum. As of April 2011 there are approximately 40 wind farms of greater than 1 MW capacity operating in Australia, with a combined total capacity of approximately 2120 MW. There are also at least 50 smaller wind installations in operation, with a total capacity of approximately 8 MW. Approximately 300 MW of wind capacity was commissioned in 2010 and early A list of operating wind farms in Australia with installed capacity greater than 1 MW is presented in Table 2.1. Table 2.1 Operational wind farms in Australia over 1 MW capacity Source: GLGH Australian wind farm database Project Name State Developer/Owner Commissioned Size (MW) Blayney NSW Eraring Energy Capital Wind Farm NSW Infigen Energy Crookwell NSW Eraring Energy Cullerin Range NSW Origin Energy Hampton NSW Wind Corporation Australia Windy Hill QLD Stanwell Canunda SA International Power/ Wind Prospect Cathedral Rocks SA Hydro Tasmania & Acciona Energy Clements Gap SA Pacific Hydro Hallett 1 (Brown Hill) SA AGL Hallett 2 (Hallett Hill) SA AGL Hallett 4 (North Brown SA AGL Hill) Lake Bonney Stage 1 SA Infigen Energy Lake Bonney Stage 2 SA Infigen Energy Lake Bonney Stage 3 SA Infigen Energy Mount Millar (Yabmana) SA Tarong Energy, Transfield Services Snowtown SA TrustPower Starfish Hill SA Transfield Services Waterloo SA Roaring 40s

7 2 Current state of the wind market in Australia Table 2.1 Operational wind farms in Australia over 1 MW capacity continued... Project Name State Developer/Owner Commissioned Size (MW) Wattle Point SA AGL & Wind Farm Developments Huxley Hill Stage 3 TAS Hydro Tasmania Woolnorth Stage 1 TAS Roaring 40s (Bluff Point) Woolnorth Stage 2 TAS Roaring 40s (Bluff Point) Woolnorth Stage 3 TAS Roaring 40s (Studland Bay) Challicum Hills VIC Pacific Hydro Codrington VIC Pacific Hydro Portland WEP - Stage 1 VIC Pacific Hydro (Yambuk) Portland WEP - Stage 2 VIC Pacific Hydro (Cape Bridgewater) Portland WEP - Stage 3 VIC Pacific Hydro (Cape Nelson South) Toora VIC Transfield Services Waubra VIC Acciona Energia/ANZ Energy Infrastructure Trust Wonthaggi VIC IFM Nine Mile Beach WA Verve Energy Albany WA Verve Energy Emu Downs WA Transfield Services/ Griffin Energy Hopetoun WA Verve Energy Kalbarri WA Verve Energy Ten Mile Lagoon WA Verve Energy Walkaway WA Infigen Energy Total

8 2 Current state of the wind market in Australia Eight wind farms are currently under construction in Australia, with a total capacity of approximately 860 MW. When these projects are commissioned, the total operating wind farm capacity in Australia will be around 2990 MW. In addition to operational wind farms and wind farms under construction, it is estimated that there are 50 to 100 wind farms at various stages of planning and development in Australia. More than half of these are large wind farms over 30 MW in size. Some projects are being developed by utilities, however a large number are being developed by private companies. The penetration of wind generation into the Australian grid is still relatively low compared to some countries in which the modern wind industry had an earlier start. Wind penetration can be defined in several ways and it is important to know which concept is being referred to when penetration is being discussed. The following definitions are useful, and may vary slightly from similar definitions used elsewhere. Installed capacity penetration: this is the installed wind generation capacity (in MW) connected to an electrical system, normalised by the capacity of all generation installed on that system. Power penetration: this is the output of the wind generation (in MW) at a given time, normalised by the system demand at that time. The peak power penetration is important when considering potential grid stability issues. Energy penetration: this is the electricity produced by the wind generation, normalised by the gross electricity consumption in the electrical system, usually on an annual basis. Table 2.2 Installed capacity penetration of wind energy by state Source: GLGH Australian wind farm database, AEMO website andgovernment of Western Australia Office of Energy website 1,2,3 Installed wind capacity (MW) Total generation capacity (MW) Wind penetration (%) NSW % QLD % SA % TAS % VIC % NEM % WA % SWIS % Total Australia % 5

9 2 Current state of the wind market in Australia South Australia clearly has the largest installed capacity of wind energy of any state and due to its relatively low total generation capacity it has by far the highest installed capacity penetration. As shown in Table 2.2, the total installed wind capacity in Australia is equivalent to approximately 3.7 per cent of Australia s total generation capacity, up from 3.5 per cent in March It is expected that the energy produced by this capacity will be roughly 5770 GWh per annum, assuming a typical capacity factor for Australian wind farms. This represents approximately 2.2 per cent of the country s total electricity consumption, estimated from aggregate generation data published in the Australian Government s Energy in Australia 2011 report 4. The distribution of Australia s installed wind capacity by state is shown in Figure 2.1. Figure 2.1 Installed wind capacity by state QLD 0.6% WA 9.5% NSW 8.8% VIC 20.1% TAS 6.7% SA 54.2% 6

10 2 Current state of the wind market in Australia 2.2 Sources of supply for Australian turbines and balance of plant Turbine Suppliers A number of new turbine suppliers have entered the Australia market in recent years. The increase in suppliers operating in the local market, growth in international turbine manufacturing capacity and resolution of supply chain bottlenecks has led to increased competitiveness. Large commercial wind turbine manufacturers currently offering wind turbines in the Australian market include those listed in Table 2.3. Table 2.3 Turbine suppliers in the Australian market Turbine Supplier Turbines offered Company background Acciona Energia (Spain) 1.5 and 3 MW The wind turbine division of Acciona Energia produces two turbine models and the wind power division provides engineering services for the construction and maintenance of wind farms, some of which Acciona Energia own. Alstom Wind (France) MW Alstom is a large French multinational which operates in power generation and transport markets worldwide. Alstom acquired the Spanish wind turbine manufacturer Ecotècnia in 2007 and the wind energy division has been known as Alstom Wind since Alstom Wind recently opened an office in Australia. Baoding Tianwei Wind Power (China) 1.5 MW Baoding Tianwei Wind Power (BTWP) is a turbine manufacturer engaged in R&D, design and manufacture of wind turbines, facilitated by technology transfer through engineering design services and training provided by GLGH. In November 2009 BTWP signed a contract to supply MW turbines to Australia s CBD Energy. Enercon (Germany) MW Enercon has a wide range of turbine models including smaller models suitable for small, remote, off-grid generation. All Enercon s turbines have annular generators which makes them a popular choice for off-grid projects as they do not require an A/C grid coupling. Gamesa (Spain) MW Gamesa is an established wind turbine manufacturer with extensive experience. Gamesa have been working in the Australian market for a number of years and although they do not have any turbines installed in Australia, there have been signs in the media that they have signed agreements with Australian developers to supply wind turbines. GE Energy (US) MW GE Energy has a large share of the global market, with a high number of installations in the US. GE Energy has recently diversified into the offshore market by launching a 4 MW direct-drive turbine. 7

11 2 Current state of the wind market in Australia Table 2.3 Turbine suppliers in the Australian market continued... Turbine Supplier Turbines offered Company background Goldwind (China) MW Goldwind manufactures wind turbines under licence from European suppliers. Goldwind s turbines have mostly been installed in China. Goldwind also invest in and develop wind farm projects and have a presence in Australia. Lagerwey (Netherlands) MW Lagerwey was established in 1979 and was one of the first generation of commercial wind turbines. Many Lagerwey turbines with capacity less than 1 MW have been installed all over the world, often in remote, off-grid locations. The company no longer manufactures small wind turbines but is now part of Lagerwey Group BV which is entering the multi-mw turbine market in a number of countries. Lagerwey Group BV sells licences to manufacture its designs in other countries. Leit Energy (India) MW Leitner Shriram Manufacturing Ltd is a joint venture between Italian company Leitner and Indian company Shriram EPC. The company currently manufacturers 250 kw and 1.5 MW turbines in India and is actively working in the Australian market. MingYang Wind Power Technology (China) MW Guangdong MingYang Wind Power Technology Co. Ltd is one of China s largest wind turbine manufacturers. MingYang have established an office in Melbourne to facilitate business development in Australia through the company Wind Pacific. Mitsubishi (Japan) MW Mitsubishi Heavy Industries (MHI) have been installing turbines since the 1980s mainly in Japan and the US. Nordex (Germany) 1.5 MW Nordex is a German turbine manufacturer which holds a substantial share of the European supply market. Nordex currently have a small number of kw sized machines that were installed in Tasmania in the 1990s. Nordex is currently looking to re-enter the Australian market with its MW range of turbines. REpower AG (Germany) MW REpower was established in The company produces turbines for the onshore and offshore markets. Siemens (Germany) MW Siemens Energy acquired Bonus Energy in Siemens has launched two direct drive turbine models in the last few years, joining Enercon in the gearless wind turbine market. Siemens also purchased the gearbox manufacturer Winergy in Sinovel (China) MW Sinovel is China s largest wind turbine manufacturer. Sinovel s turbines were installed at China s first offshore wind farm in Suzlon Energy (India) MW Suzlon Energy has a large share of the installed capacity in Australia. In 2006 Suzlon Energy acquired the gearbox supplier Hansen Technologies. In 2007, Suzlon Energy acquired a controlling interest in REpower. Suzlon Energy s current share in REpower is 95.1%. 8

12 2 Current state of the wind market in Australia Table 2.3 Turbine suppliers in the Australian market continued... Turbine Supplier Turbines offered Company background Vergnet (France) MW Vergnet is France s only wind turbine manufacturer. The company produce small 2 bladed turbines (predominantly the 275kW model). Their turbines can be tilted down to avoid damage in cyclonic conditions. A number of Vergnet turbines have been installed in remote locations in Western Australia. Vestas (Denmark) MW Vestas is the world s largest turbine manufacturer. The company acquired NEG Micon in The company is currently developing a 7MW offshore turbine model. Windflow (NZ) 0.5 MW Windflow offer a 500kW 2-bladed turbine which teeters on its horizontal axis as it yaws which reduces the fatigue loads on the structure. The turbine has Type 1A certification which allows it to be used at high wind speed and high turbulence sites. Westwind (UK, originally Australia) 3-20 kw Westwind manufactures small wind turbines that are primarily suited to household use, or wind-diesel combination systems. Westwind have supplied turbines, towers, and turbine controllers for use in many different applications around the world since There are a number of Westwind turbines installed in remote locations across Australia. Several of the manufactures listed above are recent entrants into the Australian market and to date have not installed any turbines in Australia. Figure 2.2 shows the share of installed wind turbine capacity in Australia by turbine supplier. Figure 2.2 Installed wind capacity in Australia by turbine supplier Acciona Energia 8.5% Others 2.1% Suzlon Energy and REpower 28.7% Vestas and NEG Micon 56.4% Enercon 4.2% Figure 2.2 includes wind farms that are operational and under construction 9

13 2 Current state of the wind market in Australia Vestas is the market leader in terms of installed capacity, accounting for approximately 56 per cent of the market (this figure includes NEG Micon turbines). Suzlon accounts for a sizeable portion of the market with 24 per cent of installed capacity, or 29 per cent if REpower turbines are included. Acciona Energy accounts for around 8 per cent of the capacity in Australia and Enercon accounts for around 4 per cent. The remaining 2 per cent of installed capacity has been supplied by a number of manufacturers including Siemens/Bonus, Westwind, Nordex and Lagerwey. Currently the Australian market is dominated by European turbine manufacturers and the Indian company Suzlon. The global turbine supply market is also dominated by European companies, however in the last few years Chinese turbine manufacturers have entered the top ten, signifying the huge advances in the installed wind capacity in China in recent years. In 2011 there are approximately 80 wind turbine manufacturers in China 5, and several are now marketing their products internationally. At least four Chinese companies are actively pursuing business in the Australian market. The wind industry has also attracted large multinational companies who have bought into the industry through acquisitions over the last decade Balance of plant supply The supply and demand balance for wind farm Balance of Plant (BoP) equipment is generally more stable than for wind turbines, reflecting the more mature status of the electrical equipment and civil engineering industries. Despite its maturity, the construction industry is exposed to variations in raw material costs such as copper and aluminium for the electricity cables, steel for the turbine foundations, and fuel. As an example, the volatility of copper prices over the last few years has meant that most wind farms are now installing aluminium cables. Most wind turbine nacelles, rotors and associated components are imported from overseas manufacturers however turbine towers, kiosk transformers, switchgears and cables are often manufactured locally in Australia. Three of the leading Australian suppliers of turbine towers are RPG in Adelaide, Haywards in Launceston and Keppel Prince in Portland, all established steel fabrication manufacturers. RPG recently opened a second tower manufacturing facility in Dalby, Queensland. Cables are also generally supplied by local manufacturers, with Olex being one of the leading suppliers. Civil works for turbine foundations and roads are usually undertaken by local contractors using locally sourced materials. Reactive plant components are generally imported from international suppliers such as ABB or American Superconductor Corporation (AMSC). 10

14 2 Current state of the wind market in Australia 2.3 Market participants There are a wide variety of developers operating in the Australian market, including large integrated energy utilities, investment banks, specialist wind farm development companies and small community wind farm developers. The last few years have seen the entry of a number of new developers into the Australian market and several mergers and acquisitions have also taken place. There has also been a trend for the larger electricity retailers to enter into the wind farm development business themselves, achieved through in-house project development, acquisitions of operating wind farms and projects in development, as well as acquisitions of smaller developers and their portfolio of development projects. Figure 2.3 shows the approximate share of installed wind capacity in Australia by developer. Figure 2.3 Share of installed wind capacity in Australia by developer (including projects in construction) ANZ Infrastructure Services 3% TrustPower 3% Hydro Tasmania 5% Others 5% TRUenergy 5% AGL 21% Transfield Services 5% UBS Infrastructure Fund/REST 7% Pacific Hydro 9% Meridian Energy 9% Infigen Energy 18% Acciona Energy 10% The numbers presented in Figure 2.3 include wind farms that are fully operational and under construction. Where projects are owned as a joint venture, an equal split of capacity between companies has been assumed *. * Hydro Tasmania and TRUenergy share projects previously owned by Roaring 40s. In April 2011 it was announced that Hydro Tasmania and CLP Renewables will not continue with the Roaring 40s venture. The future of the Roaring 40s development portfolio is uncertain. 11

15 2 Current state of the wind market in Australia The largest developers with existing wind farms included in the others category are summarised in Table 2.4, along with their installed capacity. Table 2.4 Other wind farm developers in Australia with installed capacity between 1 MW and 50 MW Wind farm developer / owner Installed capacity (MW) Eraring Energy 14.7 Hampton Wind Park 1.3 Hepburn Wind 4 International Power 46 Origin Energy 30 Verve Energy 43.6 Western Power 2.7 Wind Power Management 12 There are also a significant number of developers in the Australian market that have either less than 50 MW of installed capacity or no operating wind farms. A more comprehensive list of Australian developers is provided in Appendix I. In December 2010 the NSW State Government accepted bids from TRUenergy and Origin Energy for the sale of state owned electricity retail assets. The sale took effect in March TRUenergy acquired the retail arm of Energy Australia and Origin Energy acquired the retail businesses of Country Energy and Integral Energy. The acquisition of these assets has significantly increased the REC liabilities of TRUenergy and Origin Energy and as a result it is likely that both of these companies will become more active developers of wind farm projects. 12

16 3 Regulatory and Policy Environment The regulatory framework supporting renewable energy projects in Australia has been in a state of flux over recent years. The original Mandatory Renewable Energy Target (MRET) scheme, which commenced operation in April 2001, was replaced with the significantly expanded Renewable Energy Target scheme in August This was a major milestone for the industry, although a collapse of the Renewable Energy Certificate price led to significant changes to the scheme which came into effect in January The move to the Enhanced RET scheme has divided the previous RET scheme into the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES), acknowledging the different types of incentives and market dynamics driving the large and small scale sectors. The lack of international agreement on emission reduction targets at the UN Climate Change Conference (COP15) in Copenhagen created further uncertainty for the industry. In February 2011 the Australian Federal Government announced an agreement with the Greens and two Independent MPs to introduce a Carbon Price Mechanism from July A carbon price should benefit the wind energy industry via higher wholesale electricity prices, however, there is still considerable uncertainty surrounding the details of the proposed scheme and whether or not it will proceed. 3.1 Market based incentive schemes There are several government support schemes for renewable energy at the federal and state levels in Australia. The Review of the Australian wind industry report contains detailed information about the history of renewable energy support schemes in Australia. This section provides a high-level snapshot of the various schemes in Australia at the present time Renewable Energy Target As discussed above, there were some serious flaws in the previous RET scheme which led to a collapse of the REC price and the subsequent introduction of the eret. Spot REC prices fell from around $50/MWh in the March 2009 quarter to approximately $32/MWh by the December 2009 quarter 6. Prices started to recover up to levels of around $41/MWh by the June 2010 quarter with the announcement of the LRET/SRES split, however they declined again to around $32/MWh by the December 2010 quarter, probably due to the level of surplus RECs in the market. Figure 3.1 REC spot price March 2009-December 2010 Source: Australian Energy Market Quarterly Review, December REC Spot Price ($/MWh) Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 13

17 3 Regulatory and Policy Environment Figure 3.2 shows the annual renewable energy target alongside the number of RECs generated per annum. It is evident that there is currently oversupply in the market and it is quite likely that surplus RECs will remain in the system for the next 12 to 24 months. The new eret scheme should address the problem of oversupply and hopefully result in a sustained recovery of REC prices and a more predictable market. It is understood that the REC price has shown some recovery since the commencement of the eret in January Figure 3.2 RECs generated and annual renewable energy target (RET) Source: Australian Energy Market Quarterly Review, December ,000 35,000 30,000 25,000 20,000 15,000 10, Effective REC Target REC Generation by Year Carbon price and emissions trading scheme The Carbon Price Mechanism (CPM) is a proposal to introduce a price on carbon and replaces the previous proposal for the Carbon Pollution Reduction Scheme. The outline for the CPM was announced in February 2011 by the Multi-Party Climate Change Committee (MPCCC) which was set up by the Prime Minister in September 2010 to explore the options for the introduction of a low carbon economy for Australia. The MPCCC consists of members of the Australian Government, the Greens Party and two Independent MPs and is advised by a panel of experts. It is proposed that the CPM will be implemented from 1 July 2012 and run for three to five years before converting to a cap and trade emissions scheme. The CPM will cover the stationary energy sector, the transport sector, the industrial processes sector, fugitive emissions and emissions from non-legacy waste. Agricultural emissions will not be included in the CPM. The CPM outline was released in February 2011 as a starting point for public debate of the issue. There is currently intense debate around the CPM with the opposition showing no support for the policy. There have been several public rallies both for and against the CPM. The government has committed to a carbon emissions reduction target of 5 per cent below 2000 levels by 2020, with the possibility of raising the target to 25 per cent depending on commitments made by other countries. The lack of binding international agreement on emission reduction targets at COP15 has led the government to the relatively low target of 5 per cent at this stage. The lack of international progress also appears to have contributed to an environment in Australia in which ambitious action on climate change seems more difficult to achieve. Renewable energy projects will benefit under a carbon tax or emissions trading scheme because of the resulting increase in electricity prices. However, the level of the benefit will be highly dependent on the detailed design of the final scheme, particularly the target level of emissions abatement and hence the carbon price in the early years of operation. 14

18 3 Regulatory and Policy Environment GreenPower The GreenPower scheme was launched in New South Wales in 1997 and subsequently expanded to other Australian Jurisdictions in GreenPower is a voluntary program that gives electricity consumers the option of paying a premium to purchase electricity from accredited renewable sources. Green electricity purchases under the GreenPower scheme are additional to the mandated targets under the eret. A number of state governments have committed to purchasing a set percentage of electricity consumed in government buildings from GreenPower. The number of GreenPower customers has been declining since the September 2009 quarter, particularly in Victoria and New South Wales Non-Market Based Schemes A number of non-market based grant schemes covering renewable energy exist at the federaland state level, although many have been cut or closed in recent months as part of the Government s saving measures to support the rebuilding of infrastructure damaged by the floods in Queensland. Generally speaking, non-market based programs tend to be targeted at a small number of specific emerging technology projects rather than providing ongoing industry-wide support. It is unlikely that new wind projects using established technology will receive significant support under non-market based schemes. One exception is the South Australian payroll tax rebate. Under this scheme developers of renewable energy projects with capacities greater than 30 MW are eligible for a rebate on payroll tax incurred during project construction. Payroll tax in South Australia is currently 4.95 per cent of wages and the rebate is capped at $1 million for wind farms. The scheme commenced operation in July 2010 and is valid for a fixed period of 4 years. 3.3 Recent changes in state policy In March 2011 the Victorian Government introduced changes to the state planning guidelines for wind farms 8, 9. The amendment (VC78) makes the local council the responsible authority for all planning permit applications for wind farms, requires the consideration of all properties within 2km of any turbine, updates the standard to be used for assessing wind farm noise, and refers to the draft EPHC National Wind Farm Development Guidelines 10. The full implications of the amendment are unclear at present, although it is possible that more onerous requirements will result for Victorian wind farm planning applications. windenergy Review of the Australian Wind Industry

19 3 Regulatory and Policy Environment 3.4 Preferred design of programs The renewable energy industry requires consistent, predictable and long-term support schemes to create a stable and healthy investment environment. Well designed market based schemes are vital to the success of the wind industry in Australia. Important lessons have been learnt from the previous MRET and RET schemes, under which design flaws led to an oversupply of RECs and a significant decline in the REC price. The resulting investment uncertainty resulted in many wind projects being mothballed or delayed. The eret has addressed some of the flaws in the previous schemes and should result in a sustained recovery in prices and improved investment certainty for Australian wind farm developers in the short to medium term. If introduced, the proposed Carbon Price Mechanism will provide support to the wind industry via increases in wholesale electricity prices. In the short to medium term it is unlikely that a carbon price alone will be sufficient to support investment in wind projects and other renewable technologies. It is therefore imperative that support for the industry is continued via a scheme such as eret until carbon pricing has reached a level that is sufficient to bridge the gap between the costs of fossil fuel and renewable generation. Non-market based schemes are traditionally targeted at the emerging renewable technologies and therefore tend to provided limited, if any, support for large wind projects. windenergy Review of the Australian Wind Industry

20 4 Overseas market trends 4.1 Changes in global wind capacity During 2010 the total installed capacity of the global wind industry grew to 22 per cent above 2009 levels. This represents a slowing in the growth rate compared to the previous 5 years, during which growth averaged over 35 per cent per annum. This reduced rate of growth is attributed to the 2008 GFC coupled with the long lead time of wind farm projects. Once again, China has driven the growth of the market, with a total of 18.9 GW of new wind capacity installed in The Global Wind Energy Council (GWEC) reports that the global wind turbine market was worth approximately US $65 billion in In the long term it is expected that the wind industry will maintain a significant growth rate, although as a maturing market it is possible that growth rates will become more modest than the high double-digit percentages seen in previous years. Total cumulative installed global wind capacity since 1996 is shown in Figure 3.2 below. Figure 4.1 Total cumulative installed global wind capacity in MW Source: GWEC 11 Total Installed Capacity - MW 200, , , , , ,000 80,000 60,000 40,000 20, , , ,291 93,820 74,052 59,091 47,620 39,431 31,100 23,900 13,600 17,400 6,100 7,600 10, Europe has traditionally been the centre of wind turbine supply, however Chinese turbines accounted for approximately 50 per cent of global installations in The demand for wind power in China is driven by its Renewable Energy Law which lays out the targets for renewable energy and sets obligations for electricity infrastructure to connect the projects. There is also a feed-in tariff for wind farms. The wind industry in China is likely to continue growing at the high rates seen in recent years, with a 90 GW installed capacity target expected for This will drive strong demand over the coming years, however Chinese wind turbine manufacturers are also looking to sell turbines outside of the domestic market as the Chinese supply market becomes saturated with many manufacturers. Chinese suppliers are becoming quite active in the Australian market. For example, CBD Energy recently announced a joint venture with two Chinese companies DaTang and Tianwei. The aim of the venture is to develop approximately one third of Australia s wind production within the next decade 12. In addition to the new Chinese manufacturers a number of companies with well established brand names and engineering expertise are also emerging from other parts of Asia. South Korea in particular is a region showing rapid growth with players such as Samsung, Hyundai and many others entering the wind turbine arena in recent years. These companies appear to be developing turbine products in accordance with international standards at a rapid rate and this can be expected to significantly influence the dynamics of global turbine supply in coming years. 17

21 4 Overseas market trends 4.2 Global wind market forecast to 2015 The outlook for the global wind market for the next 5 years is for continuing growth, although at a more modest rate than seen in previous years. The advent of new offshore markets in Europe will support this growth with 40 GW of potential development in UK waters and a target of 9 GW by 2020 in German waters. China is forecast to continue installing between approximately 20 GW to 26 GW each year over the next five years. There have been two forecasts for the next 5 years published in recent months 11,13, with a difference of nearly 13 per cent in the global cumulative installed capacity in The more conservative forecast for wind power installations across the globe for the period from The GWEC is presented in Figure 4.2. Figure 4.2 Global wind power market forecast for : Annual installed capacity 70,000 60,000 Capacity - MW 50,000 40,000 30,000 20,000 10, Other areas Africa OECD-Pacific South and East Asia (Excluding P.R. China) P.R. China Americas Europe 18

22 4 Overseas market trends 4.3 Implications for the Australian market The slowdown in the global growth of wind turbine installations in 2010 occurred in many markets and was particularly pronounced in Europe and the US. This has been attributed to the filtering down of the GFC, which caused many projects to be delayed as securing finance on large projects became more difficult. GLGH understands that slower growth and competition on the supply side has resulted in global average contract prices for new turbines falling by somewhere in the region of 20 per cent in 2010 (excluding China). Over the same period, the Australian dollar has increased in value substantially compared to the Euro. The Australian dollar to Euro exchange rate is particularly relevant to the Australian wind industry due to the dominance of European suppliers in the local market. Theoretically, if the full value of exchange rate variations was reflected in new turbine supply contracts, the cost of such contracts in Australia should have fallen by around 30 to 40 per cent over the past 12 months. Realistically, it is unlikely that the full value of exchange rate variations will be reflected in turbine supply contracts. However, it is reasonable to expect that local contract prices over the past 12 months should have fallen by an amount that is at least similar to or slightly greater than the global average of around 20 per cent. The Australian economy weathered the GFC well and now appears to be doing very well relative to other economies around the world. The enhanced RET is driving demand for new wind farm projects and has improved investment certainty relative to the situation 12 months ago. The level of competition in the Australian turbine supply market has increased in recent years with more suppliers entering the local market, and this trend is expected to continue into the future. Overall it is reasonable to expect that market conditions are now substantially more favourable for developers than they were in early The combination of low turbine prices, demand for new projects and an improved investment environment appear to create a strong case for securing wind turbine supply contracts in Australia at the present time. 19

23 5 Economic analysis There are a variety of factors that can influence the costs of developing large wind farm projects. These include the supply and demand dynamics of the market, the exchange rate, the physical features of the wind farm site and the way construction of the project is managed. The following areas are discussed at a high level to investigate qualitatively the economics of large wind farm developments: development and capital costs; forecast development and capital costs for the next five years; operations and maintenance costs; quality of the wind resource; and the delivered cost of electricity. 5.1 Development and capital costs Wind farm projects are highly capital intensive compared to the more traditional sources of fossil-fuel generation. The actual contribution of capital costs to total wind farm production costs can vary significantly on a site-specific basis due to factors such as site conditions and local labour costs. However, it is reasonable to expect that at most sites capital costs and development costs are likely to contribute somewhere in the range of around per cent to the total cost of generation. Table 5.1 shows a typical breakdown of the major development and capital costs associated with wind farm projects in Australia. These estimates are based on GLGH s recent experience with wind farm projects in Australia and globally. Table 5.1 Indicative development costs for Australian wind farms Cost Item $m AUD/MW Typical Range * Contribution to total capital costs % Turbine works 1.10 to to 75 Balance of Plant works 0.35 to to 25 Grid connection 0.05 to to 15 Other 0.15 to to 15 Total 1.7 to Other costs cover a number of activities including feasibility studies, wind speed monitoring, development costs, consultancy work and the costs associated with project financing. It is stressed that the values shown are indicative in nature and the actual costs associated with a specific project could differ substantially from those shown. Further details on the cost elements in Table 5.1 can be found in the 2010 Australian wind industry report 3. The values provided in Table 5.1 are largely unchanged since the 2010 report except for the lower end of the range estimated for turbine works. As discussed in section 4.3, it is likely that the price of some turbine supply contracts may have dropped quite substantially in the wake of the global slowdown in turbine demand, the very strong Australian dollar and increased competition in the turbine supply market. The strong Australian dollar may also have impacted some of the other cost components to a small degree, however this impact is assumed to be negligible due to the substantially local nature of non-turbine capital works. * Values in the middle of the ranges indicated do not necessarily correspond with average cost expectations for Australian wind farms. 20

24 5 Economic analysis 5.2 Forecast Based on the discussion above and the experience curve methodology an indicative range of wind farm development and capital costs in Australia over the next five years has been developed. Further information on the experience curve methodology is available in the Review of the Australian wind industry 2010 report 3. A base case, low case and high case has been explored for each of the key assumptions. The base case reflects the assumption that historical trends are the best indicator of future trends. The low and high cases explore the potential impact of departures from historical trends. A brief outline of the key input assumptions is provided below. Average annual global growth Learning rate An important input for cost projections based on the experience curve methodology is the assumed learning rate. The learning rate is a measure of the rate at which costs decrease as total production increases. For example, a learning rate of 10 per cent indicates that when total production doubles the unit cost of production falls by 10 per cent. A base case learning rate of 10 per cent has been assumed. This matches the base case assumption in the 2010 wind industry report and is based on an assumption used in a recent EWEA study 14. A low case learning rate of 5 per cent has been assumed. This also matches the low case assumption in the Review of the Australian wind industry 2010 report and could potentially be experienced if savings from economies of scale have already been largely exploited and there is decreasing scope for further savings. A high case learning rate of 20 per cent has been assumed. This is slightly higher than the high case assumption in the 2010 wind industry report. This update is based on GLGH experience with new Asian suppliers, particularly in Korea, which tends to indicate an up-and-coming ability to develop high quality turbine products extremely efficiently. As noted in section 4.1 there has been a slowdown in global wind turbine installations over the past 12 months with the total installed capacity increasing by 22 per cent in 2010 compared with average growth rates of well over 30 per cent per annum in the previous 5 years. Recent projections published by BTM Consult 13 and GWEC 11 have assumed annual growth rates in the range of 15 to 23 per cent per annum over the next five years. In the base case the annual average growth rate over the next five years is assumed to be similar to the past 12 months, at 22 per cent per annum. This is slightly lower than the base case in last year s report, which assumed average growth rates of 25 per cent per annum and reflects the slowdown in Europe and the US. A low case growth rate of 15 per cent has been assumed. A high case growth rate of 35 per cent has been assumed. This matches some of the high growth rates that have been experienced in the past decade. It is conceivable that activity in large markets such as China and India could offset a slowdown in some of the more established wind energy regions and deliver a global average growth rate of this order. 21

25 5 Economic analysis Exchange rate Development and capital costs In the base case, development and capital costs for Australian wind farms in 2011 have been estimated using local industry knowledge and are based on the values presented in Table 5.1. High and low cases have also been provided based roughly on the high and low ranges indicated in Table 5.1. The low cost scenario could conceivably eventuate if the Australian dollar continues to perform strongly against other global currencies, combined with increasing competition in the turbine supply market. Conversely, the high cost scenario could eventuate if the Australian dollar weakens relative to other currencies and competition on the supply side is not as intense as anticipated. High commodity prices could also lead to a high cost scenario. It could be argued that exchange rate fluctuations are captured to a certain degree in the high and low cost scenarios described above. However, exchange rate is only one of many drivers impacting overall capital costs. In light of the significant changes in the strength of the Australian dollar relative to other currencies in recent times, this factor has been explored in isolation to gain some idea of its relative impact on costs. The full amount of exchange rate fluctuations will not be reflected in turbine development and capital costs. For example, the costs of local labour and locally manufactured parts will be considerably less impacted than imported equipment and labour. It has been assumed that 65 per cent of any changes in exchange rates will flow through to wind farm installation costs. In the base case, the exchange rate is based on the long-term average AUD:Euro exchange rate over the period 2000 to April A weak Australian dollar case has been included, which is based on the weakest exchange rate recorded over the same period. Conversely, the strong Australian dollar case is based on the strongest rate recorded over the period, which corresponds roughly with the current rate. It is quite possible that the Australian dollar will continue to perform strongly relative to other currencies. The strong and weak scenarios presented here merely provide an indication of the possible impact of historic highs and lows. 22

26 5 Economic analysis Summary of input assumptions Table 5.2 Experience curve cost forecasts - summary of input assumptions Scenario Global annual growth Learning rate AUD:Euro exchange rate Capital and development costs ($m AUD/MW) Base case 22% 10% Low costs base case base case base case 1.7 High costs base case base case base case 3.1 High global growth 35% base case base case base case Low global growth 15% base case base case base case High learning rate base case 20% base case base case Low learning rate base case 5% base case base case Weak Australian base case base case 0.48 base case dollar Strong Australian dollar base case base case 0.77 base case Results The results are shown in Figure 5.1. It is noted that the forecasts are indicative in nature and represent a best estimate of typical Australian wind farms. The costs of installing an individual wind farm could vary substantially from the estimates shown due to the highly site-specific nature of wind farm development costs. Figure 5.1 Installed cost projections for Australian wind farms Installed Costs - $m/mw Year Base case Low costs High costs High global growth Low global growth High earning rate Low earning rate Weak Australian dollar Strong Australian dollar 23

27 5 Economic analysis 5.3 Operations and maintenance costs Operations and maintenance (O&M) costs cover a wide variety of activities which may include: Turbine maintenance, breakdown and repair; Civil maintenance; Electrical maintenance; Operational management and monitoring; Company administration; Land lease; Insurance; The largest single operating cost for a wind farm is the operations and maintenance cost for the turbines. The work covered by turbine O&M costs will include scheduled servicing and repair work done on the turbines, including all labour, consumables and spare parts. Operational monitoring of the wind farm via a remote computer system will also usually be included. Annual turbine O&M costs are likely to vary over the life of the wind farm. Other significant operating costs include both technical and commercial costs. Cost items such as land lease, property tax and use of system or grid charges are dependent on local pricing influences. In general GLGH would expect an allocation of approximately per cent of total revenue from energy sales to cover all operational costs. 5.4 Quality of the wind resource Grid connection charges (if these are paid on a periodic basis); Taxes; Community funding; Services (eg. electricity and water); Training; Environmental monitoring; and Health and safety monitoring. The expected annual energy production of a windfarm is one of the most important factors in determining the minimum energy price that will be required to cover all capital and operational expenses. The long-term average wind speed at a site directly and significantly impacts the energy output of the wind farm because the amount of power in the wind is proportional to the cube of wind speed; a small increase in the long term mean wind speed can result in a significant increase in output. The quality and nature of the wind resource will also have some impact on the capital cost of a wind farm. Sites with more extreme conditions may require sturdier and hence more expensive turbines and foundations. In terms of predicting the long-term energy production potential of a site, it is important to quantify the level of uncertainty associated with annual wind speed and hence energy production predictions resulting from the variability of the wind. This variability is typically viewed as a risk by potential financiers who will be keen to see the level of uncertainty associated with the energy production prediction minimised. To help minimise this uncertainty it is important to implement an on-site wind monitoring campaign that meets international standards and is representative of hub height wind speed conditions across the entire site. As more wind farms are developed in Australia it is possible that the industry will eventually reach a point where the availability of sites with the most favourable wind speeds will become constrained, thereby reducing the energy production potential of new sites and driving up the cost per unit of generation. Experience in the Australian market suggests it is unlikely the market has reached a point where sub-optimal wind speed sites are generally being investigated. Data collected by GLGH indicates there has been no obvious downward trend in terms of typical long-term mean wind speed predictions expected at the newest sites currently under consideration. However, it is noted that the spread of wind speed predictions at potential new sites does appear to have increased very slightly in recent years. There are a number of factors that may be contributing to this spread. For example, it may be possible that grid connection issues are causing developers to consider sites that display relatively lower annual wind speeds but are located in closer proximity to strong grid connection points than alternative sites. 24

28 5 Economic analysis 5.5 Delivered cost of electricity The final delivered cost of electricity produced by a wind farm is dependent on a number of factors in addition to the cost and wind resource issues discussed above. Other important determinants include the life of the project, the financing structure of the project, the required equity return, and interest rates. In broad terms, GLGH experience suggests that PPA prices in the range of around $ per MWh seem consistent with current conditions in the Australian market. However, it is noted that the PPA price for any individual Australian project could easily fall outside of this range. A recent study carried out by the Melbourne Energy Institute 16 investigated the levelised cost of energy (LCOE) for various renewable and fossil fuel technologies. The study reviewed cost estimates from a number of different Australian and international studies. Table 5.3 summarises the ranges reported. Table 5.3 Estimated LCOE for different generation technologies around the world based on Australian and international studies 16 Technology Cost - $ /MWh Fossil fuel - pulverised black coal Fossil fuel - combined cycle gas turbine Wind Photovoltaic Concentrating solar thermal Wind is still the most competitive of the renewable technologies. However, the rate of cost reduction for other renewables, particularly solar technologies, is noted to be more rapid than the comparatively established wind industry. The gap between the delivered cost of wind energy and new fossil fuel generation highlights the need to continue supportive policy measures such as the eret to provide a stable investment environment for the industry. 25

29 6 Economic benefits 6.1 Local economic benefits The economic benefits of wind farm development and construction are evident on the local and national levels. Wind farm project development generates employment in Australia nationally, and during the construction and maintenance phases there are employment opportunities created within the local area. Wind farms are typically sited in rural and regional areas that can benefit significantly from increased employment opportunities. Additionally, farmers that own land on which turbines are constructed can benefit substantially from the drought and flood-proof income stream offered by wind energy. A recent study into the economic impact of the Hallett wind farm project 1 7 found that during the 34 months of construction of the 95 MW Hallett 1 project, 66 full time construction workers were employed in the local region on average. At the peak of construction activity the number of workers reached 111. It is noted that these numbers correspond with direct employment in the local region only. On average, this project therefore generated 66/95 = 0.7 jobs per MW locally. Assuming construction of this wind farm is typical of other wind farms across Australia, this factor can be applied more generally to estimate total direct employment generated by wind farm construction. In addition to the direct employment generated by the construction of a wind farm, there are flow-on effects to the wider economy in relation to support for the construction project and local retail and services related to the increased economic activity in the locality of the wind farm. The value used in a number of recent reports 17, 18 suggests that for every job generated directly, a further two full time equivalent (FTE) indirect jobs are created, which gives an overall employment multiplier of 3. Indirect employment may occur in the local region, the wider national economy or in some cases outside of Australia. 6.2 Community benefits A number of wind farm developments in Australia have set up community benefit funds for the local area. The amount of funding has ranged from approximately $100 to $1000 per MW installed capacity 19, 20, 21, 22. Community project funding applications are generally submitted directly to the wind farm owner or to a panel consisting of community members and representatives from the wind farm. Often there are sustainability or community development criteria that must be met to qualify for funding. Some wind farm owners also contribute to local communities through direct sponsorship of projects or events, such as football clubs or community festivals. Other community benefits can include improved infrastructure. For example, local roads are often upgraded or repaired to meet the requirements of wind farm construction. 26

30 6 Economic benefits 6.3 Wider benefits One of the most obvious and significant benefits of growth in the wind energy industry is the avoidance of greenhouse gas emissions associated with conventional fossil fuel generation; electricity generated by wind energy displaces greenhouse gases that would otherwise have been emitted by more polluting sources of generation. Renewable energy improves the security and diversity of the energy system by insulating the electricity market from fluctuations in fuel prices. Another important environmental benefit of wind farms in the Australian context is that, unlike fossil fuel generators, they do not consume water in the process of generating electricity. Tangible benefits to the nation as a whole include rural economic stimulus as discussed in section 6.1, job creation in geographically diverse rural and regional areas, and the development of Australian skills and expertise in a sector that is experiencing massive growth on a global scale. Some opponents of the wind industry point to variability of output as a reason for discounting the benefits of wind farms. Despite being variable, wind generation is reliable and predictable in the short term (minutes to hours) and in the long term (months to years). Over long periods of time, months or years, the mean wind, and the energy output of wind farms are very predictable, and typically vary by about 10 per cent from year to year. The main issue with wind is its variability and reduced predictability over periods of hours to days. There is significant investment being undertaken around the world, including Australia, in order to improve the forecasting of wind generation for these time periods. Typically, predictability improves as geographic diversity increases, that is, the wind generation is not all in one location. This is one reason for encouraging the development of wind farms across diverse regions in Australia. Wind does not suddenly start and stop, rather it typically varies in strength. Likewise the output from wind farms does not start and stop, but rather varies with time. This contrasts with traditional thermal generation, where the loss of a single generating unit can have a massive and sudden impact on the overall generating capacity in a region. The electricity system operates to cater for variability, both in consumption and for variable generators such as wind. 6.4 Employment and investment inflows Based on the Australian wind farm data presented in Table 2.1 and employment estimates discussed in section 6.1, Figure 6.1 shows estimated direct and indirect employment resulting from annual Australian wind farm construction over the last decade. The values shown are indicative only and are based on the simplifying assumption that all construction jobs are generated in the year that wind farm construction is completed. It is noted that the numbers do not account for project-specific variations in rates of employment, or employment generated during the pre or post-construction phases of a wind farm project. 27

31 6 Economic benefits Figure 6.1 Estimated direct local jobs and indirect jobs created during wind farm construction Number of jobs created Direct local employment Direct and indirect employment Figure 6.2 shows the estimated annual investment inflow to Australia due to construction in the wind industry for the period These numbers have been estimated based on capital and development costs of $2.59 million / MW, which falls within the range of values provided in section 5.1. Approximately 60 per cent of total capital expenditure is assumed to be invested within Australia. This is based on the findings from the Hallett wind farm project 17, 23. The estimates below do not include investment inflows resulting from economic activity in the post-construction O&M period of a wind farm s life. Figure 6.2 Estimated annual investment in the Australian economy resulting from wind farm construction Annual Australian Investment ($ million)

32 7 Payback period and carbon abatement The carbon payback period refers to the length of time required for a wind farm to generate sufficient electricity to offset the greenhouse gas emissions associated with the manufacture, construction, operation and decommissioning of the project. A number of studies have been carried out in the past 15 years to calculate the carbon dioxide (CO2) payback period for wind farms 24, 25, 26, 27, 28, 29. These studies quantify the mass of CO2 emitted during the life cycle of a wind turbine as a function of the lifetime energy output of the wind turbine. This has been carried out for a wide range of turbine models in a number of countries around the world. The range of values presented in these studies is between 6 and 34 tonnes CO2 per GWh of electricity produced over the lifetime of the turbine (20-30 years). The payback period of a wind farm depends, among other things, on the CO2 intensity of the electricity generation it is displacing. Each Australian state has an average emissions factor, based on the mix of generation types used. These factors are provided in the National Greenhouse Accounts Factors published by the Department of Climate Change and Energy Efficiency 32. The figures published in July 2010 are shown in Table 7.1 below. Table 7.1 Emission factor for each state, territory or electricity grid State, Territory or grid description Emission factor (kg CO2-e/KWh) New South Wales and Australian Capital Territory 0.90 Victoria 1.23 Queensland 0.89 South Australia 0.72 South West Interconnected System 0.82 in Western Australia Tasmania 0.32 Northern Territory 0.68 These figures represent the average CO2 intensity of the electricity generation mix in each region, however, this is not necessarily equivalent to the CO2 displaced by wind farm generation. The average emissions intensity of generation displaced by wind generation in a given location is dependent on a number of factors including the net volume of trade between different regions in the electricity system and seasonal and diurnal variations in emission factors and wind farm output. To assist in determining the level of greenhouse gas abatement associated with Victorian wind farms the Victorian Government commissioned a study 29 into the likely greenhouse gas abatement factor for two scenarios of installed Victorian wind capacity. The findings are summarised in a document published by the Department of Planning and Community Development 31. This document recommends that in the period , an emissions factor of 1 tonne of CO2 equivalent per MWh is appropriate for calculating the greenhouse gas abatement from Victorian wind farms. A similar study was carried out for the New South Wales Department of Environment, Climate Change and Water in July This study does not provide a single recommended emissions abatement factor for NSW wind farms, but does provide a range of abatement factors for different installed capacity scenarios. 29

33 7 Payback period and carbon abatement An indicative carbon dioxide payback period for a 50MW wind farm in Victoria is calculated in Table 7.2. Table 7.2 Example calculation for carbon payback period of a theoretical 50 MW wind farm Wind farm capacity 50 MW Assumed capacity factor 35% Annual electricity generation 50 MW x 35% x 8766 hrs/year = 153,405 MWh/year = 153 GWh/year Life of wind farm 25 years Life cycle wind farm CO2 emissions per unit of 20 t CO2 / GWh energy production * Lifetime CO2 emissions 20 t CO2 / GWh x 25 years x 153 GWh/yr = 76,500 t CO2 Greenhouse gas abatement factor ** 1 t CO2 / MWh Total generation required to abate wind farm life cycle emissions 76,500 t CO2 1 t CO2 / MWh = 76,500 MWh Payback period 76,500 MWh 153,000 MWh/year = 0.5 years = 6 months The calculation above has been repeated for a worst-case scenario based on the following changes to the input assumptions: Capacity factor of 28%; Life cycle CO2 emissions of 34 t CO2 / GWh; Wind farm lifetime of 30 years; and Emissions abatement factor of 0.87 t CO2 / MWh [32]. The resulting payback period for a 50MW wind farm is just over 14 months. These estimates show that carbon emissions associated with the life cycle of a modern wind farm should be abated in well under 1.5 years of wind farm operation. For the Victorian wind farm example in Table 7.2 the wind farm emissions amount to approximately 2 per cent of the total emissions abatement achieved by the displacement of fossil fuel generation over the life of the project. * 24, 25, 26, 27, 28, 29 Assumed to be a representative value, based on a review of data published in ** Based on the recommended emissions abatement factor for Victorian wind farms,

34 8 Outlook for the industry 8.1 Expected growth in the Australian industry A possible scenario for growth of the Australian wind industry to 2020 is presented below. This forecast is based on a conservative GLGH forecast of the additional wind capacity that will be constructed to meet demand under the eret scheme. Figure 8.1 Projected Australian wind farm construction under the eret scheme Installed wind capacity per annum (MW) The forecast above corresponds with an additional 6.9 GW of wind capacity above existing levels being installed in Australia under the eret. This corresponds with average REC generation of around 75 per cent of the target in each year of the scheme to

35 8 Outlook for the industry 8.2 Barriers to deployment/development Inconsistencies in government policy can create a significant barrier to the development of a sustainable and thriving wind industry. The wind industry in Australia has experienced many periods of uncertainty over the last decade. It is important that a stable investment environment is provided for the industry for the remainder of the eret scheme, and importantly, in the period after operation of the scheme ceases. Federal and state planning laws are very important to the successful deployment of wind energy across the country. Consistency, transparency and rational assessment of development applications are important to ensure wind farms are developed in the most appropriate regions. For example, significant confusion has surrounded recent changes to the Victorian Government s planning guidelines for wind farms and this has discouraged some developers from pursuing new projects in Victoria. Power system issues relating to high rates of wind penetration will need to be addressed in order to ensure the long-term viability of the industry in Australia. Transmission systems in Australia and around the world have traditionally been designed to deal with production characteristics associated with thermal generation. Many studies have been carried out in Australia in recent years to prepare the National Electricity Market (NEM) for the inevitability of increased penetration of wind and other renewable generation. Modern wind farms are generally well-equipped to satisfy power quality and voltage management parameters. However, issues relating to reserve requirements and grid adequacy remain important considerations. Important steps have been taken in Australia to reduce the impact of variable wind output in these areas, for example, with the implementation of the Australian Wind Energy Forecasting System in However, significant further work still needs to be undertaken to encourage further penetration of wind energy into Australian networks into the future. The development and implementation of concepts such as Scale Efficient Network Expansions (SENE), which is designed to help promote the efficient connection of clusters of new generation to electricity networks over time, will be key to the growth of the industry in the long-term. Other high level issues which need to be addressed include interconnector limitations, which currently hinder the efficient import and export of energy between regions; this issue is particularly pertinent to South Australia and neighbouring regions at present. The design and overarching policies governing electricity markets and associated infrastructure will also need to be reviewed carefully to adequately reflect the overall benefits to the nation associated with increased renewable penetration in the long-term. Education of the general public in regards to the benefits and potential issues associated with wind energy will also be important to the success of the industry in the long-term. A vocal minority of groups opposing wind farm developments have received significant exposure in the Australian media in recent times. These groups often cite misleading or erroneous facts to support their claims. It is important that the industry as a whole works together to respond to misleading information in the general community. windenergy Review of the Australian Wind Industry

36 8 Outlook for the industry 8.3 Technology trends The ongoing development of wind turbine technology has primarily been driven by two significant trends: the move towards larger turbines and the emergence of new direct drive turbine models. LARGER TURBINES Between the late 1980s and early 2000s, the wind industry saw exponential growth in the size of wind turbines in the market. This trend has been driven primarily by economies of scale with larger turbines allowing total project costs per kw installed to decrease. Over the last 5 years however, this growth rate has slowed and turbines in the 1.5 to 3.0 MW range are dominating the onshore market. The offshore market is still driving development of larger turbines, with turbines in the 3 to 6 MW range considered for most projects currently in development 33. There are also a number of projects in the US and Europe that are developing prototypes of turbines up to 10 MW in capacity. These turbines will be primarily for the offshore market as it is unlikely that onshore turbines will continue to increase significantly in size due to landscaping and public amenity considerations. TREND TO DIRECT DRIVE TRAINS There has been a significant trend towards innovative drive train systems. Direct drive or hybrid systems with reduced gearing now feature in many new designs. Enercon has long pioneered direct drive and is the only company with a large market share delivering this technology. Other manufacturers such as Siemens, Goldwind and Dongfang are also now manufacturing direct drive turbine models commercially. The benefits of direct drive turbines over models with gearboxes include fewer components and therefore fewer component failures and wear and tear related problems. A more efficient drive train and the requirement for full power conversion means that power quality can be controlled which makes the turbines more compatible with electricity grids. There are drawbacks such as higher costs for the generator and power conversion equipment, and for the Permanent Magnet Generator (PMG) models there are concerns about the continued security of supply of the neodymium needed to manufacture the permanent magnets. Neodymium is currently mined mainly in Canada and China 13. The emerging direct drive turbine models are using PMGs rather than wound magnet generators which have previously been the norm (in Enercon turbines, for example). PMGs are also being used for a number of new turbine models, not just direct drive systems. windenergy Review of the Australian Wind Industry

37 9 References 1. Australian Energy Market Operator, accessed 06/04/ Government of Western Australia Office of Energy website, accessed 06/04/ Garrad Hassan report for the Clean Energy Council, Review of the Australian Wind Industry, April Australian Government, Department of Resources, Energy and Tourism, Energy in Australia 2011, accessed 05/04/ Mathias Steck, Garrad Hassan, The Asian wind energy market, Presentation made to NZWEA Conference 2011, April SKMMMA report for CEC, Australian Energy Market Quarterly Review: Review of December 2010 Quarter, March 2011, members area, accessed 28/04/ SKMMMA report for CEC, Australian Energy Market Quarterly Review: Review of June 2010 Quarter, August 2010, members area, accessed 28/04/ Department for Planning and Community Development, Amendment VC78, accessed 28/04/ Department for Planning and Community Development, Policy and planning guidelines for development of wind energy facilities in Victoria, planningapplications/moreinformation/windenergy, accessed 28/04/ Environment Protection and Heritage Council, National Wind Farm Development Guidelines - draft, July Global Wind Energy Council, Global Wind Report Annual market update 2010, March CBD Energy media release, CBD and China Partners establish AusChina Group, 18th April 2011, accessed 29/04/ BTM Consult, International Wind Energy Development World Market Update 2010 March Awerbuch, S., Morthorst, P. and Krohn, S (editor), The Economics of Wind Energy, European Wind Energy Association, March OANDA website, accessed 5th February Patrick Hearps, Dylan McConnell, Melboure Energy Institute, Renewable Energy Technology Cost Review, March SKM for AGL, Final Economic Assessment of the Hallett wind farms, accessed 07/04/

38 9 References 18. Dr Robert Passey for the Australian Wind Energy Association, Driving Investment, Generating Jobs: Wind Energy as a Powerhouse for Rural & Regional development in Australia, March Waubra wind farm newsletter, September 2010, Acciona Energy, accessed 08/04/ The Voice of Upper Lachan Shire, July 2010 edition, local newsletter, available from accessed 08/04/2011, 21. Wind in the bush, Wind power and Wind farms in Australia, accessed 08/04/ Pacific Hydro, Sustainable Communities Fund, Pacific Hydro, accessed 08/04/ Suzlon, Local content in Australian wind farms Presentation to CEC members wind energy workshop, August Dali Rani Nayak, David Miller, Andrew Nolan, Pete Smith & Jo Smith, funded by the Scottish Government, Calculating carbon savings from wind farms on Scottish peat lands - A New Approach, June 2008, accessed 11/04/ Lenzen, M. and J. Munksgaard, Energy and CO2 life-cycle analyses of wind turbines review and applications, Renewable Energy, (3):p Scott W. White and Gerald L. Kulcinski, Birth to Death Analysis of the Energy Payback Ratio and CO2 Gas Emission Rates from Coal, Fission, Wind, and DT Fusion Electrical Power Plants, March 1998 (revised February 1999), Fusion Eng. Des. 48, Vestas Wind Systems A/S, Life cycle assessment of offshore and onshore sited wind power plants based on Vestas V MW turbines, 2005, accessed 11/04/ SKMMMA for NSW Department of Environment, Climate Change and Water, Estimating Greenhouse Gas Emissions Abatement from Wind Farms in NSW, July 2010, accessed 13/04/ MMA report for Sustainability Victoria, Assessment of Greenhouse Gas Abatement from wind farms in Victoria, July accessed 12/04/ Department for Climate Change and Energy Efficiency, National Greenhouse Accounts Factors July 2010, accessed 08/04/ Department of Planning and Community Development, A guide to calculation greenhouse benefits of wind energy facility proposals, September 2009, accessed 27/04/ SKMMMA for NSW Department of Environment, Climate Change and Water, NSW Wind Farm Greenhouse Gas Savings Tool Standard.aspx, accessed 27/04/ European Wind Energy Association, Wind Energy The Facts (March 2009), accessed 8th February

39 APPENDIX I : Australian wind farm developers There are a large number of wind farm developers in Australia, from large multinational companies and national electricity generators to small community projects. The active developers are summarised in the table below. Developers involved in very small existing projects (less than 1 MW) that are not actively pursuing new projects have not been included. Acciona Energy AGL ANZ Infrastructure Services CBD Energy Energy Visions EPURON Acciona Energy have been active in Australia since The company develops and builds wind farms, as well as supplying the wind turbines. Acciona Energy have been involved in two major wind farms in Australia and have a number of other projects in the pipeline. AGL is an Australian integrated energy company. It includes retail and merchant energy businesses, power generation assets and an upstream gas portfolio. In October 2006 AGL and Alinta merged their respective infrastructure businesses. AGL is involved in a number of wind farm projects in New South Wales, Victoria and South Australia. In South Australia, AGL has constructed 4 of the 5 wind farms that make up the Hallett Project, totalling 351 MW so far. AGL is also developing the 420 MW Macarthur wind farm with Meridian Energy. ANZ Infrastructure Services Limited (ANZIS) are a specialist division of ANZ Banking Group Limited, representing private equity in the infrastructure and services sector. ANZIS are involved with Acciona Energy in the Waubra site in Victoria. The company purchased the operational MW Wattle Point wind farm in South Australia for $225 million. CBD Energy is a renewable energy company with interests in developing wind and solar energy projects, as well as emissionsreducing technology projects. A division of CBD Energy, CBD Wind is pursuing a joint venture with two Chinese companies: DaTang and Tianwei. The ambition of the joint venture is to develop one third of Australia s annual energy production within the next decade. Energy Visions is a wind energy company founded in Western Australia in 1996 and incorporated in 2001, with the specific purpose of implementing community owned wind energy projects. Energy Visions is developing the 104 MW Coronation Wind Farm near Geraldton in Western Australia. Taurus Energy commenced operations in mid 2002, and was incorporated in New South Wales on 24 April It was renamed EPURON Pty Ltd in January EPURON is a German company that develops and operates large-scale renewable energy projects around the world. EPURON is currently involved in the development Silverton wind farm near Broken Hill in New South Wales. EPURON sold a number of approved wind farms to Origin Energy. 36

40 APPENDIX I : Australian wind farm developers Eraring Energy Hepburn Wind Hydro Tasmania IFM Infigen Energy International Power Macquarie Group Eraring Energy owns two wind farms in NSW, at Crookwell and Blayney. The Blayney Wind Farm with a capacity of 10 MW was commissioned in 2000 and its output is sold under contract to Advance Energy for distribution to their GreenPower customers. Crookwell has a capacity of 5 MW. Hepburn Wind will be the owner and operator of Australia s first community owned wind farm at Leonards Hill, just south of Daylesford, Victoria. The 4 MW wind farm is currently under construction. Hydro Tasmania is an energy generator and retailer owned by the Tasmanian State Government. The company own and operate 28 hydro stations, one thermal plant, two diesel power stations, and one wind farm in Tasmania. Hydro Tasmania will be the owner and developer of half of the Roaring 40s wind farm portfolio, following the dissolution of the joint venture with CLP. Industry Funds Management (IFM) is a superannuation trust that enables Australian superannuation funds to access investment in Australian economic and social infrastructure assets. IFM invests in wind farms, among many other things. A division of IFM currently owns and operates Wonthaggi wind farm in Victoria. Infigen Energy, formerly known as Babcock & Brown Wind Partners (BBW), was initially formed in June 2003 and listed on the Australian Securities Exchange (ASX) in October Infigen Energy has an interest in a large number of wind farms in Asia Pacific, Europe and North America and operates the Capital wind farm, Walkaway wind farm and the Lake Bonney wind farms in Australia. International Power is an independent power generation company with interests in over 40 power stations around the world. International Power has ownership interest in various assets totalling 18,935 MW, and 149 MW in assets that are currently under construction. International Power owns and operates the Hazelwood Power Station in Victoria and developed the 46 MW Canunda wind farm in South Australia, which has been operational since Macquarie Capital Wind Fund is an investment fund jointly owned by Macquarie and a subsidiary of Martifer Renewables, a specialist renewable energy company with a pipeline of over 6,000 MW in wind, solar and hydro across 14 countries. Macquarie Capital Wind Fund is jointly developing the Silverton wind farm in NSW with EPURON. The Silverton wind farm will be over 1000 MW in capacity when complete. 37

41 APPENDIX I : Australian wind farm developers Meridian Energy Mitsui & Co (Australia) Meridian Energy is New Zealand s largest state-owned renewable energy generator. Meridian Energy was Australia s third largest generator of renewable energy until 2005, when the company sold its Australian subsidiary, Southern Hydro, to the Australian company AGL. Meridian Energy is developing wind farms in Australia and is involved with AGL in the 420 MW Macarthur wind farm in Victoria. Mitsui Australia s core business is in international trade and investment in mineral resources, energy, forestry plantations, agriculture, power generation and machinery sectors. The company is actively looking into new growth industries particularly in the fields of renewable energy. Mitsui Australia acquired the 104 MW Bald Hills project from the developer Wind Power Pty in 2008 and is planning to construct the project in the near future. NewEn Australia NewEn Australia is an Australian Company, established in 2003, owned jointly by two German companies with experience in wind energy. NewEn s focus is the development of wind farms in South East Australia. NewEn is has been given approval for development of the Salt Creek and Morton s Lane wind farms in Victoria, each for up to 29.9 MW. Origin Energy Pacific Hydro Origin Energy is a major Australasian energy company involved in gas and oil exploration and production, energy retailing, power generation and utility network management. In Australia, Origin Energy generates most of its electricity in gas-fired power stations. It operates four power stations and has interests in a portfolio of cogeneration plants. In May 2009 Origin Energy acquired Wind Power Pty Ltd, an acquisition that included a portfolio of 1460 MW of wind farms at various stages of development. Origin is currently progressing Stockyard Hill, Yass Valley and Crystal Brook wind farms. Pacific Hydro is a privately owned leading Australian renewable energy company with projects operating in Australia, Chile and Brazil. Wholly owned by Industry Funds Management (IFM), Pacific Hydro provides a sustainable infrastructure investment for around five million Australians (almost half of Australia s workforce) who have super invested in an industry super fund. In Australia, Pacific Hydro owns six operating wind farms in Australia with a total installed capacity of 260 MW. Pacific Hydro also owns a number of small hydro projects including the 30 MW Ord hydro project in Western Australia. Pacific Hydro also has around $2 billion of new wind energy projects it hopes to develop over the next five years as well as interests in conventional geothermal energy and large-scale solar PV. 38

42 APPENDIX I : Australian wind farm developers Roaring 40s (CLP Renewables/ Hydro Tasmania) Southern Cross Windpower / Renewable Energy Systems Synergy Wind Tianrun Transfield Services Infrastructure Fund Roaring 40s is a joint venture between CLP Renewables, a large electricity investor-operator based in Hong Kong and Hydro Tasmania, the state-owned Tasmanian electricity company. The aim of Roaring 40s was to develop and build a portfolio of wind farms in Australia. In April 2011 it was announced that the joint venture would be dissolved and the two companies would split the development and operational portfolio. Roaring 40s operates the Studland Bay and Bluff Point wind farms in Tasmania and the Cathedral Rocks wind farm in South Australia. The company is also currently constructing the Musselroe site in Tasmania and developing the Sidonia Hills site in Victoria and the Stony Gap and Robertstown sites in South Australia. Southern Cross Windpower is an unlisted public company backed by a group of private investors. The company s objective is the development, construction and operation of wind farms. In December 2003 UK wind farm developer Renewable Energy Systems Ltd (RES) announced the incorporation of a new subsidiary, RES Australia Pty Ltd, and the formation of a joint venture with Australian company Southern Cross Windpower. RES is currently developing the 105 MW Taralga site in New South Wales. Synergy Wind is an Australian company who identify and develop viable wind farm sites within Australia. It was founded in 2004 by a group with previous experience in renewable energy in Germany. Synergy Wind is currently involved in the development of a number of projects in Victoria, the most advanced of which is the 14 MW Yarram wind farm. Tianrun Australia is a division of Goldwind. The company is working in the Australian wind industry, although they do not currently have any wind farms in construction or operation. Transfield Services Infrastructure Fund is a public listed entity owning a portfolio of infrastructure assets including five power stations, two water filtration plants and four wind farms. Transfield acquired four operating wind farms from the Queensland Government entities, Stanwell Corporation and Tarong Energy. The wind farms are the 12 MW Windy Hill wind farm in Queensland, the 21 MW Toora wind farm in Victoria and the 34.5 MW Starfish Hill and 70 MW Mt Millar wind farms in South Australia. Transfield Services has development rights for 12 wind farms with potential total capacity of over 1,000 MW. 39

43 APPENDIX I : Australian wind farm developers TRUenergy Trust Power UBS Infrastructure Fund /REST Union Fenosa TRUenergy is owned by China Light and Power (CLP). CLP was founded in Hong Kong in 1991 and is one of the largest electricity investor-operators in the Asia Pacific region. In October 2005 CLP Renewables acquired a 50% interest in Roaring 40s Pty Ltd to provide a platform for the development of renewable energy projects, primarily wind projects, in Australia and Asia. See the Roaring 40s entry for further information. TrustPower Limited is New Zealand s fifth largest electricity retailer and is majority New Zealand owned. TrustPower, the second largest independent generator of power in New Zealand, owns and operates 33 hydro generation units and two wind farms. In South Australia, TrustPower has built and is operating a 90 MW wind farm at Snowtown. TrustPower is actively identifying and developing potential Wind Farm sites throughout Australia, including sites in South Australia, New South Wales and Victoria. The UBS International Infrastructure Fund is managed by UBS Global Asset Management. UBS is a global firm providing financial services to private, corporate and institutional clients. The Retail Employees Superannuation Trust (REST) was established in REST is Australia s largest superannuation fund by membership, with over 1.9 million members and more than $18 billion of funds under management. Collgar Wind Farm is owned by UBS International Infrastructure Fund (UBS) and Retail Employees Superannuation Trust (REST). Collgar will be the UBS Fund s fourth investment and its first greenfield acquisition. Union Fenosa is a large Spanish energy utility operating in both the gas and electricity sectors with a large portfolio of Spanish wind farms. Union Fenosa Wind Australia is a subsidiary developing wind farms in Australia. In July 2008 Union Fenosa signed an agreement with Tecnología y Mercado Exterior (TME Group) to purchase an 80% share in a wind farm development portfolio of 800 MW in Australia. TME Australia was formed in 1999 with the purpose of investing in the development and promotion of wind farms in Australia. In New South Wales, Union Fenosa is currently developing the 92 MW Crookwell II and 90 MW Paling Yards wind farms. In Victoria, the company is progressing four projects: Hawkesdale (62 MW), Ryan Corner (136 MW), Darlington, and Berrybank. 40

44 APPENDIX I : Australian wind farm developers Verve Energy Westwind Energy Wind Farm Developments Wind Prospect Verve is an electricity generation company that was created in April 2006 when Western Power separated into four businesses as part of energy market reforms in Western Australia. It is owned by the government of Western Australia. Verve Energy is involved in at least 11 relatively small wind farms in Western Australia, the largest of which is the 21.6 MW Albany wind farm. Verve Energy is investigating wind energy projects at Grasmere (an extension to Albany Wind Farm), Milyeannup on the WA south coast and Mumbida near Geraldton. Westwind Energy is an Australian subsidiary of the German group of companies, Westwind Group. Westwind Energy is currently involved in the development of two Victorian wind farms, Moorambool and Lal Lal, totalling 471 MW. Wind Farm Developments (WFD) develops, project-manages, finances and commissions utility scale wind farm developments and wind farm sites in New Zealand and Australia. WFD is currently developing a portfolio of wind farm sites in Victoria. Wind Prospect is a wind energy developer, constructor and operator, working in Australia, UK and Ireland. In late 2000, Wind Prospect set up an Australian joint venture company with Danish and US developers EnXco and Zilkha Renewables. In 2003, the joint venture was expanded to include SIIF Energies, the renewable energy arm of French Utility EdF, Wind Prospect Ltd (UK) and Australian interests. The company has been involved in a number of Australian projects including Canunda (46 MW), Hallett (420 MW) and Mt Millar (70 MW). Wind Prospect is also currently involved in the Dandaragan wind farm in Western Australia, the Sapphire project in New South Wales and the Willatook wind farm in Victoria. 41

45 windenergy For more information please contact the Clean Energy Council on or info@cleanenergycouncil.org.au visit cleanenergycouncil.org.au