The wind farm that ate the RET  

Giles Parkinson at The Climate Spectator has a look at wind farm developments in Australia - The wind farm that ate the RET

In Australia’s renewable energy market, fortune favours the quick and the big. The $1 billion Macarthur wind farm to be built in south-western Victoria is being touted as the most significant renewable energy project in Australia since the Snowy Hydro. But don’t expect another project of similar ambition to follow anytime soon, even though there are a couple on the drawing board – there’s simply no room left in the market.

Macarthur has been a long time in the planning for AGL, it’s just been waiting for the opportunity provided by the passage of the Renewable Energy Target.

Just over a year ago, AGL suggested Macarthur would be around 330MW-360MW, but improving technology and the opportunity provided by the passage of the RET means it has been able to upgrade the size of the facility by a quarter over its original estimates.

Instead of using 2.1MW turbines it has used elsewhere, AGL announced on Thursday that it will use new model 3MW turbines manufactured by Vestas, enabling it to boost the size of the plant [to] 420MW and reduce the number of turbines to 140 from 174, providing a significant saving in operating costs.

That’s terrific news for AGL and its joint partner in the project, Meridian Energy, and for its suppliers and contractors Vestas and Leighton; but not so good for others, particularly the independent developers who are finding it difficult to get long-term power purchase agreements to satisfy their financiers.

In a single bound, the Macarthur wind farm takes the size of the committed wind farm pipeline to more than 1000MW. Wilson HTM analyst Jenny Cosgrove says the size of this pipeline – another 150MW from two projects due to be completed this year, another 382MW from five projects in 2011, and the 203MW Collgar wind farm in WA in 2012 – means that the price of renewable energy certificates could remain at current levels of $40/MWh for longer than expected. That’s not enough to get most projects off the ground.

Cosgrove says the wind farm pipeline means that LRET is rapidly approaching a balance of supply and demand in 2011-2013, and this is before the excess current banked supply of small-scale RECs, which she estimates to be more than 21 million by end 2010, is transferred into the large-scale RET.

“It will take a number of years before this excess supply is absorbed,” says Cosgrove. Which means that many other wind farms currently in the planning stage may struggle for a window of opportunity, of even financing, for a few years yet. ...

The real test of that estimation will come in years 2016 and beyond, when the RET target will scale up dramatically towards it 2020 target of 41 million MWh. By then, wind might have some serious competition from solar thermal, if Lend Lease is right about the pricing of solar PV, as well as some geothermal projects.