ACT delays results of 200MW wind energy auction

The results of the ACT government’s ground-breaking wind energy auction will now not be announced until February next year, because of delays in the process.

The ACT auction sought bids for 200MW of wind energy capacity to be built to help the capital territory meet its ambitious 90 per cent renewable energy target for 2020.

It is currently the only bright spot on a bleak policy map of Australia, and the only policy that will currently deliver projects in Australia, given the fact that the national Renewable Energy Target is stranded because of Abbott government attempts to reduce it.

The ACT auction received 18 proposals for its first wind power auction accounting for more than 1,000MW of capacity.

The results were due to be released in December, but the government wrote to bidders this week informing them that there would be no public announcement until February.

However, preferred tenderers would be advised by the end of this week, and would then have two months to lock in funding to meet the conditions of the tender.

This is similar to the process the ACT adopted for its 40MW of solar auctions. The first of those projects, the 22MW Royalla solar farm, has been completed – the first utility scale solar project in Australia’s National Electricity Market.

The ACT is offering a feed in tariff to successful tenders that will be set by the results of the wind auction. This will last for 20 years, but because it will be fixed, and not adjusted for inflation, it is likely to attract higher bids than would otherwise be expected.

Some wind projects in Australia are considered profitable at around $85/MWh, although the cost in the US is around half that price due to local manufacturing and the sheer scale of the industry.

Two local wind farm component makers in Australia have had to cut their workforce in recent months because of the standstill in the industry.

ACT Minister for the Environment, Simon Corbell said in September that he considered it to be a “buyer’s market” and because of this the ACT could expect lower prices now than if the required investments were deferred to a later time.

Corbell said that as the costs of energy supplied by fossil-fuelled power plants will rise, the feed-in tariff mechanism will mean the costs to ACT electricity customers will decline from the first day of generation in real terms.

The 200MW of wind power is expected to provide about 24% of the ACT’s electricity consumption in 2020 and is key to the Government’s 90% renewable energy target. Another 50MW of capacity, including storage, will be auctioned next year, and up to another 250MW of wind or solar energy will also be auctioned in coming years.

Among those expected to have submitted bids are Union Fenosa, listed company Infigen Energy (which wants to expand its facilities at the Capital wind farm and nearby Woodlawn), and Windlab.

Most of the candidates are likely to be in the immediate area surrounding the ACT, but Corbell has said it will be open to wind farms further afield. This is likely to include the Hornsdale project in South Australia, now owned by Neoen and Megawatt Capital after a buyout of Investec Australia’s renewable energy portfolio.