APA says policy uncertainty killing new investment in wind and solar

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APA shrugs off RCR collapse to complete Darling Downs solar farm, but says new investment in renewables won’t happen until there is policy certainty.

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Emu Downs solar and wind farm.
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APA, the listed infrastructure company that makes most of its money from building and operating gas pipelines, has warned that the ongoing uncertainty around federal energy policy will kill any new investment in wind and solar farms.

APA owns the Emu Down wind farm in Western Australia and recently completed the neighbouring Emu Downs solar farm, the first co-located facility in the state.

It has also completed the Darling Downs solar farm in Queensland, and expects to complete the Badgingarra wind and solar facility in W.A. later this year.

However, CEO Mick McCormack warned on Wednesday that there will be no further investment because of the heightened risk around energy policy.

“we will continue to look at renewable energy,” McCormack told analysts in a conference call. “But changing the (company’s) risk curve to match the uncertainty in the market is unlikely.

“We like renewable energy, it gives us consistent risk return profiles …. and if we can replicate those we certainly will be investing under a clearer policy framework.”

McCormack later told RenewEconomy in an interview that the company has a “great appetite” for new investment in wind and solar.

“Any project that comes along that fits into that (risk profile), we have got balance sheet to pursue it,” he said. “But until we get a bit more policy certainty, the opportunities in renewable energy are a bit thin on the ground.
“That’s temporary, hopefully. We are facing a federal election, I think we will see some policy certainty on the other side of that, whatever the result.”
APA had not yet completed the Darling Downs solar project in Queensland when its EPC contractor, RCR Tomlinson, collapsed and the administrators closed the solar construction division, which had been at the core of its problems due to cost blowouts and connections issues.
McCormack said the construction phase was 98 per cent complete at the time, but completing the remainder and going through the final connection and commissioning process was the “high value” end of the project.
“We were sort of bent over the barrel in that respect. But we were lucky, we had the technical expertise and it didn’t cause us any more fuss than for many others.
Darling Downs is now complete and and its wind and solar farms at Badgingarra are also in the final stages of completion.
McCormack also saw opportunities in hydrogen, and the company is looking at a pilot project near Dalby that will seek to use excess wind or solar to create hydrogen, and inject it into the gas network, although he said that the high pressure pipelines could only accommodate about a 10 per cent mix.

 

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Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.


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