Australia’s wind turbines may stop spinning as banks foreclose

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Wind farms in Australia may have to close under proposals put forward by RET Review panel, which is accused of ignoring financing issues.

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Australian analysts have warned that some of the country’s wind farms could be forced to close down under proposals made by the Abbott government’s RET Review panel.

Insiders are aghast at the assumptions made by the panel about the possibility of closing the scheme to new entrants and providing “grandfathering” arrangements for existing assets.

They say the proposals – and the assumption that LGCs, the certificates that are the currency of the scheme – will hold value are flawed, and the panel has not considered the basic refinancing risks of all projects under any scenario.

“I’m amazed at how flawed this document is,” said one close observer. “It is internally inconsistent, it is intellectually flawed … and it doesn’t even try to cover up its bias. It is 160 pages of self-serving logic.”

Another noted that almost every wind farm in the country will be up for refinancing for next 3 years. “They will be in major financial distress, and they are all at risk of falling over.”

While wind farms in Australia can have long term power purchase agreements out to 2030, the financing arrangements are much shorter, usually around 5 years.

This means that most, if not all, wind farms, will be up for refinancing in the next few years. When that happens, the major banks will review the state of the market, and are either likely to raise the price of debt, or do an “equity sweep” – calling on project owners to invest more cash.

None are likely to do so.

And in some cases – because the value of the LGCs will be effectively zero – as Bloomberg New Energy Finance has pointed out – and the price of wholesale electricity has fallen due to the removal of the carbon price and over-capacity brought about by the construction of thousands of megawatts of gas-fired generation – many wind farms will struggle to make debt obligations under current terms.

In its report, BNEF warned that a “whole host of Australian and foreign companies and lenders could be exposed to asset impairments, and almost all will suffer significant write-downs in the mark-to-market value of their investments.”

This dire situation was confirmed last week by Infigen Energy, which warned of potential bankruptcies last week (an extraordinary enough statement for a listed company). Infigen Energy head Miles George – who doubles as the chair of the Clean Energy Council – warned that many other companies are in a similar situation.

Those wind farms on merchant contracts are most at risk, but even those with PPAs have clauses which allow bankers to review the financing arrangements.

Analysts suggest that Australian banks will be mortified when they understand the full implications of the review panel’s recommendations.

“Every time there is a refinancing, banks redo the base case model for the project. As the situation gets worse – with a lower LGC price – they will have to squeeze all of their parameters to make sure they get repaid,” one said.

“When they pull all those levers – a shorter amortisation period, a higher debt-equity ratio, then the equity holders are going to have to tip in additional capital to keep the projects going. The project owners are not in position to do that.

“And if the equity holders start falling over, banks might be left with wind farms to run and operate. But there will be no real market left, and no real market value in those projects. It may be that they have to turn them (the wind turbines) off.”

Even the other scenario recommended by the RET Review panel – that of downgrading the target from its current level of 41,000GWh to a “real” 20 per cent target of around 25,000GWh with targets set annually, would not be practical.

Analysts warn that there would unlikely be any new entrants because of the price uncertainty with rolling targets and – as a result – the higher cost of capital.  It is highly unlikely that any Australian bank would provide debt finance in these circumstances.

All of Australia’s big four banks are at risk, but particularly NAB and ANZ, who have project financed most wind farms in Australia.

bnef debt

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  1. Motorshack 5 years ago

    The initial pain in this situation will be felt by the renewable energy industry, but I should think it will spread far beyond that.

    If you think about it, what the Abbott government is doing is to arbitrarily change the entire legal foundation for an industry, purely for the short-term gain of its cronies and close supporters. That is the sort of thing usually associated with the dictatorial governments of banana republics, not First World industrialized democracies like Australia.

    So, if we go back and see what usually happens to the economies of banana republics, it might tell us something about the future of Australia. Namely, no foreign investor with a grain of sense will put any money into such a place.

    Thus, the problem here is not likely limited to renewable energy projects, or the exposure of Australian banks to that risk, but might also kill the foreign investment in projects favored by the Abbott government, such as the expanded coal export capacity that is being largely funded by foreign investors.

    After all, some future government could just as abruptly reverse the policies of the Abbott government in order to kill the coal projects and to reinstate the renewable projects – thus confirming the inherent instability of the Australian business and legal climate.

    In short, the motto of the Abbott government should perhaps be: live by the sword, die by the sword.

    • suthnsun 5 years ago

      I agree with your logic, that would be a welcome silver lining if coal projects were adversely effected. I would certainly put this government to the sword. The process of the RET review seems quite illegitimate but does not seem to be getting the attention it deserves. There are legitimate double dissolution triggers in the Australian system and they must be close at hand with the Senate rightly resisting the budget which could not be said to have a mandate.

      • Motorshack 5 years ago

        Well, while I’m glad that I seem to make sense to you, the possible effects on the coal industry do not strike me as much of a silver lining if the business climate of the whole country is seriously damaged on a long-term basis.

        In any case, as someone with a fairly strong background in biology, what worries me most is not fossil fuels (although they are certainly a big problem), but our unsustainable farming practices. Even if we did not have global warming to worry about, we would still be on the ragged edge of a lethal worldwide food catastrophe.

        And, if you think it is tough getting people to pay attention to the RET review, try talking to them about the loss of topsoil, the near-exhaustion of world phosphate reserves, or the desertification of 40% of the world’s agricultural land in the last forty years (among many other nasty, but very obscure things).

        In the long run Mother Nature will almost certainly have the last laugh, and my best bet is that in one to two hundred years all of our surviving descendants will be either medieval subsistence farmers or, more likely, old stone age hunter-gatherers.

        Against that, killing a few coal projects is a triviality.

        Sorry to say.

        • suthnsun 5 years ago

          I dunno MS , you seem to be making a good case for the benefits which may be inherent in damaging the business climate on a long term basis. While I don’t support arbitrary, illegitimate and illegal undermining of the business environment ( intrinsically conservative am I) I do support a managed, intentional and agreed rebalancing and contraction of the global economy – for precisely the reasons you advance. Put simply we have a delusional affluence which relies on not taking account of destruction of natural capital and the account will soon fall due as you say. I think we passed multiple inflection points in the recent past and the headwinds of subtly adverse conditions will soon step right into full-on waves of catastrophe. We can’t avoid that but we can still make orders of magnitude difference to the suffering which will ensue if we face our predicament intelligently and cohesively.

          • Motorshack 5 years ago

            Sorry, no, if you think I actively prefer a nihilistic point of view then I probably have not been entirely clear. I have children, and I care very much that they have a habitable world in which to live.

            Moreover, I have done my damnedest to make sure that they do really understand these existential threats. Among other things, my youngest is about to graduate with a degree in marine biology, and I do certainly hope that he puts that education to the best possible use.

            My point is rather that the short-termism that is blatantly evident in the fossil fuel industry is equally strong in the world of corporate agribusiness, and it is far more dangerous in the very short term.

            As for minimizing the problem by several orders of magnitude, I fully agree. There is a great deal that could be done to improve our farming methods, and actually stop or reverse both loss of agricultural productivity and global warming.

            In particular, if we were to restore the normal carbon content of soil on a global basis we would yank enough CO2 out of the atmosphere not just to stop global warming, but to reverse it entirely.

            I say again, reverse it entirely.

            Ditching fossil fuels would also be necessary, but that will only slow global warming, not stop or reverse it. To do that you need to take the carbon back out of the atmosphere, and the only real way to do that is by growing enough plants in the right way.

            So, yes, I am very pessimistic, because the biology is far more complex an issue than merely substituting solar panels for coal.

            However, if I had some perverse need to see the human species collapse, I would just shut up and wait for it to happen. I would not be here talking about the problem.

          • suthnsun 5 years ago

            No, I was not seeing you as preferring nihilism. I’m not sure whether you are equating ‘managed contraction’ with nihilism? I don’t see what I am suggesting as nihilism at all, though it would deconstruct and recast all economic theory and practice with realistic boundary conditions , the required transitions pass necessarily I think through a chaotic field , which is why we need widespread conscious consent , legitimate social contracts, resolve and leadership. I have children and grandchildren.

            How much carbon is involved in soil restoration to ‘normal carbon content on a global scale’?

          • Motorshack 5 years ago

            Sorry, evidently I found something about your last post confusing. Clearly we are largely in agreement on these issues.

            As for carbon in the soils, the arithmetic is quite stunning.

            At present the carbon in the soil is about three times what is in the atmosphere, yet most agricultural land is now holding about 50% of the amount that is normal in virgin soil. So, just bringing soil carbon part way back to normal would entail removing all of the excess carbon from the atmosphere.

            Also, there are people already doing agriculture that does just this, along with restoring much of the biodiversity of the land as well. For the details of one example see Restoration Agriculture by Mark Shepard.

            The problem is that these methods require a very sophisticated understanding of the biology involved, so there is a steep learning curve for the average farmer.

            Also, this approach is absolute anathema to big agribusiness, because there is no market at all for what they normally sell. No artificial fertilizers, no pesticides or herbicides, no hybrid GMO seeds.

            So, they are pulling every string possible to keep their preferred methods in place, even though they are almost certainly leading to a major collapse one of these days.

            Finally, the average citizen is totally clueless about any of this. So, there is effectively no political pressure to change. The push by voters for renewable energy is far stronger, even though that is also far from overwhelming.

            So, I am seriously concerned that we will blindly cruise right over the edge one of these days soon, with no one the wiser, until far too late.

          • Greg 5 years ago

            The problem is that wind farms are uneconomical. I’ll be glad for anything that will reduce my power bill. I’ve got better things to spend my money on.

          • Alen 5 years ago

            When it comes to generation technologies wind farms are more economical than coal generation when you consider all the costs and externalities in the price as you should. For instance the IMF estimated $20 billion in subsidies went to FF in 2011 here in Australia (versus $2 billion for the RET), Doctors for Environment Australia conservatively estimate $2.6 billion annual in health cost from coal-fired power generation and then there are all the environmental costs arising from the destructive nature of coal projects in general, e.g. massive land clearing for mining, thermal pollution in water bodies from power generation, and not to mention the extreme cost associated with air pollution and climate change.

            Also it was the FF-biased review panel itself that said RET will lead to lower power prices in the future. Removing the RET and halting wind farms will therefore logically cost you more, even if the market continues to ignore and not price all externalities

          • Colin Nicholson 5 years ago

            Can you supply a reliable refrence for that thanks Greg?

          • Thomas Stacy 5 years ago

            Are you kidding, Colin? Reliable references abound that wind electricity machine levelized cost far exceeds levelized financial recovery through markets agnostic to source but sensitive to dependability to demand induced dispatch instructions. At a 20 year lifespan in a 35% CF regime and $2 Million (USD) per MW, the devices would break even at time weighted wholesale energy prices in about 20 years. Add to that debt service, insurance, lease payment obligations fixed and variable management and maintenance, and you have a bona-fide subsidy pig backed by bona-fide rent seekers (aka thieves protected by law).

          • Colin Nicholson 5 years ago

            Thomas Stacey …So reliable in fact that you can’t quote one ….heres one for the brazilian market 127 GE2.2s for 450 mill all set up ready to go. The 2.2 is good for 8GWHr a year which conveniently makes the even TWHr for 127 of them or 50 mill/year at $50 per MWHr generating a 20 year return of a cool billion. More than enough…. and spare me the waffle

          • michael 5 years ago

            so Colin, essentially your saying this article is highly flawed, as the current wind capacity can easily compete with other sources for the grid?

          • Colin Nicholson 5 years ago

            Yes it can, provided the provision of finance is not encumbered by changing circumstance. The crux of the argument is that by withdrawing guarantees, risk increases and when risk increases the cost of finance increases. You get a guarantee from a franciser that your turf as francisee is a certain size and the bank assesses your prospects as good – gives you a 20 year morgage, and then come the renewal of the francise in five years and your turf is halved and the bank assesses your risk as high and up goes the interest on the morgage – you go broke. Oh and that doesn’t even consider that with your guarantee changing, the big boys then wouldn’t resort to predatory tactics – of course they wouldn’t

          • michael 5 years ago

            why is the turf halved? I’m pretty sure the wind operators can sell as much power into the grid as they want. The ‘grid’, just isn’t forced into buying as much if the RET target is reduced. So, that remaining portion that is now subject to purer market forces I would think. If this change, making it compete heads up against other sources, changes the financing conditions of the loans enabling the projects to exist, I think you’ll see where I’m going with this

          • Colin Nicholson 5 years ago

            ” I’m pretty sure the wind operators can sell as much power into the grid as they want” Try running that past a bank manager as a sureity. or ….. I’m pretty sure I can get a job and keep it so give me a morgage

          • michael 5 years ago

            spot on Colin, without anyone being forced to buy the capacity they are going to struggle. which will in turn potentially affect their ability to borrow. not debating that in the slightest, however with your proposition of them being inherently competitive, this wouldn’t be a problem. just show the bank how your cost of generation is competitive….

          • Colin Nicholson 5 years ago

            But they won’t have a market. This is coles and woolworths transferred to the electricty market. Bank managers are not interested in price predictions – they are interested in contracts. If for any reason middle men running a monopoly decide to shut you out, then you are finished. Just look at the milk business – yes, as a small farmer you need to put forward bankrupcy type prices to be competitive, but even that does not get you a contract. And then you have the price distortions that monopolies produce. As a brown coal burner in Victoria, you can easily underbid for electricity. You know that the Government will always pick up the tab if anything goes wrong – your pit might for instance cut a major highway or catch on fire – or you might forget to make allowance for the capital for new plant replacement – no worries – governments always bail out monopolised utlities. Australia can in no way laugh at Europe for becoming so dependent on Putin’s Gas – we have created our own despotic monopolies

        • Alen 5 years ago

          Environmental concerns in general have largely always been ignored not because people do not care about it, but because there is a lack of information about the issue or because there is a feeling of helplessness about the issue. Now as you say desertification is a significant issue that is largely unknown to the public, global warming and stabilising GHG emissions and atmospheric concentrations has had a similar beginning, and even though the IPCC reports in particular have tried to make the public more informed and aware of the issue, it was in my opinion not until renewable technologies in relatively recent years dropped in price that the public started more broadly acknowledging the problem. This was because now they could actually do something on a personal level to contribute to the solution.Of course there were also many financial reasons involved, but my point is that this is an important starting point. For example, a council or community that wants to become more sustainable now-days always seems to initially set a renewable energy (electricity) target, soon to be followed by other sustainable processes. It is these individuals starting at the low and personal level that than push or elect authority figures with a sustainable approach in mind. So in other words, by creating a starting point in cleaning up and making our electricity sector more sustainable, we push the issue of sustainability on other parts of our economy and hopefully begin on the path of “development that meets the needs of the current generation without compromising the ability of future generations to meet their own needs”

          • Motorshack 5 years ago

            I once had a friend who was a retired fighter pilot, and he used to say, “show me someone who is not afraid, and I will show you someone who just does not understand the situation.”

            That is how I feel talking about agriculture. It is far and away the most dangerous problem we face, and yet almost no one is worried. I can only assume that that is because they have no idea what is really going on.

            They don’t know that global food production peaked a decade ago, and has been declining at an accelerating rate ever since. They don’t know that a lethal game of musical chairs has already started quite some while ago, and that the only way to quit the game is to die.

            The particularly nasty thing is that there are half a dozen largely independent threats to our food supply, and that together they constitute a “perfect storm” of enormous proportions. Worse yet, none of these things is easy to fix, never mind all of them at once.

            Norman Borlaug, the guy who got a Nobel Prize for starting the Green Revolution, warned fifty years ago that his work was just a stopgap for a couple of generations. That time is now up, and things are working out just as he was afraid they would. Yields are going down again, population is still rising, and almost no one of consequence is advocating anything except more of the same.

            Your reaction is entirely typical. You see it as sensible and reasonable, while I see it as cause for absolute despair. As with global warming, when the problem becomes too obvious to ignore it will also be too late to do much about it.

            The difference is only that the threats to our food supply are going to get us a lot faster than climate change will.

          • Ronald Brakels 5 years ago

            Motorshack, there are definite reason to be concerned about the state of world agriculture, but fortunately global food production did not peak a decade ago:


            In that time absolute poverty has decreased and average lifespans in developed countries have increased. Can this be maintained? Well, I certainly hope so, but we definitely should be taking better care of the environment than we do.

          • Motorshack 5 years ago

            As my mother used to say, “consider the source”.

            The World Bank is, by definition, run by bankers, who have been notoriously bad at protecting the environment. Among other things they are still funding big coal-fired power plants in some places.

            I am getting my data from agricultural experts, such as Lester Brown, the UN Food and Agriculture Organization, and lately Mark Shepard, the author I cited above. Their analyses are dramatically less sanguine, although all are offering sensible solutions, if only the average citizen were not too clueless to notice.

            Also, improvement of life expectancies in the industrial countries is hardly the whole story. Life expectancy in Russia dropped dramatically in the 1990s, and in places like Kenya it is stuck in the mid-40s, or actually dropping.

            Nearly a billion people have no food security, several million children die every year from preventable water-born infections, and the richest billion go right on whingeing because their smart phones are a trifle too expensive or require a two-year commitment.

            The big agribusiness corporations cannot be trusted to do the right thing any more than the fossil fuel industry can. They are in it for the massive short-term gain, and that is all they think about.

            And you can be sure they are putting out the sort of propaganda needed to keep the voters as compliant and as complacent on the issue as possible.

            You are a smart guy, Ron, and I have followed your comments for years, so I know that you mean well, but most people these days have no direct experience with agriculture, so they do not have a clue.

            In contrast, I come from a family full of farmers, I have worked on farms as a teenager, I was once married to a farmer, and I was also a biology student in college for several years before switching majors to computer science.

            So, for me, the lies being told about the state of agriculture are utterly transparent, and what those lies are concealing is a disaster that is already killing people in very large numbers.

            Everyone reads those news stories, but most people assume that they are the exception, and that we are mostly okay, in most places. In fact, those disasters are on the ragged edge of becoming the norm on a global basis. Not everywhere all at once, to be sure, but, still, increasingly, the norm, and eventually nearly everywhere.

            Finally, I probably sound like Chicken Little, but if you knew me you would realize that I am actually very hard to scare.

            I once met a bomb disposal expert on leave, and he was wearing a T-shirt with the following printed on the back: “If you are reading this, then you should be running faster.”

            That’s me talking about agriculture. I know how to grow my own food, even in a badly degraded world, but you probably don’t, and I’m just trying to give you fair warning.

            So, take comfort in your banker’s statistics, if you like, but I am making other plans.

          • Motorshack 5 years ago

            Yes, I have seen Savory’s TED talk also, and some others of his. Unfortunately, there is a lot of controversy about his claims, which is too bad, because it would be nice if something that simple could solve the problem.

            George Monbiot, the Guardian columnist, who is also a graduate in zoology, interviewed Savory a few weeks ago, and tried to get him to answer some basic questions on things like peer-reviewed studies supporting his claims, but apparently he dodged the questions pretty consistently. That is decidedly weak from a scientific point of view. After all, there are a lot of people studying this problem, and even a few who have tried to reproduce Savory’s claimed results. However, those few studies were inconclusive at best, according to Monbiot’s cited references.

            Interestingly, Monbiot’s column provoked a rebuttal from Hunter Lovins, thoroughly castigating Monbiot for being unfair to Savory. However, while both Monbiot and Savory can at least claim real degrees in biology, Lovins is a lawyer and sociologist, with no evident training in science at all, much less rangeland ecology. So, her rebuttal is a little weak as well.

            So, you might want to look more into the issue, before getting too wound up about Savory. He may be on to something, but apparently he has not proved the point conclusively yet, and may not actually be trying to do so, if the suspicions of some of his detractors are anything to go by.

  2. Dan Wrightman 5 years ago

    I’ve always maintained that money is what put the wind turbines up
    and lack of money is what will bring them back down

  3. George Papadopoulos 5 years ago

    If wind turbines stopped working, I will be able to enjoy living at home again!

    • Warwick 5 years ago

      Sure, busy concocting another homeopathic remedy to another non-existent illness…

      • George Papadopoulos 5 years ago

        Warwick – nice display of your human decency! No respect for people’s right to live in a peaceful environment or anything – just ridicule and irrelevant nonsense!

        • Colin Nicholson 5 years ago

          Finally somebody who has been forced out of their home by WTS and will admit it. When and where … the data is needed urgently

          • George Papadopoulos 5 years ago

            Oh – just one strange human being that thinks ridicule and mockery are decent art forms for victims of developments! Hope this isn’t a consistent pattern amongst those who worship those idols called wind turbines?

          • Colin Nicholson 5 years ago

            So what are we to think? All we get is posters who talk about being forced out, but won’t say which development caused the issue… which turbine type …. which wind pattern …

          • George Papadopoulos 5 years ago

            So Colin, could I comfortable assume that you take Chapman’s “research” seriously and don’t go searching on the net for stories published in official media, research papers etc, of what low frequency noise does to people’s living environments?

          • Jon 5 years ago

            Sorry George, its hard to take someone seriously who believes they can here low frequency noise from 100km away – as you have previously claimed. I guarantee as a city dweller I am exposed to far more low frequency noise than you – without complaint!

          • George Papadopoulos 5 years ago

            Jon, have you ever heard of patterns? qualities? Water is a chemical, so too is cyanide. If 2L of water is safe to drink, what makes 1g of cyanide so lethal?

          • Alen 5 years ago

            There is a wide range of research on the impact of wind turbines and health undertaken by both small and large bodies/corporations, with medical conclusions consistently stating that there is no link between the two, but rather a perceived link caused in large by anti-wind turbine advocates who are known to make quite the noise on these scientifically disproven ailments. You can therefore understand that informed individuals will be and are justifiably skeptical of claims made by a very small number of people that they are in fact experiencing health impacts.

          • George Papadopoulos 5 years ago

            Alen, there is one group of researchers who think anti-wind turbine advocates are to blame for illnesses around wind turbines, and this research was not even cited in the recent NHMRC review on wind turbines and health. So I think your claim of “medical conclusions” is a little erroneous at the least.

    • Jouni Valkonen 5 years ago

      can I ask you something. What level of compensation you would be satisfied, if wind power providers had to pay you proper compensation, because you are living in proximity of wind turbine?

      Large wind tower can make several hundreds of thousands of dollars of year, so even quite hefty compensation would not be significan in their balance sheet.

  4. Ronald Brakels 5 years ago

    The maintenance cost of keeping wind turbines operating is much lower than than even the current low average wholesale eletricity prices, so turbines won’t get switched off. However, further tarnishing of Australia’s reputation as a good place to do business is definitely achievable.

    • Andrew Woodroffe 5 years ago

      I agree the operating costs of running the turbines is lower than the wholesale price of electricity. It is the paying of bank debt that could be the issue. Depending what percentage of capex was borrowed and how quickly it is be paid off, some projects could be in real strife. The investors get paid last. In the worst case, banks will foreclose, then resell to competitors who will then buy at lower capex, with the original investors loosing out. The 3200MW fleet we have will keeping spinning. But we are unlikely to get any more projects for quite some years, along with the economic benefits they deliver to the rural sector.

  5. Andrew Woodroffe 5 years ago

    So NAB and ANZ have nearly a billion dollars each in Oz renewables. Question is, how does this compare with what they have in coal?

    • Andrew Woodroffe 5 years ago

      Well, ANZ have $6.7 billion and NAB have $4.4 billion. We are at a point where it is one or the other . . .

  6. nastybrutishshort 5 years ago

    Everything will fall on the taxpayers’ shoulders; the rich men have made their piles and make off like banksters with our tax money; to my way of thinking, we should be acting small; every house has a roof; Add solar; then we’ll have local infrastructure which is how it should be, not all huge noisy blighting turbines forced on small rural communities whose members don’t have voices in the urban shouting. I’m angry at the loss of my peace, which I came a long way to find.

    • Colin Nicholson 5 years ago

      Once again … which rural community?

  7. TwoFingeredTypist 5 years ago

    Wind doesn’t turn IWTs – government subsidies do.

    • Colin Nicholson 5 years ago

      See Brasil

  8. Richard Mann 5 years ago

    What nobody wants to hear. Bad news about Wind Turbines.

    Wind Turbines in Ontario, Canada.

    1. Health impacts of Wind Turbines. Invited talk at University of Waterloo,
    new DOT livestream DOT com/itmsstudio/events/2968290.

    2. Ineffectiveness of Wind turbines at reducing C02:
    ospe DOT on DOT ca/?page=adv_pub
    Go to report 2012, “Wind and the Electrical Grid”. Lots of other stuff there.
    OSPE is “Ontario Society of Professional Engineers”, those responsible for Generation, Distribution and Billing of Energy in Ontario. They are also the ones building Wind turbines…

    3. Economic failure of Wind Turbines:
    atguelph DOT uoguelph DOT ca/2013/06/prof-questions-benefits-of-wind-turbines/

    • Colin Nicholson 5 years ago

      The OSPE report is interesting, because the crux of the argument was that if wind electricity output grew, then nuclear would need to be shutdown and in response to nuclear’s poor startup capability, gas and coal produced electricity would grow. The results in 2013 actually turned out to be the opposite, wind up nuclear up, gas and coal down, exports up.
      The professors analysis starts with the proposition that wind can only provide 1/7 the output of electricity for the installed capacity that fossil fuels can produce. Coal can operate at about 90% (somewhat less in Ontario), Ontario wind in 2013 operated at about 32% or 35% in comparison …… and from then on his arguments go from bad to worse.
      Check out the actual results at

  9. michael 5 years ago

    why is the surplus supply equated to gas power plant construction? wouldn’t the aggregate supply include all sources, including the recently installed wind power?

  10. Jon 5 years ago

    “and the price of wholesale electricity has fallen due to the removal of the carbon price and over-capacity brought about by the construction of thousands of megawatts of gas-fired generation…”

    What? What happened to the merit order effect of renewables lowering the price of wholesale electricity making it cheaper for consumers? As an industry we can’t now point the finger at gas fired generation that hardly ever runs. There is 9000MW of oversupply partially because of the RET reducing demand. The scheme is set up such that each new project reduces the business case for the next. It needs a rethink!

    This article also fails to recognize that bulk of the risk in the wind industry is borne by those who hold the long term PPAs and allowed the banks to finance the projects in the first place. For some reason you overlook that ironically its “the dirty three” retailers who hold most of the risk here…with the exception of those bold enough to operate merchant plant. The suggestion that wind turbines will be switched off is ludicrous!

    • Colin Nicholson 5 years ago

      Sorry but your agument seems the wrong way around. In Victoria for instance, Brown Coal has just leap-frogged the merit order because it is now $20 a megawatt cheaper with the removal of the carbon tax. It is difficult to determine a wholesale price for brown coal based electricity, but it may have just been halved. If you accept that taxpayers are going to pick up a lot of the costs around brown coal (including the generator replacement capital cost), then it will always be artificially cheaper for making electricity.

      • Jon 5 years ago

        My point here is that the renewables industry (of which I am a part) has been selling itself on the idea that it lowers the wholesale price of electricity…which it does. But this article blames too much gas fired generation for the low wholesale prices which is simply not true. We can’t be out there saying that low wholesale prices are one of the benefits of the RET and then complain that low wholesale prices wont support a business case for new projects. This is the frustrating part and its why I think the RET needs a rethink!

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