Bowen says struggling wind projects can rebid, but won’t be able to change their contract

Federal energy and climate minister Chris Bowen says wind farm developers who are struggling to get finance for the projects – despite being offered an agreement under the government’s flagship underwriting scheme – will be able to re-bid, but won’t be able to change their contracts.

Wind energy projects have struggled to get going, largely because of rising costs, transmission delays and the inability to seal significant off-take deals with the country’s big four gentailers and other corporate buyers.

There has been speculation about possible changes to the CIS since Bowen first acknowledged the difficulties with wind energy in an episode of Renew Economy’s Energy Insiders podcast in late April, where he said wind will “require further work.”

However, Bowen has since rejected the suggestion that contracts could be renegotiated, but said on Wednesday morning that project developers could re-submit bids in later auctions.

“No, we won’t be doing that,” Bowen said when asked about the potential for renegotiations of wind projects. He was speaking at the announcement of the results of the latest battery storage tender.

“The economics of wind are more challenging. That’s publicly recognised. The economics of wind have recently been more challenging than the economics of solar, and that’s a global situation, including in Australia.

“If a company is not able to comply with what it told the Government it would do when it won its auction, it is welcome to withdraw and bid again with new economics, and we’ll consider that.

“But we won’t be renegotiating things that have previously been agreed.”

Only one wind project is currently being built in NSW – the 414 MW Uungula wind project – despite the state being the country’s biggest grid with the most coal capacity, and all of this due to close in the next decade.

Only a handful of other smaller wind projects that have won agreements in the Capacity Investment Scheme have landed finance across the country.

The only major corporate buyers for wind energy have been the likes of iron ore giant Fortescue, and Rio Tinto – for its giant smelters and refineries in Queensland – and most of the other contracting has come from state-owned utilities like Synergy and Victoria’s SEC.

Some 31 wind projects have won CIS contracts, and only three have made it to CID – Palmer, Waddi and Carmody’s Hill.

Of the remaining 28 projects, ten of these only won their tenders in late May, so cannot be expected to have reached that milestone yet. Some of those new winners – such as Theodore and Yanco Delta – have indicated FID could be reached later this year or early next year.

Bowen told Renew Economy last month that the bidding in the latest CIS auction from wind projects had been more realistic.

“The good thing about these wind project, Yanco Delta being the most notable example, winning support under the CIS auction, is that they’ve put in the economics of today, not the economics of a few years ago,” he said on May 29 at the launch of an expanded vehicle-to-grid project.

“The projects that put in bids with the economics of a few years ago are struggling, and you that’s no secret, but the projects that are bidding into the auction today and are winning include wind, so that indicates that we are getting the balance right.”

David Dixon, who tracks the market for Rystad Energy, says that many of the winning bids in the first auctions were pitched too low.

“The banks need the contracted revenues to cover their debt and their margins,” Dixon told Renew Economy. “The problem is that many of the projects have bid so low it is way below that.

“It doesn’t enable the debt providers can cover them, so they need power purchase agreements to provide that certainty …. and at the moment no one is signing PPA’s.”

Of the six winning wind projects in the first CIS generation tender announced in 2024, only one has reached FiD – the Palmer wind farm. Another, Goyder North, is expected to go ahead because it has a PPA with BHP to help power its giant Olympic Dam mine.

However, another Neoen project, Thunderbolt, is thought to have not signed the contract, while others such as Acen’s Valley of the Winds are held up in the planning process.

Origin Energy’s Yanco Delta, which could be the biggest wind farm at the country at 1.45 gigawatts, is expected to go ahead at the end of this year, but it is dependent on Origin finding an equity partner for the project.

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