Infigen Energy has revealed plans to defer financial close of its 138MW Flyers Creek Wind Farm, as well as other renewable energy projects, and the transfer of newly leased peaking generators in South Australia, in a bid to dodge a variety of Coronavirus-related risks, including the subdued wholesale electricity price outlook.
The decision was announced in the company’s results statement for Q3 FY2020, as part of a broader move by the renewable energy developer to “re-calibrate the timing” of delivery of between 600-700MW of targeted nameplate renewable energy capacity growth.
Infigen says it has decided to push back the timeline for the Final Investment Decision for Flyers Creek in NSW – originally slated for the end of June – with a new date to be set once the market looked like returning to normal.
“The decision to defer FID is due to a range of risks that arise from the Covid-19 crisis, including risks related to financing, construction, and commissioning, through this period of economic and social disruption, along with a more subdued wholesale electricity price outlook,” it said.
The statement did stress, however, that the fundamentals of the project had not changed; Flyers Creek Wind Farm was still located close to large electricity load, with a compelling wind resource, in one of the nation’s most opportunity rich electricity markets on the NEM.
“As and when the market normalises, consideration of FID for Flyers Creek Wind Farm – either on Balance Sheet or Capital Lite – will be evaluated within the context of our Capital Management Strategy.”
On that front, Infigen said it remained committed to the delivery of its 600-700MW of targeted nameplate renewables capacity growth, but the decision to adjust it would ensure the company had properly priced economic and financial risks.
“The decision to re-accelerate the growth strategy is one that will be made when Infigen has confidence in the timeframe over which market conditions will normalise. In the short term, this decision minimises Infigen’s exposure to wholesale electricity prices,” the statement said.
The delays will also extend beyond the company’s renewables portfolio, with Infigen also deferring the relocation of its 120MW South Australian Gas Turbines (SAGTs) by at least one year to calendar 2022, or later if deemed necessary.
That project, which will involve the development of a 6km gas pipeline and a 1.5km 66kV transmission line, had been scheduled to be carried out in 2021.
The gas turbines were bought and installed by the state government as part of its emergency response to the 2016 blackout. Now, instead of operating only as an emergency response, they will be allowed to play in the market, and Infigen sees the installation as a key part of its “firm renewables” strategy. Nexif is leasing the other turbines built for the government.
Infigen said it would continue to finalise all necessary development approvals and connection arrangements so that when market conditions returned to normal the relocation could go ahead with minimal risk.
“A corollary of a deferral of the relocation is lower near-term capital expenditure, as the majority of the $55m capital expenditure budget will be reprofiled,” Infigen said.