Infigen says vested interests, policy uncertainty damaging Aust renewables market

ASX-listed renewables company Infigen Energy has announced a net loss of $79.97 million for the year to June 30, 43 per cent wider than the $55.87 million loss recorded in the previous year, warning that policy uncertainty and vested fossil fuel interests were damaging the Australia market.

Four days after announcing a $58.4 million capital write-down on its wind energy generation assets in the US, the Australia-based company said its economic performance had remained solid due to 7 per cent revenue growth – $302.64 million, up from $283.47 million in fiscal 2012 – underpinned by higher wholesale electricity prices in Australia and the US, and higher production and compensated revenue in Australia.

In its ASX company statement on Friday, Infigen said it expected an FY14 improvement in production in the US, and an improvement in investment conditions in Australia following the September 7 election, but warned that in the near-term, the regulatory environment would continue to be challenging for the renewables industry.

“Despite the favourable findings of the Climate Change Authority’s review of the RET in late 2012, vested interests in the fossil fuel generation sector continue to lobby forcefully to reduce the RET,” the statement says.

“The upcoming federal election has exacerbated the uncertainty to a point where the market for new renewable energy project development is very weak, and the appetite to contract with existing assets is poor. This has depressed the Large-scale Generation Certificate (LGC) spot price to low $30s levels. Average Australian prices are expected to be around the same as FY13 due to contract escalation and a higher carbon price, offset by lower LGC prices.

Infigen managing director Miles George said the US and Australian businesses had continued their focus on containing operating costs with both regions delivering wind farm costs below the lower end of the guidance ranges previously advised.

“In the US we settled the disputes with Gamesa. Each of Infigen’s US wind farms with Gamesa turbines is now covered under a 15 year warranty, service and maintenance agreement with Gamesa. These agreements significantly reduce Infigen’s exposure to cost variability at those wind farms,” he said.

“We now have all of our wind farms in Australia and 71 per cent of our US fleet covered by either original warranties or post-warranty agreements where the service provider meets the cost of component replacements.”