Infigen sees improving market for green energy, even some PPA talk

Infigen Energy says it sees a marked improvement in market conditions for its wind energy business – at least those that are operating – but says that the market for new developments remains stalled.

Australia’s largest pure-play renewable company Infigen Energy has announced a net loss of $55.9 million for the last financial year, a $5.1 million improvement on 2010/11. Cash flow was improved by 25 per cent due to a reduction in debts, but its operating profits fell 4 per cent due to worse wind conditions in the US and higher maintenance costs, offset by better market prices, and a contribution from the newly completed Woodlawn wind farm.

Managing director Miles George told RenewEconomy in an interview that market prices had jumped significantly since July 1, improving conditions for its operating wind farms, 45 per cent of which operate on a merchant basis, meaning that they collect revenue from market prices rather than fixed contracts.

The average wholesale price of electricity had jumped to more than $80/MWh in South Australia and $66 in NSW, mostly due to the carbon price, partly because of production issues at Hazelwood, and also because of a “change of bidding strategy” by generators.

George also said there were signs that the market for power purchase agreements (PPAs) was returning after a near two-year hiatus. “There are some encouraging signs,” he told RenewEconomy. “For 18 months there was no interest, but at least they (the obligated parties, principally the large utilities) are talking now and are interested in negotiations.” But he said the prices being discussed were still not at the level required to build new wind farms.

Infigen is not in a position to undertake any new major developments, but George said the company would consider smaller wind projects, around the size of the 48MW Woodlawn project. The company is also pursuing a 30MW solar PV project near the town of Bungendore, with an application currently before the new Australian Renewable Energy Agency, and it is also building a 1MW project combining solar and storage, that will be the first of its type operating through the National Electricity Market.

Infigen says solar represents a “sizeable” growth opportunity, and solar PV could play an important role in achieving the 20 per cent Renewable Energy Target. However, George said most of the RET would be satisfied with wind, with 6,000MW or more of wind projects to be built. The company is also pursuing solar PV projects in the US, where various states are conducting auctions for solar capacity in the same manner as the ACT government.

Infigen has 557MW of wind capacity in Australia, in WA, South Australia and NSW. In the US, it has 1,089MW of wind capacity. In Australia it has a pipeline of more than 1,200MW of wind projects, and 267MW of solar PV projects.