An Australian-based investor in large scale solar farms has delivered a withering critique of Australia’s renewable energy policy and regulatory environment, and says it is looking forward to focusing on the US, where president Joe Biden is seeking to fast-track the energy transition.
New Energy Solar, one of the few remaining listed renewable energy companies in Australia, had already announced that it was looking to sell its two Australian solar farms – Beryl (pictured above) and Manildra in NSW – because of the failure of investors to recognise their value.
But in the company’s newly released annual report, chairman Jeffrey Whalan, a former senior public servant, said there were other reasons for the Australian-based company to pursue growth overseas.
“Clearly, (New Energy Solar) is an Australian-originated business but the policy and regulatory environment for renewables in Australia is not conducive to growing the business and achieving economies of scale in Australia,” he wrote.
“The sale of NEW’s Australian assets to focus the business on the United States, together with a path to containment of COVID-19, promise a new chapter for New Energy Solar in 2021.
“We are also looking forward to an acceleration in the progress of the energy transition and in the uptake of renewable energy technology under the new US administration of President Biden.
“While the US has long had federal and state policies supportive of renewable energy, the openly supportive rhetoric of the new president and his plans to undertake extensive investment in renewable energy mark a significant step forward in the world’s appreciation of the need to combat climate change.”
Whalan’s comments are widely shared in the industry, but rarely spoken out loud. The renewables industry has grown rapidly as the result of policies put in place long ago by the Labor government, and have grown tired of the constant antagonism of the Coalition government that tried but failed to repeal those policies.
Another frustration has been the regulatory regime, partly because it has been slow to move and recognise the growth of new technologies, and also due to what are often seen as capricious changes made as regulators try to keep up with the pace of change and installations.
This is important because the Australian renewable energy landscape is increasingly dominated by seriously big international energy groups – such as Iberdrola, Shell, Total, BP, ENI, RWE and others – who have operations across the world and can easily shift capital to more accomodating countries.
This may be felt in the race to seize a share of the green hydrogen market, where the big investors are looking for supportive policies and regulatory regimes that are not trying to muddle the waters with fossil fuelled projects.
New Energy Solar had to write down the value of its two solar assets by more than 10 per cent, partly due to reduced output enforced by grid congestion, and unfavourable changes to marginal loss factors, which decides how much of their output is credited at the meter.
New Energy Solar has been seeking buyers for its two Australian solar farms and expects to make an announcement in the next month or two.
They are not the only ones putting their Australian assets up for sale. UK investors John Laing has already sold its Australian wind portfolio and will seek to sell its two Australia solar farms – Finley and Sunraysia next year. It has taken a heavy write-down on their values for the same reasons as NEW.
Other companies to have their solar assets up for sale are Elliot Green (three projects), Blackrock (two projects), and FRV – which is seeking equity partners for their seven-strong portfolio of operating solar farms. They are not the only one suffering.