Origin quits geothermal, to sell wind assets, makes push for big solar

Origin Energy says it is to exit all its international geothermal assets, and sell some operating wind farms in Australia, as part of significant restructure headlined by a massive $2.5 billion fund raising.

The gas and electricity company, whose share price has fallen by more than half in the last 12 months, responded to another 10 per cent fall this week, and concerns about debt levels, by making a share offer pitched at another 25 per cent discount.

CEO Grant King said market volatility is “very clearly saying to us that debt is a worry. That needs to be dealt with today.” Also included in its package are an announced cut to dividends, a $1 billion reduction in capital expenditure and as much as $800 million of non core asset sales.

These include the geothermal and wind assets, as well as some international exploration projects.

The decision to exit geothermal comes after it sold its majority stake in New Zealand energy company Contact Energy, which has geothermal assets, and after withdrawing from the Australia “hot rock” investments with Geodynamics in 2013. It had been pursuing geothermal projects in both Indonesia and Chile.

As part of its decision to sell non core assets, Origin will also sell wind farm assets that currently have power purchase agreements. This could include the yet-to-developed Stockyard Hill in Victoria, and the already operating 30MW Cullerin Range wind farm in NSW.

The international asset sales – which include exploration – could lead to write downs of $100-$150 million. In Chile, Origin was pursuing geothermal with Energia Andina, its joint venture with Antofagasta Minerals in Chile.  Its solar developments with that company will not be affeted.

In Indonesia, Origin had been pursuing geothermal opportunities through its interest in Geothermal Services Indonesia (OTP), which recently signed a PPA for the Sorik Marapi project in North Sumatra.

Origin says it expects to make $53 million write-off for discontinued exploration in Vietnam

King, meanwhile, re-iterated previous comments that large scale solar is rapidly becoming a more interesting prospect for the company, and confirmed that Origin is looking for projects, and securing solar sites, particularly in Queensland.

“Large scale solar is becoming more cost competitive in its own right, producing power at times of day that are more valuable,” King told a telephone media briefing. He said solar was becoming more competitive with wind energy.