Trustpower halts Oz renewables investment until RET cloud clears

Leading New Zealand utility and developer of Australia’s second largest wind farm – Snowtown I and II in South Australia – has become the latest international energy company to warn it will abandon any further investment in Australian renewables if ongoing uncertainty surrounding the RET is not resolved.

A generator and retailer of electricity – and listed on the NZ stock exchange – Trustpower has invested $659 million in its Snowtown wind farms in South Australia, which have been a great success story for the company and the state.

As the largest wind farm in South Australia, Snowtowns I&II have helped drive down the state’s energy prices, and – on occasions times – have contributed to producing enough electricity to meet between 43 per cent and 100 per cent of its entire electricity needs.

And via the Snowtown projects, Trustpower has spearheaded the involvement of neighbouring property owners, through offers of rental payments, or by making them turbine hosts.

In December last year, the company proposed making voluntary “sliding scale” payments to property owners near its planned $700 million Palmer wind project in the Mt Lofty ranges east of Adelaide, with payments of up to $2,000 a year to be offered to property owners with a boundary within 1km, or a residence within 2kms of a wind turbine.

But in an interview with the Bay of Plenty Times, focused on the Tauranga-based company’s third-quarter results, chairman Bruce Harker and chief executive Vince Hawksworth stressed they needed a decision on Australian energy policy before any further major investments were made in Australia.

Trustpower, which also owns Australian hydro gained through its acquisition of Green State Power’s assets last July, says it wants to diversify its core power business and increase its wind generation footprint in Australia, with a significant pipeline of options for other wind power projects already developed.

So far, however, these plans have been frustrated by local politics.

“The outcome of the Australian government’s review of the Renewal Energy Target remains uncertain and this remains a near term barrier to further renewable energy investment in Australia,” said Harker.

“They have done the RET review, but they haven’t come out and said this is what we want to do,” he said. “It’s a question of the Government determining what position they are going to take with respect to that review, and then looking for a bipartisan agreement with the opposition to make that view a reality.”

Hawksworth stressed that Trustpower’s current Snowtown investments would not be affected by any future changes to the target.

“We’re pleased with what we’ve got in South Australia,” he said. “We are just looking for the opportunity to continue that story and we’ll wait patiently for the policy issues to be resolved.”

TrustPower’s decision not to invest in Australia echoes that of Australian renewable energy developers Infigen Energy and Pacific Hydro, and the recent sale of a 1.2GW solar portfolio held by Recurrent Energy for zero dollars, courtesy of the Australian policy environment.

Meanwhile, Senvion Australia has added its voice to the call to end Australia’s impasse on renewables, with CEO Chris Judd saying now was the time for bipartisan support for the RET to be restored.

“We are pleased that negotiations on the future of the RET are back on, but the industry can’t withstand such an uncertain policy environment for much longer,” said Judd – whose company has delivered 18 wind farms across Victoria, South Australia and NSW, and has approval to build a $1.5 billion wind farm in South Australia.

“People clearly want more renewables, and, if the Prime Minister keeps his election promise of maintaining the RET, the clean energy industry is ready to deliver billions of dollars in private investment, create thousands of jobs, and drive down power prices,” he said.

“This is the type of nation-building infrastructure that modern economies need, and we are very keen to talk to the Prime Minister about the job opportunities in renewables.”