New Zealand utility Trustpower has put the brakes on its plans to spin-off its wind energy assets into an Australia-based renewables-only entity, while it reviews the timing and business case of the move in light of last week’s electricity system failure in South Australia.
The planned demerger, first flagged by the NZ utility in December 2015, mirrors the strategy taken by European renewables giant E.ON, of dividing business between the old – the poles and wires – and the new, development of renewable energy generation.
But in a statement issued on Wednesday in response to the SA transmission event the company said Trustpower would not seek the final court order for the demerger, which had been scheduled for the following day, and was “reviewing the timeline for demerger completion.”
The decision could signal a potential impact on all wind farm developers and operators in Australia, with many fearing that the market environment may take a turn for the worse, just when the renewable energy target was finally about to have some bite.
Tilt, which was to bring a $1.3 billion 582MW portfolio of Australian and NZ wind assets and “significant” plans to develop and buy more large-scale wind and solar in Australia – was to be dual listed in Australia and New Zealand, and to begin trading on October 13.
Hawksworth told the AFR on Thursday that he would not estimate when the spin-off might now take place.
“Given the events in South Australia we just think we need a little but more time to evaluate all of that and be able to think about that in the context of the scheme booklet that went out and make sure that we can say to the court that despite the events in South Australia the proposition in the scheme booklet still stands,” he said.
“So we’re just taking a bit of time to do that.”
As Hawksworth noted in the company’s statement to the New Zealand stock exchange, its South Australian wind farms, Snowtown 1 and 2, while not damaged in the “once in 50 year storm”, did go offline for a short period.
Both wind farms, which are majority-owned by Infratil, have returned to service but are subject to market constraints, imposed under Ministerial direction until it is determined that normal operations can resume.
“It is currently unclear how long repairs to the transmission system will take and when the market suspension will be lifted,” Hawksworth said in the statement.
“A preliminary AEMO report indicates that multiple transmission system faults were followed by disconnection of several wind arms and overload on the interconnector with Victoria prior to the State wide blackout.
And he noted that both Snowtown 1 and 2 had been tested and had performed as expected in previous storm events, “however this storm event was far worse than previously experienced.”
Hawksworth also said that the loss of revenues incurred so far was “not considered material”.
This is not the first time Trustpower’s faith in the Australian renewable energy market has been shaken. Back in February 2015, the company flagged abandoning further investment in Australian renewables if ongoing political uncertainty surrounding the RET was not resolved.
Currently, Trustpower’s Australian portfolio consists of the SA Snowtown wind farms (101MW stage 1, 270MW stage 2), and Crookwell (5MW) and Blayney (10MW) in NSW.
In July, the company won planning approval for a 300MW wind farm near Dundonnell in south-west Victoria – one of the largest in the state – which it planned to begin building in 2017.