Vestas says lack of certainty will kill wind energy in Australia

The CEO of Vestas Wind Systems, the world’s leading wind turbine manufacturer, has reiterated his call for certainty over the country’s renewable energy policies, saying that lingering doubts would “kill” a capital intensive industry such as wind energy.

Ditlev Engel, who is in Australia for the formal opening this week of Australia’s largest wind farm, the 420MW Macarthur project in south-west Victoria, which boasts 140 Vestas wind turbines, said Australia currently has bipartisan support for the renewable energy target, but he could not look into a “crystal ball” to see what would happen post a September election.

The renewable energy industry in Australia is becoming increasingly nervous about what a conservative government would mean for the future of large scale renewable energy developments in Australia.

The Coalition has recently branded renewables as “expensive”, and underlined its support for another review of the RET in 2014 and indicated its sympathies for the argument that Australia does not need new capacity because of lower than expected demand. In the meantime, utilities have virtually shut up shop on new contracts for wind farms, developers say.

Engel is acutely aware of how a change of policies can effect business. One of his first jobs at Vestas in 2005 was to fly to Australia to open a blade factory – one of two manufacturing plants it operated in Australia. Not long afterwards, after the then Coalition government rejected an independent recommendation to extend the Mandatory Renewable Energy Target, Engel flew back out to Australia as the CEO to close them down.

“We had to close both of them – because of the lack of certainty,” he told RenewEconomy in an interview on Tuesday. And he said there was now little chance of any new local manufacturing for blades and nacelles being created in Australia, even if the country had great prospects for a flourishing wind industry and for local jobs.

“Australia has something that other countries really envy – it’s got a lot of wind and it has got a lot of space. That’s not a bad place to start,” he told RenewEconomy in an interview on Tuesday.

“I know you guys have an election in September.  We will need to see what happens after the election.

“I think that Australia will benefit most from a long term energy policy that is supported by either side of the parliament. My understanding is that the RET is pretty much supported by everybody, but I don’t have a crystal ball. We will have to cross that bridge when we come to it.”

Engel said it was more challenging to maintain the momentum for new renewable energy projects in economies which had already had sufficient capacity to meet overall demand.

“People says we have enough capacity from fossil fuels, so they ask why we should make this energy transfomation. But need to make this energy transformation because it comes at different (environmental) costs going forward.

“It’s much better to keep on doing it on an ongoing basis,  rather than waiting for it to pile up in front of you and then you have to pay a massive amount to make that transformation. It has to come on a continued basis.

“In many countries around the world – I cannot recall people saying we will give up on this. Even in US, the renewable portfolio standards are in place. In the EU, they are staying, and they are looking to increase them. Countries are sticking to targets, and in some cases increasing them.”

Engel said even in the US, despite the shale gas boom, more wind energy (13GW) was installed in 2012 than new gas plants.

Engel said Vestas currently had a 50 per cent share of the installed capacity in Australia, even though its ranking as the world’s number 1 manufacturer is now being challenged.

However, he remained confident that wind energy would continue to expand. “The technology does work and it works very well,” he said.

Energy storage would, however, be important for future of wind. ”If someone is going to do that that will be a game changer for wind industry.

“The phone I am using now, is so much different to what it was 10 years ago. I don’t think we can say what it will be like in 10 years, but there is a lot of investment in supporting technologies and if someone can crack the code of the storage – that will be the ipad of the wind industry.”