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Australian Windfarms Face $13b Wipeout
World Economy

Australian Windfarms Face $13b Wipeout

Australia faces a A$17 billion ($13.3 billion) exodus of investment from its windfarm industry because of a political deadlock, threatening to deal the country a major economic blow and kill hopes of meeting a self-imposed clean energy target.
Some 44 Australian windfarm projects, about half overseas-funded, have been shelved since a new conservative government said it wanted to cut state support for the industry a year ago, with investors and operators saying they are considering either downscaling or leaving the country altogether if it succeeds.
Even Australian windfarm companies such as Infigen and Pacific Hydro have effectively shelved their Australian operations, with Infigen saying it plans to pour all its financial muscle into the more amenable US market.
“It’s a difficult time at the moment, and the policy uncertainty is the main cause of it,” said Shaq Mohajerani, an Australian spokesman for wind farm company Union Fenosa, owned by Spanish energy giant Gas Natural.
A Gas Natural spokesperson said the firm had an “attractive backlog” in Australia but “we are waiting for the whole development of the new framework for renewable energy and hope our presence ... in the country can be maintained”.
Wind power in Australia is not the only renewable energy sector to be affected by uncertainty over government subsidies or actual cuts. In Europe, Germany has scaled back support for solar power over the past few years, leading to a flood of insolvency filings by solar firms and a shrunken market.
Italy’s plans to cut subsidies for solar power firms have prompted an investor exodus. Retroactive solar subsidy cuts have also happened in Spain, Greece, Bulgaria and the Czech Republic over the past couple of years, putting off new investors as governments try to rein in energy costs and cut debt.
Windfarms are Australia’s No. 2 renewable energy source, behind hydropower but ahead of solar, providing a quarter of the country’s clean energy and 4 percent of its total energy demand. But while households can collect rebates for installing their own rooftop solar panels, windfarms rely on “certificates”, or tradeable securities handed out by the government, to offset costs.
That support hit a roadblock a year ago when new conservative prime minister Tony Abbott ordered a review of the country’s target for clean energy use by 2020, which ultimately recommended slashing it by a third, in line with falling overall energy demand. A lower target would mean a lower certificate price.

 

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