With the right policies in place, wind power will continue to increase its market share of the nation’s electricity supply. The foundations of the Federal Government’s commitment to fight climate change and reduce its emissions are its proposed emissions trading scheme known as the Carbon Pollution Reduction Scheme (CPRS) and the recently legislated expanded Renewable Energy Target (RET).
Wind energy is expected to be a major contributor to Australia meeting this target. Four new projects became fully operational in 2009, adding 406 MW of capacity to the Australian electricity grid. At the close of 2009, there were 51 wind farms in Australia, with a total installed capacity of 1,712 MW.
The estimated annual wind generation output in Australia from this capacity is 4,284 GWh or 1.6% of Australia’s national electricity demand. Another seven wind turbines projects totaling 588 MW are under construction and expected to be commissioned within the next three years.
An additional 6,794 MW of wind farm projects are currently proposed for development in Australia. The developers of these projects have either received planning and environmental approvals or are currently applying for them. Projects with a total of 6,147 MW are undergoing feasibility studies.
Installed wind power capacity in Australia by state
State-Installed Capacity (MW)
New South Wales-187
While each of the six Australian states now generates wind power, South Australia’s 740 MW provides more than 40% of the national total, followed by Victoria (428 MW) and Western Australia (201.5 MW).
The policy environment
Although there are many wind farm projects currently proposed, uncertainty around the future of the Federal Government’s Carbon Pollution Reduction Scheme (CPRS) and difficulties with the recently legislated expanded Renewable Energy Target (RET) have resulted in many of them stalling.
The global financial crisis has impacted upon the lending practices and risk appetite of banks, leading to difficulties in securing financial commitment.
THE CARBON POLLUTION REDUCTION SCHEME: The CPRS is a cap and trade emissions trading scheme planned to commence in July 2011. The emissions reduction target under the scheme will be 5% of 2000 emissions by 2020, and this could rise to 25% by 2020 with an international agreement. The long-term target is 60% by 2050.
The CPRS legislation has been before the Australian Parliament three times, but without bipartisan support has so far been rejected. With the possibility of an Australian federal election in 2010, the CPRS could play a significant part in the government’s policy position.
THE EXPANDED RENEWABLE ENERGY TARGET: The expanded RET Scheme was passed by federal parliament in August 2009, mandating that 45,000 GWh or 20% of Australia’s electricity supply will be sourced from renewable energy in 2020, four times the previous 2001 mandatory renewable energy target (MRET).
The expanded target commenced on 1 January 2010 with an initial annual target of 12,500 GWh which will be gradually increased until 2020. Renewable energy generation under the RET scheme creates renewable energy certificates (RECs).
As a result of other support measures for domestic small scale technologies, there is currently an oversupply of these certificates which has caused the REC spot price to ease to almost half of what it was worth a year ago.
This has made it difficult for wind developers to obtain finance for their projects, and resulted in delays in the development of large scale wind farms.On 26 February 2010 the Australian government announced amendments to the RET scheme in order to rectify existing problems.
The amendments foresee that from January 2011, the scheme will include two parts – the Small-scale Renewable Energy Scheme (SRES) and the Large-scale Renewable Energy Target (LRET), the combination of which is hoped to achieve the 20% target.
The LRET portion of the target will be increased to ensure that target is still met if the uptake of small scale technologies is lower than anticipated. An industry consultation process will follow this announcement, and the government intends to pass the amended legislation in the winter sittings of Parliament.
GREENPOWER SCHEMES: While the main incentive program for wind farms is through the renewable energy target, GreenPower schemes are becoming increasingly popular. These schemes allow consumers to purchase renewable energy from their electricity utility. More than 900,000 domestic and commercial customers have taken up GreenPower since its inception in 1997.
There are also state based feed-in tariff or buyback schemes for domestic scale wind technology that provide some level of payment or credit towards electricity bills.
NATIONAL WIND FARM DEVELOPMENT GUIDELINES: In October 2009 the Environment Protection and Heritage Council (EPHC) released its draft National Wind Farm Development Guidelines for public consultation. The draft was developed to address the need for greater consistency in the approach to wind farm developments.
It focuses on environmental and social aspects of wind farm development and contains provisions for community consultation, noise, shadow flicker, landscapes, birds and bats, and electromagnetic interference. A final draft is expected in 2010.