Wind energy in Australia: AGL buys rights to 1000MW wind farm

Australian utility AGL Energy buys the rights to develop what could be the biggest wind farm in the southern hemisphere. The wind farm’s first stage of construction, due to begin in 2013, will consist of 282 wind turbines.

With the potential to generate up to 1000 megawatts of wind power from about 600 wind turbines, Silverton, near the town of Broken Hill, would be the biggest onshore wind farm in the world were it operational today.

The Roscoe Wind Farm in Texas now generates close to 800 MW of electricity. Some large offshore windfarms are also under construction in Europe, as nations try to reduce their reliance on the fossil fuels that are blamed for causing glob al warming.

Australia has been a global laggard in wind energy, partly because it has a natural abundance of coal to generate cheap electricity. Activity in the wind power sector began to stir in anticipation of legislation introduced in 2009 that set a mandatory target to source 20 per cent of national power needs from renewable sources by 2020.

Investment has also been encouraged by a national carbon pricing scheme, which kicks in from July 1. AGL said construction of the project’s 300 MW first stage could start next year, subject to market conditions. Silverton was sold to the Australian utility by an equal joint venture between unlisted Epuron and Macquarie Capital Windfarms, which counts Macquarie Group and Portugal’s Martifer as shareholders.

While Australia’s carbon tax legislation has passed through both houses of parliament, the Liberal-National opposition has pledged to repeal the levy if, as expected, the party takes power in elections due next year.

AGL chairman Jerry Laycock said in October 2011 that the lack of bipartisan political support for the carbon tax had done little to lift the uncertainty hanging over energy investments. The absence of a carbon price could make renewable energy projects less competitive compared with more traditional sources of power generation that are more carbon intensive.

Even so, AGL and New Zealand’s Meridian Energy are constructing the $1 billion Macarthur wind farm in Victoria, a 420 MW development they hope to complete by early next year. While a cost estimate hasn’t been provided for the Silverton facility, the 300 MW first stage may cost around $700 million based on numbers supplied for the Macarthur project.

Epuron executive director Andrew Durran said its joint venture had always planned to sell the development rights to Silverton.

"Primarily, we’re not large or long-term asset holders," Mr Durran said. "It was always our intention to select the site, prepare it for development and sell it to a utility in a position to construct."

Mr Durran declined to comment on whether the venture was paid what it expected. The value of the deal cannot be material to AGL – if it were material, AGL would have had to disclose the details in accordance with Australian sharemarket listing rules.

The market for renewable energy certificates in Australia "is getting hotter and hotter", according to Mr Durran, who said Epuron can now focus on preparing other sites, including Liverpool Range in NSW.

AGL is one of Australia’s leading integrated renewable energy companies and is taking action toward creating a sustainable energy future for our investors, communities and customers. Drawing on over 170 years of experience, AGL operates retail and merchant energy businesses, power generation assets and an upstream gas portfolio.

AGL has one of Australia’s largest retail energy and dual fuel customer bases. AGL has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, landfill gas and biomass. AGL is Australia’s largest private owner and operator of renewable energy assets and is looking to further expand this position by exploring a suite of low emission and renewable energy generation development opportunities.