Wind energy technology firm, Windlab Systems, says ongoing uncertainty over Australia’s renewable energy policies is prompting it to turn to overseas markets for growth.
The privately held company, spun off from the CSIRO in 2003, will this week sign power purchase agreements for two of the largest wind farms in South Africa, one of the markets Windlab has targeted abroad.
The two sites, in the Eastern Cape and the west coast, will have a combined capacity of 226 megawatts and account for about a fifth of South Africa’s planned 1200 megawatts in wind energy capacity planned for the next three years, said Roger Price, Windlab’s chief executive officer. The country now has just 10MW in wind turbines installed.
Windlab says its ability to model atmospheric conditions and wind energy prospects gives it an edge over rival developers. After identifying the most promising sites, the company looks to secure access to land, maximise grid connection and turbine designs, and develop projects for investors.
Those skills, though, have lately been diverted to markets such as South Africa, the US and Canada as doubts over political support for Australia’s renewable energy target (RET) and state-based restrictions on wind farms stall local projects.
“Everyone’s been holding their powder dry as to how these (issues) will play out,” Mr Price said.
While the federal government recently left the RET settings largely unchanged at 45,000 gigawatt-hours by 2020, the policy will be reviewed again next year. The Coalition is yet to commit to sticking to the current goals.
Making serious investment is difficult “if the policy levers are being moved on an 18-24 month basis”, Mr Price said.
At a state level, Victoria bars new wind turbines closer than two kilometres of a residence – a setback distance that NSW may match when it fixes new guidelines.
“These are by far the most aggressive planning laws in the world,” Mr Price said. There is “very little scientific basis” for those distances, he said.
Victoria’s Department of Health last week released a review that found inaudible sound from wind farms does not affect human health, and is no worse than the background level in other environments.
Assuming the RET targets remain, though, wind energy has significant potential in Australia, with construction seen ramping up between 2015-20. “We still expect Australia to be 25 – 35 per cent of our business over time,” Mr Price said.
That promise is luring other investors. Denham Capital, a global energy-focused private equity firm, said it plans to invest $US75 million ($74 million) in a one-gigawatt suite of Australian wind power projects.
Along with partners Enersis Australia, National Power and Kato Capital, the $7 billion company will establish OneWind Australia to specialise in development and financing of several Australian projects. These include Glen Innes, a 100 megawatt NSW venture, Lincoln Gap, a 250 megawatt project in South Australia, and Cattle Hill, a 240 megawatt development in Tasmania, Denham said in a media statement.
Windlab's South African wind farms will supply power to state-owned Eskom, which has been forced to resort to load-shedding to maintain power supplies.
The 20-year off-take agreements will see supplies extend beyond 2030, the date South Africa has set to secure half of its electricity from renewable sources, Windlab said.
“We are using our success in South Africa as a springboard to expand into the rest of Africa,” Mr Price said, noting southern Africa's electricification rate remains below 30 per cent.
Windlab has plans to expand into three other African economies, which Mr Price declined to name.
The Canberrra-based company claims to have success in seeing through to completion 75 per cent of wind farm projects identified, compared with an industry average of as low as 10-20 per cent.
The ability to define the best wind resources down to individual hectares meant sites could be chosen to minimise impacts on communities and birdlife – two common complaints about wind farms.
Mr Price said cars, cats and buildings were “thousands of times more dangerous than wind farms” than turbines.
On the corporate front, Windlab is considering ways to “beef up its balance sheet”, with an initial public offering one option being considered, Mr Price said.
A larger balance sheet would allow the company to take stakes in more of the ventures it has established. Current limitations, for instance, meant that Windlab had to sell down its equity interest in the South African windfarms and bring in partners for the $400 million required, although the firm retains a commercial interest.
The company, whose investors include an arm of property giant Lend Lease and Australian group Innovation Capital, has been profitable overall for the past four to five years, Mr Price said.