UPDATE: AGL Energy Buys Giant Outback Wind Farm Development
23 March 2012 - 3:06PM
Dow Jones News
Construction in the Australian Outback of what may become one of
the world's biggest wind farms came a step closer Friday after AGL
Energy Ltd. (AGK.AU) bought its development rights for an
undisclosed sum.
With the potential to generate up to 1,000 megawatts of power
from about 600 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 currently generates close to 800
megawatts of electricity. Some large offshore windfarms are also
under construction in Europe, as nations try to reduce their
reliance on fossil fuels blamed for causing global 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% 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-megawatt 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 Ltd. (MQA.AU) and Portugal's Martifer SFPS SA
(MAR.LB) 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 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 A$1 billion Macarthur wind farm in Victoria state, a 420
megawatt development they hope to complete by early next year.
While a cost estimate hasn't been provided for the Silverton
facility, the 300-megawatt first stage may cost around A$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," 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."
Durran declined to comment on whether the venture was paid what
it expected. The value of the deal cannot be material to AGL, else
it would have to have been disclosed, in accordance with Australian
share-market listing rules.
The market for renewable energy certificates in Australia "is
getting hotter and hotter," according to Durran, who said Epuron
can now focus on preparing other sites, including Liverpool Range
in New South Wales state.
-By Ross Kelly, Dow Jones Newswires; +61-2-8272-4692;
ross.kelly@dowjones.com
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