The three wind farms signing 20-year feed-in deals with the ACT Government have been given solid financial guarantees worth hundreds of millions of dollars in the event of any change in ACT legislation.
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The guarantees amount to as much as $266 million between the three wind farms if the government were to pull out or change its feed-in tariff now, declining to $12 million by the final year of the deal, 2035.
The deals were tabled last week by Environment Minister Simon Corbell.
They point to the difficulty a Liberal government would have trying to reverse some of the long-term deals made by Labor, notably the tram.
The Liberals say they would seek to terminate a contract with the consortium signed up to build, own and operate the tramline, but have consistently refused to say how much they would be willing to pay in compensation.
Chief Minister Andrew Barr told the Assembly on Thursday that Canberra was becoming a "magnet" for some of the world's biggest infrastructure players and the Liberals' stance was a major threat.
"They are putting at risk our city's reputation as a place to do business. The global infrastructure community has told us that if this happens, if the Liberals are reckless enough to trash our reputation, there will not be investment of this kind in this city again," he said. "How do you think we will go as a jurisdiction trying to attract private sector investment and partners for a new convention centre if the market in which we would be conducting such a transaction has just witnessed the tearing up of a contract? How would we ever seriously procure a new major project?"
The wind farm deals are much smaller than the tram, but show just how firmly companies protect their interests.
As the biggest project, the Hornsdale wind farm has the biggest compensation schedule if the government changes the ground rules, worth up to $123 million in the first year and $6 million after 20 years. Compensation for Ararat ranges from $99 million to $5 million, and Coonooer Bridge compensation ranges from $14.3 million now to less than $1 million in 2035.
A spokesman for Mr Corbell said the guarantee amount reflected the level of debt the companies would have unsecured if the feed-in tariff was repealed over the 20 years.
Finance strategy reflected in amount
"Generally the guarantee amount reflects the financing strategy of the proponent and the total capital cost of their project, rather than the [feed-in tariff] price. This is similar to commercial infrastructure contracts where government becomes liable for costs incurred by a developer if the government cancels a contract mid way through the project," he said.
Only one of the three solar farms has a similar deal – the Royalla solar array that began operation south of Tuggeranong last year. Its compensation deal is capped at $35 million in the first year, declining to $1.8 million by 2034.
Mr Corbell's spokesman said the Royalla Solar Farm was the only one of the solar farms to request the compensation deal. In the case of the wind farms, all three had requested it, and the request was considered as part of their bid.
The government has signed 20-year deals with the French company Neoen for a 100MW wind farm at Hornsdale near Port Augusta in South Australia; British company RES for an 85 megawatt wind farm near Ararat in Victoria; and Canberra company Windlab for the Coonooer Bridge wind farm, with 19 megawatt capacity, also near Ararat.
The government expects to pay the companies about $68 million a year for the electricity they generate, but has signed contracts that allow payments of up to $91 million a year across the three wind farms, if they generate more than expected.
The government says the three wind farms will supply 33 per cent of the city's renewable electricity, sufficient to power 107,000 Canberra homes.
If the wind farms break their side of the deal or fail to meet milestones, they don't face financial penalties, but they can be issued with a "breach notice" and if the issue is not resolved, the ACT can revoke their feed-in tariff entitlement.
Meantime, Uriarra residents are still waiting for a decision on whether the proposed solar farm to be built beside their village will go ahead, or be shifted to a site further away from homes. The controversial solar farm has been held up in planning for almost a year.
