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ACT government wind auction gives hope to struggling industry

The winning wind farms in the ACT's large-scale auction heaped praise on the ACT government for giving some hope to an industry in difficult times on Friday, but others raised eyebrows at the rock-bottom prices the wind farms were prepared to bid to win the auction.

The government has guaranteed a 20-year price to three wind farms, two near Bendigo in Victoria and one in South Australia, for the energy they feed into the national grid. They are being paid prices from $81.50 a megawatt hour to $92 a megawatt hour, expected to total about  $68 million a year. The deal will add an average $93 a household to power bills in Canberra at its peak in 2020.

The prices paid to the companies - British-based RES, French-based Neoen, and Canberra-based Windlab - do not increase with inflation, so over 20 years the value to wind farms will fall considerably.

Project director for Union Fenosa's planned Crookwell wind farm Shaq Mohajerani said the winning farms were close enough to the "merchant" price (effectively the open market price) that he questioned why the owners would sign up to  20-year deals at such a low rate.

"I'm sure everyone in the ACT area has got the same expression on their face at the moment about the results," he said.

A swath of Canberra region wind farms missed out, but Windlab chief executive Roger Price said the local farms did not have a competitive wind resource.


"They're just simply not as windy," he said.

Windlab uses CSIRO-developed technology to map the country's wind resource, and Mr Price said his company's Victorian project had one of the best energy resources in the country. It would produce at maximum capacity almost 50 per cent of the time and would produce some energy 90 per cent of the time, he said.

As part of the deal, Windlab will boost its Canberra staff from 15 to 24 or 25 people to manage the six Windlab turbines, and RES' turbines, expected to number 75 when fully developed. Windlab will also partner with the Australian National University to offer a new masters unit in wind development.

Mr Price described the win as "a big step up for the business", which had been forced to rely on overseas operations to stay in business.

"Over the last three or four years we've produced effectively no revenue in Australia because the industry has been moribund and completely decimated by the lack of certainty and completely flawed government policy," he said.

It was "a fundamental falsehood" that renewable energy was not as competitive as coal or gas. "You cannot build new coal or gas or nuclear for anywhere near the price of wind," he said.

While the average merchant price for coal-fired energy was about $38 to $40, much of that came from old coal-fired plants. "If had to produce new coal-fired power plant today, you could not produce energy for anywhere close to $100 a megawatt hour."

The Collector community welcomed the outcome, which puts off the prospect of a wind farm in the village for now. Resident Frank Ross said the ACT government had blocked divisive local operators and "ensured that the unscrupulous ones who would destroy our regional communities are kept out".

Anthony Yeates from Collector wind farm developer Ratch Australia said the company remained committed to the project and would look for other ways of getting it funded, including bidding in a second ACT wind auction.

The winning projects "seem to have been able to secure their power at very competitive prices", he said.

Neoen Australia managing director Franck Woitiez said welcomed the certainty offered by the ACT deal.

"We were waiting for certainty over the revenue, this kind of project needs a huge investment and the investment needs finance and the financiers would not commit in an uncertain environment," he said.

The price was "competitive" and very low, but realistic, he said.

Neoen would establish its Asia-Pacific head office in Canberra, managing more than 1000MW of wind projects in development, and fund a new course at the Canberra Institute of Technology to train people to maintain and operate wind farms.

The Boco Rock wind farm on the south coast also missed out and Will Stone from CWP Renewables said the result was a great price for the ACT while disappointing for the Boco Rock project.

The Australian Workers Union called on the wind farms to commit to using Australian steel to build the wind farms.

"Chinese steel may be cheap, but because it is dirty and carbon-intensive to produce it would, ironically, create dirty renewables," national secretary Scott McDine said.

Liberal leader Jeremy Hanson said it was unfair to lump Canberrans with another $93 a year on their power bills to pay for the wind energy when they were already struggling with the cost of living.