Originally published on RenewEconomy
by Sophie Vorrath
Plans to build what would be Australia’s largest wind farm, an 800 MW project proposed for Victoria’s Golden Plains Shire by German-backed outfit WestWind Energy, have been submitted for planning approval by the state government.
WestWind, which has built hundreds of megawatts of wind farms in Germany, has focused on Victoria since coming to Australia, bringing three other wind farms to various stages of the development pipeline.
These include the 321 MW Moorabool wind farm project which was sold to Goldwind as a greenfield site, and the 216 MW Lal Lal wind farm project, which was solar to Macquarie Capital.
The 131MW Mt Mercer Wind Farm Project, which became fully operational in October 2014, was sold by WestWind to Meridian Energy as a greenfield site in 2009.
The $1.7 billion, 231 turbine Golden Plains project, which also stands to be the largest wind farm in the Southern Hemisphere, was formally proposed by WestWind in February, but has been on the books for years, the company says, awaiting the right political and economic timing.
“(The project has) been in the pipeline for a long time and we’ve been monitoring wind in the Golden Plains area for years now,” said WestWind stakeholder engagement manager Paige Ricci in comments to Power Engineering.
“Now we have a supportive state government in particular we think it’s the right time to move forward.”
Indeed, the arrival of the Labor Andrews government has been a boon to the large-scale renewable energy industry, particularly since its introduction of a Victorian Renewable Energy Target of 40 per cent by 2025, which just last Thursday passed Parliament’s lower house, on its way to being enshrined in state law.
Whether this law survives the 2018 state election remains to be seen, with the Opposition having vowed to repeal it if it wins government. But until that time, companies like WestWind are making hay while the sun shines.
The favourable policy environment has been particularly good news for wind developers, like Senvion, which in June this year credited the VRET for its deal to deliver the 429MW Murra Warra wind farm in the state’s Western District.
Goldwind is also building a 530MW wind farm at Stockyard Hill, in a deal that will set a record low price for wind farm output in Australia, and which means zero subsidy for the wind farm developers.
For WestWind, whose Golden Plains project will be almost double that size, community engagement has also been key to advancing the project.
As well as offering the 39 host landowners a collective “drought proof” income of $3.5 million a year, the company has set up a community benefit fund, a community investment program a power offset and energy audit scheme and a financial incentive program for neighbouring landowners.
For each of the host landowners, the financial incentive is calculated based on the number of turbines within 2km of eligible dwellings: $1000 for each of the first three turbines, and $750 for each additional turbine that is constructed within 2km of their dwelling.
The annual payment – which will be adjusted for CPI, and will continue while the wind farm is operational – will begin when construction of the foundation of the turbines within 2km of their dwelling is complete.
On top of this, a community fund would be established once the Golden Plains Wind Farm was operational, to provide annual financial support of up to $235,000 a year ($1000 annually per turbine) for community-based initiatives, projects and events that benefit local communities around the wind farm.
For non-host residents living within 3km of a turbine, an electricity off-set program, which will begin within six months of commencement of onsite construction of the wind farm, will provide green electricity to an amount equal to the average Victorian home at no cost, as well as an energy audit, to help homeowners to minimise electricity usage.
And a community investment program would also be set up, to allow neighbouring, non-host property owners living within 10km of the wind farm to invest in the project, and secure a financial return from it.
But what cements the case for an 800MW wind farm in Victoria is the current state of the electricity market, with its combination of rising electricity prices, and the retirement of coal-fired power plants that once dominated supply.
“At the moment our cost of energy is closer to half the market price, because the market price has finally gone to levels that are actually reflective of the true cost of generation with a mix of generators,” said WestWind CEO Tobias Geiger in comments to the Australian Financial Review on Tuesday.
“Now that some of (the state’s coal plants) get mothballed because they are just too old to keep them running commercially viably, the market price has bounced up,” he said.
“It is now at levels where investment in new generation capacity actually makes sense again.”
But while things are stable at a state level, the turbulence being created at a federal level is still being felt – and negotiated – by developers like WestWind.
“What we are more afraid of is government doing really stupid things by propping up old coal-fired power stations for them to operate longer,” he said, most likely in reference to the recent debate over whether the NSW Liddell coal power plant should be kept open past its use-by date of 2022.
The idea, proposed by the Turnbull government as a way to shore up energy market stability in the transition to renewables, has been rejected by the plant’s owner, AGL Energy, and by a number of other market players and analysts as an unnecessary and likely very expensive backwards step.
Still, it has not been ruled out by the federal government, just as using federal funds to help put new coal-fired power on the NEM has not been ruled out.
“That may dilute the market price to a point where investment for the private sector becomes unattractive,” said Geiger.
“That would then leave potentially stranded assets, but more importantly would actually lock out Australia out from the energy transition for a bit longer.”