Origin buys up Wind PowerClancy Yeates
May 7, 2009 – 9:00AM
The carbon pollution reduction scheme may have hit a brick wall, but this is unlikely to stop a stampede of investment into wind farms.
Origin Energy is the latest company seeking to cash in on the government mandate to increase renewable energy by nearly tripling its potential wind development portfolio through the purchase of Melbourne’s Wind Power Ltd yesterday.
Origin said the deal which will take its wind development portfolio to 2000 megawatts was signed in preparation for the Mandatory Renewable Energy Target that will require 20% of all power to come from renewable sources by 2020.
The price of the acquisition was not deemed material, but the deal is significant because it could support a wave of investment into wind, as the race to build new farms heats up.
Origin’s deal comes after AGL Energy last month spent $341 million – on construction of the 132 megawatt Hallett – 4 wind farm in South Australia. Under similar construction costs, developing all of Origin’s wind portfolio could cost more than $5 billion.
Wind energy is tipped to be a big winner from the renewable energy target, which is expected to stimulate about $27 billion in investment in the next decade.
The managing director of Origin, Grant King, said the move was part of the company’s plans to meet its obligations and meet growing customer demand for green power.
However the deal – estimated to be worth in the tens of millions by analysts is also an attempt to address Origin’s relatively low emphasis on wind compared to AGL.
“It gives them options, because they’ve clearly got a major liability under the renewable energy target the government has come up with,” an analyst at RBS, Jason Mabee, said.
Wind Power’s prize asset is the 484 MW Stockyard Hill wind farm near Ballarat. Analysts said the site’s capacity factor of 40% was on par with AGL’s Hallett farms in South Australia.