Green energy firm Hydro Tasmania faces $20m loss

AUSTRALIA’S largest renewable energy producer, Hydro Tasmania, faces projected losses of up to $20 million a year on wind power deals.

Hydro Tasmania has suspended major spending on $3.6 billion in new wind projects in Australia while the target of 20 per cent by 2020 is reviewed by the Abbott government.

AUSTRALIA’S largest renewable energy producer, Hydro Tasmania, faces projected losses of up to $20 million a year on wind power deals and blames uncertainty surrounding the ­Renewable Energy Target.

The state-owned company also revealed it had suspended major spending on $3.6 billion in new wind projects in Australia while the target of 20 per cent by 2020 is reviewed by the ­Abbott government. Hydro Tasmania chief executive Stephen Davy said significant cuts to the RET could see existing wind farms prematurely abandoned and trigger demands for taxpayer compensation.

A planning document, leaked to The Weekend Australian, shows Hydro Tasmania’s power-purchasing agreements for its major Tasmanian wind farms — Musselroe and Woolnorth — will return a $12.5m loss this ­financial year, rising to $20.6m in 2014-15. Cumulative losses total $103.6m by 2018-19, according to the document, the authenticity of which was confirmed by the company.

Mr Davy blamed the projected losses largely on uncertainty surrounding the RET, being reviewed amid a push from business, industry and elements of the Coalition to reduce or abolish it to cut power prices.

He said the projections were pessimistic and only part of the equation on wind farm profit­ability, but reflected a significant market decline linked to the pending abolition of the carbon tax and uncertainty on the RET. “Since the time the power purchase agreements were ­negotiated for these wind farms, there has been significant decline in the market, including the impact of the anticipated removal of a price on carbon,” Mr Davy said. “The market decline has been exacerbated by continued uncertainty about the ­future of the RET. The ongoing review of the RET has created a lot of uncertainty around wind farm revenues.”

Hydro Tasmania is a major player in renewable energy, particularly through its Chinese wind farm joint venture partners Shenhua Clean Energy.

The Musselroe and Woolnorth wind farms are owned by Woolnorth Wind Farm Holdings, a joint venture between the two companies. The companies have $1.6bn in plans to develop, build and operate a further 700MW of wind farms in Australia by 2020. Separately, Hydro, which exports power to mainland Australia, is investigating a $2bn plan to build the southern hemisphere’s largest wind farm on King Island.

As lobbying intensifies ahead of next week’s closure of submissions for the RET review, Mr Davy said all major expenditure on new wind farms was on hold: “We won’t be able to commit large amounts of money further developing those opportunities until the RET is reaffirmed.”

He warned abolition of the RET would kill off all future wind farm developments.