A renewable energy entrepreneur says he will be forced to cut 150 staff from his company unless the Federal Government can deliver more assistance to wind power equipment manufacturers.
The threat comes as the Government's rebate for solar hot water has created huge demand, forcing down prices for renewable energy credits and stifling demand for other forms of alternative energy.
Steve Garner, chief executive of Keppel Prince Engineering, says his company may eventually be forced to find other avenues of work if the Federal Government does not grant some sort of assistance.
The company manufactures about 40% of Australia's wind turbine towers.
"Our company is under threat for lack of work. We've built part of our business around that sector of building wind towers, but their manufacturing is suffering because of the imbalance in the way the renewable energy certificates are being rolled out."
"I would like to think otherwise, but certainly there is a risk that if the industry doesn't deliver, then we will need to assess our continuation in wind component manufacturing."
Garner says he may be forced to let 150 workers go if enough work cannot be found. But he says the Government needs to reassess its priorities in order to provide the industry with enough projects.
"Absolutely there needs to be a shift in priorities. I think if the Government was able to deliver more renewable energy certificates in the short-term it would help a lot."
"The industry, I believe, has got something like $28 billion worth of projects waiting to be delivered, and they have been stalled for quite some time. The solar hot water services are not actually delivering any of the renewable energy targets that the Government wants."
Garner also says the delay on many of the Government's projects is bad for investors, describing the industry's performance as a "roller coaster ride".
"I've been in the industry since 1999, and we've had the on-again, off-again situation since then. We've been on a roller coaster ride through good years and bad depending on assistance. There needs to be stability, and although we thought some targets would help that, it hasn't."
"All we really want is a bit of support, and from that I know I can create a further 100 jobs. We could potentially lose 150 now due to this situation, but get some projects underway and we'll employ in excess of 100 people."
written by HamishC, October 27, 2009
For a typical 30% capacity factor, RECs are $100,000 per Megawatt turbine nameplate capacity, based on an REC value of around $30. If you look at AEMO's website you will see Waubra wind farm for instance is claiming capacity factors of 45-60%. This means the wind farm company will be claiming between $450,000 and $600,000 per turbine per year (four megawatt tubines) in RECs alone. Also AEMO's website shows that during the times Waubra was generating electricity, the base load power was not reduced. Therefore there are no actual greenhouse gas abatements. At the July 2009 ACCC energy conference paper, AEMO showed contribution from wind farms in SA was only 3%. The generating capacity of wind farms in South Australia is 20% of grid capacity, yet is only delivering 3% because of base load being satisfied without wind. So how on earth can the wind farm industry be crying out for more support? Almost a million dollars support per turbine per year when the project cost is only $4m per turbine to construct - its a very nice payback for the company, funded by us taxpayers.
If they are not viable and cannot be adequately financed by the RECs, the green electricity tarriff and other government support to the tune of nearly one million dollars per turbine per year (and they are only delivering 3% of nameplate), then they shouldn't be built at all.
At least a large take-up of solar hot water systems will actually save electricity and will deliver greenhouse gas savings because less electricity will need to be generated.
In theory the government involvement in the green industry is great to provide support to their environmental policies but it seems as if their involvement has not taken into account the market itself - their actions are distorting the very market it is trying to support. Its not the first time government interference has adversely distorted and undermined a market and I suspect it won't be the last.......