GREEN DEALS: Pacific's solution

Pacific Hydro officially enters the energy retail sector, ARENA makes its first funding decision, a Chinese firm makes a bigger splash in the Tasmanian wind sector and there’s news with major solar and wind players, Suntech and Vestas.

Pacific Hydro

Pacific Hydro has this week launched its long awaited retail offering. The initial launch will be in Victoria and Tasmania and will focus on business customers.

The plan to take on the big utilities in the energy retail sector was publically floated in February after the company failed to reach agreement on a power purchase agreement for its Moree Solar Farm joint venture – although the company had been working on it prior to then. The inability to seal a PPA was symbolic of challenges for independent power producers to get the major utilities to come to the party for clean energy projects.

These difficulties have now borne themselves out through wind power-focussed Pac Hydro and Meridian Energy both launching retail offerings in Australia in the past month. Both of these companies are focusing on Victoria and South Australia first – not surprising given their asset base is largely in these two states – but while NZ-based Meridian is concentrating on households, Pac Hydro will target business.

“Initially we will target medium and large business retail customers in Victoria and South Australia, ranging from local councils and manufacturing facilities through to corporations who are committed to a minimum purchase of 10 per cent GreenPower,” the company’s Australian GM Lane Crockett said.

Pac Hydro’s portfolio of 207MW of merchant wind farms will form the basis of its retail offering.

ARENA, geothermal

The Australian Renewable Energy Agency has announced its first commitment since it was launched on July 1, a $1.25 million grant to geothermal research – a drop in the ocean given it has $3.2 billion at its disposal ($1.5 billion already committed to certain programs and $1.7 billion available for new projects and programs). The money will stem from the $126 million Emerging Renewables Program and will be directed to the South Australian Centre for Geothermal Energy Research at the University of Adelaide.

The $3.54 million University of Adelaide project, expected to be completed in September 2014, will see a scientific analysis of Australia's two existing geothermal wells drilled in hot sedimentary aquifers: the Cooper-Eromanga Basin and the Otway Basin.

“This project will help address two important technical challenges confronting the geothermal energy industry in Australia: well drilling practices to assess potential damage to the rock during drilling and evaluation of the anticipated fluid flow rates," Energy Minister Martin Ferguson said.  

The study also has participation from CSIRO, Geodynamics, Panax Geothermal and the South Australian Department of Manufacturing, Industry, Trade, Resources and Energy.

Musselroe Wind Farm, Hydro Tasmania

Chinese renewable energy business Guohua Energy Investment Corporation has bought into the 168 MW Musselroe wind farm in Tasmania. Following the deal, Hydro Tasmania will retain a 25 per cent stake in the $395 million project, while Guohua will take 75 per cent through its Australian subsidiary Shenhua Clean Energy Holdings (SCE). It is the second such deal between the two companies following a similar agreement on the Woolnorth wind farms.

The deal is still subject to project finance, execution of a formal connection agreement and Chinese regulatory approvals. It is expected to reach financial close by the end of 2012.

Hydro Tasmania’s CEO Roy Adair said the agreement followed an extensive due diligence process undertaken by SCE during an exclusivity period that followed the acquisition by SCE of 75 per cent of the Woolnorth wind farms in north-west Tasmania in February 2012.

 “Strategic partnerships are the future for wind farm development as we look to build our renewable energy resource,” Adair said.

“Our wind strategy is about a small percentage interest in the development with a continued interest in the power purchase agreements to support our retail load through Momentum Energy and its mandatory requirements under the federal government’s Large-scale Renewable Energy Target.

“We also look forward to developing further investment opportunities with SCE into the future.”

Under the sale, Hydro Tasmania will provide operational, maintenance and administration services at Musselroe. It will also retain ownership of the Musselroe land with the wind farm operating under a 30-year lease.

The wind farm is on track to be operational by July 1, 2013.

Vestas

While rumours abound about Vestas’ finances – the crux being that they’re not particularly good – the world’s leading wind turbine maker has launched a new variant of its popular 3 MW turbine.

The new technology has a rotor diameter of 126 meters, 14 meters more than its first 3 MW turbine, which was launched in 2010. The first prototype of the new turbine, designed for low wind areas, will be installed during the second quarter of 2013.

Meanwhile, discussion of the company’s financial position continues to dominate moves in its stock price. Shifts of 5 per cent a day in either direction are now commonplace, with speculation of a 500 million euro capital raising sending the shares sharply lower last week (investors climbed back in last night, sending it up 8 per cent). The capital raising is seen likely, sources told Bloomberg, if a deal is not struck with Mitsubishi before year’s end.

Suntech Power, LDK Solar

Suntech, the largest solar panel maker in the world, slashed production capacity by a quarter overnight, sending its shares higher – a rare sight this year as its stock is down close to 60 per cent. Still clouded by a 560 million euro fraud scandal, talk continues to centre on the prospect for a tie-up between it and another Chinese solar firm though, for now, there are scant details on any possible plans.

Meanwhile, smaller competitor LDK Solar has held talks with potential investors, with the company saying a few companies have shown “significant interest in taking a strategic investment position.” That announcement coincided with another weak revenue forecast from the firm and an expanding loss in the second quarter.