GREEN DEALS: Snowtown celebration

Construction begins at Australia's second largest wind farm, AGL suspends its SA developments and Siemens makes plans to exit the solar sector.

Snowtown II

The first sod has been turned today at Snowtown II, signaling the beginning of construction at the 270 MW wind farm.

Snowtown II will be South Australia’s largest wind farm when fully operational by the end of 2014. By the time it is complete it is likely to only trail the 420 MW Macarthur wind farm in Victoria in terms of largest in the country. The $439 million project is being developed by New Zealand’s TrustPower with the use of 90 turbines from Siemens.

The project is adjacent to TrustPower’s 100 MW Snowtown wind farm and like that development, has a PPA in place with Origin Energy – the energy retailer's largest wind offtake agreement to date.

Financial close on the project was reached a few months ago, with construction slated to begin in August. The slight hold-up was likely caused by a wait for full development approval, but expect first power to still be exported to the grid late next year.

AGL

AGL will suspend any developments in South Australia as it fights the state energy regulator's decision to reduce electricity prices.

The company lists two wind farms in its South Australian portfolio that it plans to build in coming years – 186 MW Barn Hill and 99 MW Mt Bryan – but both had already been put in cotton wool before this development.

That cotton wool just got a bit thicker.

Siemens

German engineering group Siemens is set to offload its solar business after running out of patience with consistent losses from the division.

A giant of the engineering sector, Siemens’ solar activities are quite small in comparison to its overall size. It has both a PV unit and solar thermal power plant maker (Solel), which combined provide about $A380 million of revenue per year, a small fraction of its yearly sales of around $A90 billion.

The company had high hopes for solar, confident it could prove as successful as its foray into wind, where it is now one of the world leaders. Instead, its PV unit has been afflicted by the same problems facing all solar manufacturers around the world – a glut of supply that has led to rapid price declines.

Meanwhile, Solel, which was bought for around $400 million in 2009, has failed to find enough projects to fulfill the potential the company thought it had to be a key player in the market.

The company did not speculate on the likely bidders for the two solar businesses.

LDK Solar

LDK Solar has kept the liquidators at bay with a fresh injection of equity from a state-backed Chinese group.

LDK has been crippled by large debt loads and is struggling to pay them off thanks to the pricing weakness in the solar PV market. A stake of 19.9 per cent of its outstanding shares was picked up by state-backed Heng Rui Xin Energy for just over $A20 million.

With Beijing indicating it will focus its attention on supporting the top 12 Chinese solar firms, LDK Solar was in a position to benefit. Its balance sheet is still far from a pretty picture however, with red ink too often seen on its recent financial statements. Indeed, it has recorded losses for the past five quarters.

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