Australia: Inward investment shows tide is turning


March 18, 2016

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It is six months since Malcolm Turnbull took over from the wind-hating Tony Abbott as the prime minister of Australia. The wind industry is now starting to see the benefit.

New projects are being built and new investors are coming in.

This week, we have seen two deals featuring overseas investment from Asian companies. First, Thai renewable energy firm Wind Energy Holding agreed to buy a 50% stake in Australian business CWP Renewables for an undisclosed fee.

CWP is a joint venture between US firm Continental Wind Partners and the UK’s Wind Prospect. The deal gives WEH a stake in the 800MW CWP Renewables pipeline, where work is starting up.

Just last week, CWP committed to build its 260MW Sapphire wind farm in New South Wales, after winning subsidy support from the government of the Australian Capital Territory. The 32-turbine project near Glenn Innes is due to complete in 2018.

And second, the state-owned China State Power is set to buy Santander’s 107MW Taralga wind farm in New South Wales for a reported A$300m ($227m). This follows its acquisition for $3bn ($2.3bn) in December of Melbourne-headquartered firm Pacific Hydro, which has a 900MW renewables portfolio in 19 hydro and wind projects in Australia, Brazil and Chile.

The money is starting to flow again in Australian renewables, and Malcolm Turnbull is one of the main reasons why.

We were sceptical during his first couple of weeks in charge, as he came out in favour of damaging climate policies that one scorned, and looked unwilling to pick a fight with the Abbott-supporting climate change sceptics in his own party.

But his record since then has been more positive.

In December, he scrapped a contentious Abbott decree to ban state-backed investments in wind, which means local governments can once again support wind developers on their new projects. He is also leading renewed commitment within the government to Australia’s renewable energy targets to 2020.

Yes, he has not reversed many of the Abbott-led changes. The renewable energy target is still at the revised-down level agreed last May, and the government still supports coal. But the deals this week show the renewed optimism around the Australian market.

Miles George, managing director of developer and investor Infigen Energy, was one of the wind industry’s most high-profile critics of the Abbott administration, and now expects a lot of mergers and acquisitions activity in the sector after a “two-year drought”. He argues that the Pacific Hydro was just the start, and that investors have expressed interest in his firm.

It is great to see a once world-leading renewables market come to life again but, as ever, we will temper our enthusiasm. The damage wrought by Abbott means that there are now 27% fewer people working in Australia’s renewable energy sector than in 2011, and a few deals do not mean the country has wind industry has shaken off two difficult years.

But it is starting to and, for now, that must go down as a success.

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