Meridian Energy and AGL Plan Joint Venture for 365-Megawatt Windfarm in Australia

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Researched by Industrial Info Resources (Sugar Land, Texas)--Australian utility company AGL Energy Limited (ASX:AGL) (Sydney, Australia) and New Zealand's state-owned power company Meridian Energy Limited (Wellington, New Zealand) recently announced that they have entered into a conditional joint venture to construct the 365-megawatt (MW) Macarthur Wind Farm in southwest Victoria, Australia.

The announcement follows closely on the heels of the announcement late last month by the Australian federal government that it would make changes to its Renewable Energy Target (RET) scheme, splitting the scheme between large renewable energy projects and household projects from January 1 next year.

The RET scheme, introduced last year, was designed to reduce Australia's dependence on coal-fired electricity generation and required 20% of power generation to come from renewable sources by 2020. The scheme, which required major energy companies to purchase Renewable Energy Certificates (RECs) for each megawatt-hour of electricity produced from green sources, was intended to support about $19 billion of large renewable energy projects.

However, the scheme was badly affected by many households installing small-scale solar schemes, effectively devaluing the RECs and minimizing large-scale investment. Now the government has split the scheme into small-scale and large-scale developments and has decreed that 41,000 gigawatt-hours (GWh) of the total 45,000 GWh planned must come from large-scale projects.

The boards of AGL and Meridian will make a final decision on the Macarthur Wind Farm when the final legislation has been passed on the revised RET scheme. However, if the project goes ahead, AGL will use all the energy produced from the farm and will also take the RECs.

The planned project will use 174 turbines supplied by Suzlon Energy Limited (BSE:532667) (Pune, Maharashtra). The turbines will be Suzlon model S88, each with a capacity of 2.1 MW. The turbines are designed to operate in medium wind speeds and have a rated wind speed of 14 meters per second. In total, the windfarm will generate 365 MW of electricity and will provide about 945 GWh of electricity each year.

The windfarm is expected to take about three years to construct, but no work will be undertaken until the boards of AGL and Meridian have approved the project. Final investment plans will be announced following the official approval.

Meridian is New Zealand's electricity generating company and supplied about 28% of the country's power in 2008. The company operates a mixture of hydroelectric and wind-powered generating stations in New Zealand with a total generating capacity of 2,761 MW. In addition to the joint venture with AGL in Victoria, Meridian currently has several projects under development in New Zealand, again a mixture of hydroelectric and wind power, totaling 1,800 MW, including the controversial Project Hayes windfarm.

The Project Hayes farm, with a proposed capacity of 630 MW, had its resource content approved in 2007, but appeals to the Environment Court resulted in the consent being revoked in November last year. Meridian has appealed the decision to the New Zealand High Court, and a hearing is planned for June 2010. To date, Meridian has spent more than $5.4 million attempting to gain approval for the project.

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