No point building new windfarms in Australia while Abbott's in power, NZ's Meridian says

Wednesday 19th August 2015

The Australian federal government's negative attitude to renewable energy means New Zealand windpower expert Meridian Energy sees no opportunities to build new generation there in the near future, chief executive Mark Binns says.

"We've been disappointed by the approach that's been taken by the Abbott government to the review of the Renewable Energy Target (RET) and its attitude to renewables overall, particularly Mr Abbott's very clear personal antipathy to windfarms," he said, referring to Australian Prime Minister Tony Abbott, whose government has shown little appetite for action to combat climate change in a country highly dependent on coal and gas-fired electricity generation.

"A new (RET) target was agreed after 18 months of political posturing which, together with the delay, has done significant damage to investor confidence," he said. "The government's commitment and longevity of the scheme is less than convincing."

The Australian renewables target was wound back from 41,000 Gigawatt hours of new renewable generation to 33,000GWh and plans to introduce carbon charging were dropped.

Binns' comments came as Meridian announced it had taken writedowns on the value of its Australian wind assets of $38 million, which relate mainly to its 70MW Mt Millar windfarm in South Australia.

Given Abbott's antipathy to windfarms and his intention to establish a commission to investigate complaints about them, Binns said the Australian market was "not one where you would regard the political risk as low in making a major further investment in Australia."

However, the company did report some upside from its Australian operations, with the Australian Tax Office dropping a claim for $28 million in capital gains tax from the sale of Meridian's stake in the Macarthur windfarm and a strong early showing from its fledgling Powershop retail offering in eastern Australian states.

Excluding the cost of adding new customers, Powershop's Australian operation had reached breakeven in the last year and was expected to become profitable in its own right, despite anticipated additional marketing costs in the current year, said chief financial officer Paul Chalmers. Powershop had 48,208 customers at June 30, up from 35,138 a year earlier and customer wins in New South Wales were running ahead of budget, said Binns.

The company is also in advanced talks with an unnamed UK electricity retailer about the potential to establish a Powershop franchise model, with interest from other Northern Hemisphere providers, where there was scope to improve customer experience using the Powershop model.

BusinessDesk.co.nz

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