The economics of building new wind farms in Australia is \u201cgetting worse, not better\u201d the developers of some of Australia\u2019s biggest new projects have warned, as rising construction costs, connection and transmission delays, and a fickle off-take market increasingly block the path to final investment.<\/p>\n
Executives from companies ranging from global renewables developers to one of Australia\u2019s biggest utilities have painted a grim picture of the current market for large-scale wind, in a series of presentations delivered at two separate conferences held in two different states over the course of the week.<\/p>\n
Origin Energy CEO Frank Calabria says the soaring cost of building new large-scale infrastructure is an economy-wide problem, but is \u201cshowing up most visibly\u201d in the energy sector given the scale of the projects that need to be delivered. <\/p>\n
Within the renewable energy sector, it is wind farms that are feeling the economic pinch most keenly. <\/p>\n
\u201cThe cost of developing a wind farm today is roughly 50 per cent higher than it was in 2020,\u201d Calabria told the Australian Energy Council conference in Sydney on Thursday.<\/p>\n
\u201cWind projects that were bankable a few years ago, are now finding it very hard to clear the hurdle. That is a problem, because wind is essential to the system we\u2019re building.\u201d<\/p>\n
Origin has its own lived experience of this, with its huge 1.45 gigawatt (GW) Yanco Delta wind farm that is approved for construction in the south-west of New South Wales but is still yet to reach a final investment decision.<\/p>\n
Just a couple of weeks ago, Yanco Delta made the list of 19 winners of the latest and biggest auction under the federal government\u2019s flagship Capacity Investment Scheme, notching up the title for the biggest capacity awarded for a single project in the CIS program.\u00a0<\/p>\n
But Calabria says that even with the CIS support, the company is not yet in a position to make a final investment decision on what will be the largest wind farm in the Southern Hemisphere. <\/p>\n
\u201cThe Capacity Investment Scheme has been an important bridge for energy helping close the economic gap for projects the market alone would not support,\u201d he told the Sydney conference. <\/p>\n
\u201cThe CIS is supporting our own Yanco Delta Wind Farm, and we are grateful for that. But even with CIS support, the economics of wind remain challenging.<\/p>\n
\u201cProgressing towards a final investment decision on Yanco Delta \u2026 is challenging with escalating costs, even with CIS support, but we will continue to work through the final steps of what\u2019s required to make this call,\u201d Calabria said.<\/p>\n
\u201cOur problem is not ambition; we want to build this infrastructure. The projects exist. The intent is there. The problem is economics \u2013 and it is getting worse, not better.\u201d<\/p>\n
Further down south, at an energy conference in Tasmania, developers of wind energy projects on the island state repeated a similar refrain.<\/p>\n
\u201cThis presentation comes with a with a warning,\u201d quipped Acen Australia CEO David Pollington. \u201cAnyone who doesn\u2019t like lots of hard work, disappointment, frustration, and who lacks perseverance, leave now!\u201d<\/p>\n
The Philippines-based Acen is developing three major wind projects in Tasmania: the 900 megawatt (MW), two-part Robbins Island and Jim\u2019s Plain projects in the state\u2019s north-west, and the up to 1.2 GW North East Wind in the north east.<\/p>\n
Pollington says that costs for the fully permitted Robbins Island Jim\u2019s Plains projects are already into the tens of millions, well before any sod has been turned.<\/p>\n
This situation has no doubt been exacerbated by the Robbins Island project\u2019s remote and environmentally sensitive location, which has in turn underpinned community opposition to the project and inspired a number of legal challenges.<\/p>\n
But as the project approaches 10 years in the development pipeline, the costs continue to pile up \u2013 including for the long and winding transmission line Acen has to build to link the project to Tasmania\u2019s grid \u2013 and to eat away at the project\u2019s business case. <\/p>\n
\u201cI don\u2019t mind saying we\u2019ve spent about $25 million on the development of Robbins Island today [and] Jim\u2019s Plains,\u201d Pollington told the 8th Annual Tasmanian Energy Development conference in Devonport on Wednesday.<\/p>\n
\u201cThe case that we put forward is the value of the project, and what it \u2026 offers the community, the company, long-term. We have a high capacity factor, one of the best wind projects I\u2019ve worked on in this country, and in fact overseas as well \u2013 so far, the board\u2019s believing me,\u201d he said.<\/p>\n
\u201c[On] supply chain costs; look, we\u2019re tendering all the time at the moment, because we\u2019ve got major projects in New South Wales that we\u2019re looking to go into construction in 2028 \u2013 something in the order of $6- $7 billion worth of projects.\u00a0<\/p>\n
\u201cWe\u2019re seeing price increases, and they\u2019re going to impact Tasmania, and it\u2019s also going to be challenging to get the workforce here to actually build these things,\u201d Pollington said.<\/p>\n
\u201c[In Tasmania], the transmission infrastructure largely doesn\u2019t exist, so you\u2019ve got Acen developing long transmission lines to be able to connect projects that are in the areas that were identified by [the Australian Energy Market Operator] as key renewable energy zones.<\/p>\n
\u201cLong-term revenue streams are unclear or absent. [I\u2019ve] built many projects. I can guarantee no banks are going to look at you unless you\u2019ve got a credible off-take, and that needs to be \u2026 bankable, someone with a credit-worthy account.\u201d<\/p>\n
Marc White, the principal consultant and COO of Goanna Energy Consulting in Tasmania said the more than 50 per cent price rises in the cost of building wind energy is, in turn, affecting the market for renewable energy offtake deals and, in particular, long-term contracting.<\/p>\n
\u201cBased on all the logistics and issues we\u2019re facing in the market \u2026 we\u2019re seeing retailers less willing to sign fixed price products, large corporates are looking for shorter deals, and the banks are becoming very nervous about longer term pricing outcomes,\u201d White said on Wednesday.<\/p>\n
\u00a0\u201cThe [electricity] forward market [has] dropped \u2013 literally last week we\u2019ve seen forward pricing for 2029 go from $103 a megawatt-hour down to 80 bucks a megawatt-hour and, of course, you know when you\u2019re looking at new-build costs above $100 a megawatt-hour, this doesn\u2019t augur well for our enormous rollout.<\/p>\n
\u201cIt looks to me like the market\u2019s thinking that there\u2019s going to be a very different supply-demand outlook in those [forward] years than what it did just a couple of short months ago,\u201d White says.\u00a0<\/p>\n
\u201cSo, the problem [from] that, I guess, is that my customers remain complacent. <\/p>\n
They\u2019ve got great deals that we did one or two years ago at $60 or $70 a megawatt-hour, and so when I say to them, you know, are you interested in a 10 year power purchase agreement of over $100 a megawatt hour, they don\u2019t understand why they would need to confront that sort of future.<\/p>\n
\u201cAnd so unfortunately, just in the last couple of weeks, what we\u2019ve seen is that gap between buyers\u2019 expectations of what\u2019s fair value and sellers\u2019 expectations about what\u2019s fair value has actually widened significantly.\u201d<\/p>\n
Andrew Kerley, general manager of wind development at Equis\u2019 newly rebranded Australian renewables outfit GreenPoint Energy (GPE), had a slightly more positive take, based on the company\u2019s experience with the proposed 224 MW Bell Bay wind and battery project proposed for near George Town in Tasmania\u2019s north.<\/p>\n
\u201cWe\u2019re talking about $10-20-plus million dollars to develop a wind farm \u2013 to get investment committee board commitments to spend that money, allocate that not only the money but the people to work on these projects.\u00a0<\/p>\n
\u201cYou kind of need to have a \u2026 sort of a baseline of certainty; \u2026 all the right signals to say \u2018yes, this is a multi-year thing\u2019,\u201d he told the TED conference on Thursday. <\/p>\n
\u201cThe forecasts for what it\u2019s going to look like in time are going to change over time. They\u2019ll be wrong now.\u00a0We know that \u2013\u00a0no forecast that\u2019s ever done this far out will be an accurate representation of what happens in a couple of years.\u00a0<\/p>\n
\u201cBut as long as we\u2019ve got the signals, like the CIS, like Hydro [being] willing to \u2026enter into PPA discussions for projects that aren\u2019t genuinely shovel ready but have a really clear path, and all the strong fundamentals\u2026 and knowing that there\u2019s still months, years, and tens of millions of dollars to be spent from the developer to get there,\u201d he said.<\/p>\n
\u201cWhen [the CIS] first came out, it was designed to be for sort of shovel-ready projects that needed just a little bit of help to get into a final investment decision. <\/p>\n
\u201cBell Bay is obviously a lot before that, but [CIS backing] means that all the commitments that you make \u2026 like local content requirements, jobs across all different categories of demographics, we can actually tell all the contractors on day one, these are the commitments that we\u2019re making under the CIS.\u201d <\/p>\n
If you would like to join more than 29,000 others and get the latest clean energy news delivered straight to your inbox, for free, please\u00a0click here to subscribe to our free daily newsletter<\/a>.<\/p>\n
![](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/05\/sophie-vorrath-e1707967778268.jpg\"\/)
<\/p>\n","protected":false},"excerpt":{"rendered":"The economics of building new wind farms in Australia is \u201cgetting worse, not better\u201d the developers of some…\n","protected":false},"author":2,"featured_media":717110,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[347920,64,63,99,187699,952,330439,137830],"class_list":["post-717109","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-acen-australia","tag-au","tag-australia","tag-business","tag-equis","tag-featured","tag-greenpoint-energy","tag-origin-energy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/717109","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=717109"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/717109\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/717110"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=717109"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=717109"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=717109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}