Overcoming barriers to wind project finance in Australia
The wind power industry in Australia is expected to grow rapidly over the next decade, primarily due to a forthcoming expanded national renewable energy target (RET) which will mandate that renewable sources provide approximately 20% of Australia's electricity production by 2020. However, development of new wind generation in Australia has stalled as a result of several barriers to project finance, the mechanism through which most wind farms have been developed historically. This paper provides an overview of wind power financing in Australia in light of recent political and financial trends. Drawing upon existing literature and a series of stakeholder interviews, it identifies three primary barriers to project finance: regulatory risk surrounding legislation of the RET, semi-privatization of electricity retailers in New South Wales, and limited capital availability resulting from the recent global credit crisis. The paper concludes that the confluence of these barriers limits the availability of long-term contracts that provide revenue certainty for pre-construction wind projects, while simultaneously making these contracts a necessity in order to obtain project finance. In an attempt to mitigate these effects, this paper identifies four alternative development strategies that can be pursued.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- MacGill, Iain & Outhred, Hugh & Nolles, Karel, 2006. "Some design lessons from market-based greenhouse gas regulation in the restructured Australian electricity industry," Energy Policy, Elsevier, vol. 34(1), pages 11-25, January.
- Venetsanos, Konstantinos & Angelopoulou, Penelope & Tsoutsos, Theocharis, 2002. "Renewable energy sources project appraisal under uncertainty: the case of wind energy exploitation within a changing energy market environment," Energy Policy, Elsevier, vol. 30(4), pages 293-307, March.
- W. D. Walls & J. Ludwigson & F. Rusco, 2006.
"Power plant investment in restructured markets,"
2014-64, Department of Economics, University of Calgary, revised 23 Sep 2014.
- Luke Reedman & Paul Graham & Peter Coombes, 2006. "Using a Real-Options Approach to Model Technology Adoption Under Carbon Price Uncertainty: An Application to the Australian Electricity Generation Sector," The Economic Record, The Economic Society of Australia, vol. 82(s1), pages S64-S73, 09.
- Blyth, William & Bradley, Richard & Bunn, Derek & Clarke, Charlie & Wilson, Tom & Yang, Ming, 2007. "Investment risks under uncertain climate change policy," Energy Policy, Elsevier, vol. 35(11), pages 5766-5773, November.
- Owen, Anthony D., 2009. "The inquiry into electricity supply in New South Wales," Energy Policy, Elsevier, vol. 37(2), pages 570-576, February.
- Saddler, Hugh & Diesendorf, Mark & Denniss, Richard, 2007. "Clean energy scenarios for Australia," Energy Policy, Elsevier, vol. 35(2), pages 1245-1256, February.
- Kent, Anthony & Mercer, David, 2006. "Australia's mandatory renewable energy target (MRET): an assessment," Energy Policy, Elsevier, vol. 34(9), pages 1046-1062, June.
- Pollio, Gerald, 1998. "Project finance and international energy development," Energy Policy, Elsevier, vol. 26(9), pages 687-697, August.
- Anderson, Edward J. & Hu, Xinin & Winchester, Donald, 2007. "Forward contracts in electricity markets: The Australian experience," Energy Policy, Elsevier, vol. 35(5), pages 3089-3103, May.
- Wiser, Ryan & Pickle, Steven & Goldman, Charles, 1997. "Renewable energy and restructuring: policy solutions for the financing dilemma," The Electricity Journal, Elsevier, vol. 10(10), pages 65-75, December.
When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:37:y:2009:i:8:p:3139-3148. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.