Meridian Energy abandons Queensland hydro plans on 'puzzling' Australian stance
Meridian Energy [NZX:MELCA], the partially privatised electricity generator and retailer, has abandoned plans for a Queensland hydro power project, blaming the "destabilising revisions" in the Australian Federal Government's renewable energy policy.
The Wellington-based gen-tailer has scrapped plans to build the 37 megawatt hydro power station at Burdekin Falls Dam, Australia's largest dam, after the federal government moved to reduce the country's renewable energy target, creating regulatory uncertainty around the project, Meridian said in a statement. Australia's legislated RET calls for 20 per cent of the country's energy use to be sourced from renewable energy by 2020, specifying that target as 41,000 gigawatt hours.
"Meridian understands the disappointment that the people of Northern Queensland will feel on learning of this decision," Ben Burge, Meridian Energy Australia's chief executive said. "However, the federal government's protracted efforts to reduce the Renewable Energy Target have made long term capital investments in energy assets in this country nearly impossible."
In July last year, before 49 percent of the state-controlled company was floated on the NZX, Burge told media he didn't see any threat to Australia's legislated RET ahead of the country's federal election, which saw the conservative Liberal Party, led by Prime Minister Tony Abbott, oust the Labor government led by Julia Gillard.
Australian power companies claim the RET is undermining their business, and say renewable energy, particularly the uptake of household solar, is the reason behind Australia having some of the world's most expensive electricity prices. Earlier this year, Abbott said the RET was having a "not insignificant" impact on power prices and if renewable energy went too far "it becomes very, very costly".
At the start of the year, Abbott's government commissioned a controversial review by former chairman of oil company Caltex, Dick Warburton, rather than using the independent Climate Change Authority, established to provide expert advice to the government about reducing climate change. The Warburton review found the RET was a "high cost approach to reducing emissions" which "promotes activity in renewable energy ahead of alternative, lower cost options for reducing emissions that exist elsewhere in the economy" which was "not justifiable". It found renewable energy was not pushing up electricity prices.
Meridian has invested about $1 billion in renewable energy in Australia over the past five years, it said, "under the explicit invitation to long term capital embedded in the RET, and rolling out a new model of electricity retailing enabled by the RET".
"The federal government's position on the RET is puzzling, given that its own Warburton Review revealed that the policy does not increase the net costs of electricity for Australian consumers," Meridian said. "At a time when electricity bills are significantly impacting the cost of living, the Renewable Energy Target introduces more competition into the Australian energy market, and serves as an important policy for relieving the pressure on electricity bills."
Meridian built the mammoth 140-turbine Macarthur wind farm in Victoria in a joint venture with Australian electricity player AGL, and sold its half-share in June last year. It remains an investor in the 64-turbine Mt Mercer wind farm, also in Victoria, both of which were predicated on the economics of the RET scheme.
Shares of Meridian declined 1.1 percent to $1.78 and have gained 77 percent in the year.