Australia, New Zealand show promising wind power markets

Sydney, June 25, 2012 — The governments of Australia and New Zealand are stepping up efforts to cut back carbon emissions and increase the share of renewable energy in the countries' energy mix.

Australia has mandated that 20 percent of its electricity be generated from renewable sources by 2020 and to this end, has introduced renewable energy targets. This policy is the biggest incentive for investments in wind power in the country.

However, uncertainty in RET in Australia and the absence of new policy approaches in New Zealand have hindered the market from making optimal use of these policies.

New analysis from Frost & Sullivan, "Australia and New Zealand Renewable Energy Markets," finds that the market earned revenues of $1.90 billion in 2011 and estimates this to reach $5.04 billion in 2016.

Frost & Sullivan Research Analyst Subha Krishnan said that ambiguity in RET has caused a reduction in the price of the renewable energy certificates and made available surplus RECs in the renewable energy market. "Ever since the RET target for 2020 was amended to provide a 'solar multiplier' for roof-top solar systems, and some states introduced generous feed-in tariffs, small-scale installations such as PV systems and solar hot water systems have flooded the REC market," he stated.

"Among all renewable energy sources, solar photovoltaic had the highest revenue share in 2011, while wind power is considered the lowest cost form of large-scale renewable energy generation in the ANZ region," added Krishnan. "It is noteworthy that Australia has some of the best wind resources in the world."

However, the targets for solar PV systems in Australia are not as high as the targets of countries such as Germany and Japan, which are as high as 20 percent. Further, the focus on improving the installed power capacity through coal-fired thermal power plants does not encourage project developers and equipment manufacturers to increase the installed solar PV capacity.

Environmental concerns are expected to cause a shift in focus from conventional power generation to renewable energy generation and thereby, make a case for solar PV power. Meanwhile, in the wind power market, the demand patterns have changed from small capacity farms to large capacity wind farms.

"The benefits of economies of scale have prompted the installation of large capacity turbines over the last four years. This move has lowered installation and generation costs, giving a huge impetus to the renewable energy market," explained Krishnan.

To stoke higher adoption of renewable energy, Australia's parliament has passed landmark laws to impose a price on carbon emissions in one of the biggest economic reforms in a decade. They are aimed at making organisations more energy-efficient and push power generation towards gas and renewable sources.

On the other hand, in New Zealand, the Government allows distributed electricity generators to sell electricity back to the grid. However, to do this, they must ensure that all generation that is injected into the grid is reported to the reconciliation facility for the market on a monthly basis and that generators obtain a certificate stating that their (metering) processes are robust and accurate. These complex electricity buyback rules impose significant costs and hence, are appropriate only for large generators.

"Despite their high costs, renewable energy systems have found considerable acceptance among industrial end users, especially in urban areas," noted Krishnan. "The economic benefits derived from green technologies will go a long way in keeping the market dynamic."

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