As foreshadowed, a major study (the Tambling Report) into the appropriate renewable energy target for Australia has now been released.
It’s a well-constructed analysis (300 pages) and anyone with an interest in wind energy should read it. See www.mretreview.gov.au
The report will knock the wind out of the flakier investment ideas. These extracts highlight the report’s no-nonsense style: ‘Overall the Review Panel considers that the wind industry has a considerable task ahead if it is to become competitive as a renewable energy sector in its own right. This task may be helped by cost savings associated with local manufacture. However it is currently unknown what the national grid’s capacity will be to absorb significant quantities of intermittent generation’.
‘Claims of the potential for developing a major export industry are viewed with some scepticism. However the industry itself is adamant that opportunities exist…for most renewable energy technologies, at this early stage of MRET (mandatory renewable energy target, established by the Government) there is little evidence in Australia of exclusive intellectual property, significant research efforts, natural cost competitiveness or market advantages. Solar PV provides the only exception. Niche exports may become viable, but little evidence exists to date that the industry could be a major world player’.
HOPEFULLY the Danes are not reading the Tambling Report.
Some background:
§ Vestas (the Danish turbine manufacturer) has a preminent position in Tasmania and is strong in SA. Enacon (USA) is strong in WA, and NEG Micron (also Denmark) is strong in Victoria, NSW and Queensland) There are 5-6 other manufacturers, including GE, all chasing market share.
§ The turbine industry is very competitive, and IP and scale economies are critical.
§ Vestas had established an assembly plant at Wynyard, near Burnie (NW Tasmania) and has undertaken feasibility studies to establish a blade manufacturing plant there. This would deliver real value adding, but substantial throughput is required.
Meanwhile, NEG Micron, its direct competitor, has been considering its own blade plant in Portland, Victoria. Voila! Press release from Ringkoebing, Denmark (December 15, 2003):
‘Two of the largest wind turbine manufacturers plan on combining their operations into one powerhouse Danish wind energy company, gobbling up 35 percent of the worldwide market, employing 8,500 people and boasting anticipated 2004 sales of EUR2.7 billion (US$3.31 billion)…citing size, technological know-how and development as well as financial strength as the major prerequisites for growth and long-term survival in today’s highly competitive international wind market, Denmark-based Vestas and NEG Micon will become one wind power entity offering a variety of multi-MW wind turbines for the world market.
What’s this all mean?
1. The Danish conglomerate may now have sufficient throughput to justify a blade plant in Australia.
2. It is now an in-house decision as to whether it is Wynyard or Portland (it could be both, or both could miss out!).
3. Serious manufacturing capacity might create the required bridge to local research effort.
4. It may trigger further joint ventures across the Asia-Pacific region. We believe the real potential in wind energy is in areas where it’s non-economic to connect to the main electricity grid, and hence the main scope is in remote communities, islands etc.