Will Origin Energy’s $900M Wind Project Be Threatened by Renewable Energy Review?
By Vittorio Hernandez | February 21, 2014 10:14 AM EST
The windmill at Brixton, the closest surviving windmill to central London
Origin Energy is waiting for the result of the federal government's review of Australia's 20 per cent renewable energy target launched on Monday. The anticipation is because of the potential impact of the policy on Origin's $900-million Stockyard Hill wind project.
Origin Energy Managing Director Grant King disclosed that the project, planned for western Victoria, is ready to go, but would depend on the result of the RET review.
The review, headed by Dick Warbuton - a known climate change sceptic - will advise the Abbott government is the 20 per cent target is still appropriate for the country.
Current regulations mandate that 20 per cent of Australia's power generation must be sourced from renewable energy sources. But recent decline in electricity demand increase the percentage from renewable energy sources such as wind and solar energy.
Origin's plan is to supply power to Victoria beginning 2017, which could be moved to 2020, depending on the review's outcome.
The firm reported a drop in its net profit in December to $322 million from $524 million a year ago because of intense competition and the warmer winter, although Mr King said the business is now more stable than six months ago.
Mr King said the pressure of Origin's retail division, which comprises more than 50 per cent of the energy firm's earnings, is expected to ease since the ability of households to further reduce their electricity is near its end.
He explained, quote by The Herald Sun, "Customers are thinking about how many lights they turn on and how long they run the air conditioner, for example, but at the end of the day there is only so far you can go with that."
Mr King added, "People aren't going to sit in the dark and eat cold meals."
However, what may boost Origin's income is the sale of gas to other exporters from its Queensland gas export project even before the start up of its own project by the middle of 2015.
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