From the Grant King interview in Business Spectator:
****************************** SB: Grant, a lot of the discussion about the renewables targets and legislation focuses on the fact that it’s going to pull forward a lot of wind investment which is not necessarily ideal. You’ve got a very big exposure to geothermal. Is that going to get pushed further out because of the focus on wind?
GK: Yeah. We’re in control of that ourselves, because currently at Origin we would say we’re probably 22 to 25 per cent market share of the retail market and we would aspire to 30 per cent to 40 per cent over the same timeframe. So let’s just pick a third of the market, per se, for the explanation. Because the RET liability is on retailers to acquit, then we are a gatekeeper, as are the other retailers. As a gatekeeper we can control whether we choose to acquit by more wind earlier, nothing and building a liability and acquitting at a future period, or wind today and banking and carrying forward or some or any combination of technologies thereof. Clearly the commercial and economic puzzle to unlock is: what technologies does one bet on and at what rate does one deploy those technologies in satisfying your RET obligation or liability.
We’d be very happy to have 2,000 megawatts of wind and 1,000 megawatts of geothermal in our mix in 2017 and 1,000 megawatts would be a big geothermal project, yeah, a very big geothermal project.
****************************** Origin are looking at a 1000MW for 2017. My understanding is this will be coming from the GDY project partnership.
Australia's geothermal industry needs to drill hundreds of wells. I would rather know there is a problem with the casing design/materials after 3 wells, than a hundred. All geothermal companies will benefit from GDY's experience.
The geothermal industry needs government support to help them accelerate through the long lead times.
I am proud to say I helped buy a drilling rig when GDY couldn't hire one in a timely manner and the Howard government wouldn't help. (I can't afford to keep doing this though!)
If you invest in GDY, you should know not to expect a dividend anytime soon. The value of the renewable energy resource under their control will be realised as the project develops.
The pilot plant is just a small step along the development path. I don't see that it is actually on the critical path. It would, however, save fuel costs and be great for investor sentiment. It would also give them some more operational experience.
RNE Price at posting:
97.0¢ Sentiment: LT Buy Disclosure: Held
