Fair wind for renewable energy now behind Infigen

Fair wind for renewable energy now behind Infigen

• The Australian
• 12:00AM November 14, 2016
• TIM BOREHAM
  
  Criterion columnist
  Melbourne
  
  extract...
  
  Ill winds may blow for workers at Victoria’s condemned Hazelwood generator and the power-deprived denizens of South Australia, but they are breezes of fortune for the bourse’s only decent-sized renewable energy play.
  
  For the first time in some years, the green-tinged shareholders filing into Infigen’s AGM in Sydney can expect an upbeat update on earnings from long- serving CEO (and Clean Energy Council chairman) Miles George in his swan song appearance.
  
  Also driving Infigen’s share price — up 140 per cent since January — is a steadier regulatory framework after years of dithering in Canberra and well before the reign of Tony “climate change is crap” Abbott.
  
  “We have moved into a supportive policy environment where renewable energy is acknowledged as a significant contributor to delivering reliable, affordable and sustainable energy,’’ says Infigen chairman Mike Hutchinson.
  
  He is referring to the Turnbull government’s recent commitment to the renewable energy target of deriving 33,000 gigawatt hours — roughly 23 per cent of the nation’s power needs — by 2020.
  
  The Victorian government has outlined a more aggressive target of net zero greenhouse gas emissions by 2050. Sun-dappled Queensland has a target of 50 per cent renewable usage by 2030.
  
  Such lofty aims tend to be eroded as the political cycle dictates, such as Kevin Rudd’s downgrading of global warming from the greatest moral challenge of our generation to … not that important, really.
  
  An ardent supporter of 100 per cent renewables target when he was a mere backbencher, Malcolm Turnbull was quick to criticise the state’s “unrealistic” targets after late September’s 24 hour blackout in South Australia.
  Formerly Babcock & Brown Wind Power, the $680 million market cap Infigen operates six wind farms with 557 megawatts of capacity, three of them in SA.
  
  Sometimes wind energy produces more than 100 per cent of the state’s needs.
  Infigen also has a development pipeline of 1100MW, which compares with the incremental 6000MW required to meet Canberra’s 2020 RET target.
  
  Aided by dramatic price spikes in SA, Infigen reported a 56 per cent increase in September quarter revenue, to $62.8m, on an 11 per cent increase in production.
  
  Not surprisingly, the SA blackout sparked furious debate about the role of renewables in the snafu, which at face value was caused by the collapse of towers linking the state to the national grid. The fossil fuel brigade blames renewables, while the renewables camp contends the blackout was literally a case of a perfect storm and transitioning issues from the old to the new.
  
  Over the border, the flagged closure of the ageing Hazelwood lends support to the sector, given French owner Engie’s commitment to move from coal-fired power.
  
  It remains to be seen how much of a role renewables will play in filling the gap created by the Hazelwood closure, which still produces up to 22 per cent of Victoria’s power needs (for the time being, subdued industrial demand and the importing of black-coal fired NSW power means a SA-style shortage should be averted).
  
  The conventional (and justifiable) argument goes that because renewables can’t be relied on for peak power, they’re as unpredictable as a boozy uncle at a wedding.
  
  But this ignores the convergence between inherently unreliable wind and solar generation and rapidly evolving battery storage technology. It’s the same trend driving the boom in graphite and lithium stocks.
  
  The battery revolution is not lost on Infigen’s incoming CEO Ross Rolfe, who is closely monitoring the technology advances, reflected in the release of Tesla’s Powerwall 2.0 unit which has doubled capacity from the mark-one version (to 14 kilowatts).
  
  At the corporate level, Infigen is getting its act together after two years of losses. In 2015-16 Infigen reported a $45m net profit on revenue of $173m, a turnaround from the previous $303m loss.
  
  This included a $285m one-off loss on Infigen’s $US274m ($360m) sale of its US business, a prescient decision given president-elect Trump’s stated desire to ramp up oil and coal production at the expense of renewables.
  More broadly, Infigen’s recovery defies the insipid performance of the clean-energy sector, with almost every pure-play stock foundering over the last five years.
  
  Casualties include the Thorney Investments-backed Australian Renewable Fuels, and Impulse Airline founder Gerry McGowan’s CBD Energy and Ceramic Fuel Cells
  
  http://www.theaustralian.com.au/bus...n/news-story/a4091041fba25b8ce5e9baf0aef0a152