Canadian group highlights the trouble with Australia’s energy ambitions

afr.com:

Canadian group OMERS Infrastructure is steering clear of Australia’s planned renewable energy zones, and says the delays in planning and development are pushing up costs and making investments too risky,

The $C34 billion ($38.6 billion) infrastructure fund, whichowns stakes in NSW’s electricity network Transgrid and renewable energy developer FRV Australia, previously had “grand ambitions” for investments in Australia, managing director Kevork Sahagian told The Australian Financial Review Infrastructure Summit in Sydney.

OMERS Infrastructure managing director Kevork Sahagian (right) and Powerlink executive Jacqui Bridge at the Infrastructure Summit. Oscar Colman

But OMERS was struggling to close investments in renewable energy projects through FRV because of rising interest rates, higher inflation, supply chain disruptions as well as scarce and expensive labour, he said.

It was finding it hard to find engineering contractors with connections to transmission networks, and the prices for power purchase agreements (contracts to buy and sell energy at an agreed price) had risen about 30-40 per cent over the past three years, making it challenging to find customers.

Although FRV has reached financial closure on one large solar project in NSW and is approaching that stage for a handful of others, OMERS is “well short” of where it had hoped to be when it invested in FRV in late 2001, Mr Sahagian said.

There are issues with the “bid-ask spread” of what people are willing to pay for energy and what can be delivered in the current market, he said.

OMERS wants governments to provide investors with “a really deliberate and methodical plan that actually gets delivered on,” he said.

“We’ve intentionally stayed away from the [renewable