With a goal to develop and establish Roaring 40s as the leading international renewable development business in China, India and Australia, Managing Director Mark Kelleher is no stranger to the Chinese renewable energy market. In line with the Chinese economy, Mr Kelleher says that the nation’s renewable energy sector is progressing strongly and rapidly.

“The Chinese government has recently increased the country’s wind energy target for 2010 from 5 gigawatts (GW) to 10 GW, however even this new target will likely be achieved by the end of this year,” he says.

“The 2020 target of 30 GW is also likely to be increased significantly in coming years. The local power generators, particularly the five state-owned generators, are still the leading forces in wind development but moving forward, more and more businesses from other sectors, both government-owned and private, have shown strong interest in the wind sector,” he says.

When it comes to world energy supply and demand China is often a centre of debate. As one of the fastest growing economies in the world, China is faced with unique challenges associated with meeting growing energy demand at the same time as addressing the impacts of climate change, and significant renewable energy targets have been introduced as part of the solution.

It is estimated that meeting these targets will require $350 billion in investment, and Mr Kelleher believes that Australia has the expertise to work with China to become a world leader in zero and low emissions technologies.

A clean energy mission

With the spotlight recently on Beijing for the 2008 Olympic Games, Mr Kelleher joined ten other Australian companies on a clean energy mission to China. The mission, led by Federal Minister for Trade Simon Crean, aimed to provide opportunities for dialogue on Australian commercial and trade interests as well as showcase Australia’s renewable energy capabilities to the Chinese market.

Mr Kelleher says that the trade mission was a success on two fronts. Firstly, it allowed Australian renewable energy companies close access to the Federal Minister for Trade; access that he believes will assist in developing stronger ties between industry and government in the Australian context.

“Secondly,” he explains, “the mission created a platform from which Australian companies could sell their expertise to Chinese businesses. From this point of view, the mission received strong recognition from the Chinese side, and I’m confident that many new business relationships were developed.”

Mr Kelleher says that the mission raised the profile of Australia’s clean energy capabilities, promoted Australian innovation, and connected Australian companies to key Chinese energy sector representatives and local customers.

Roaring 40s is a leading international wind development business in China, and has now been in the market for over three years. The company recently signed a joint development agreement with one of China’s largest energy generators, China Datang Corporation, to construct a 1,000megawatts (MW) wind farm in the Jilin Province. It is also developing a major wind farm portfolio with Guohua Energy Investment Company. In total, the company has eight wind projects operating or under construction in China and one in India.

Whilst in China, Mr Kelleher held discussions with leaders from the Chinese Renewable Energy Association, Chinese turbine manufacturers, government policy officials and other Chinese companies interested in pursuing renewable energy projects.

“With Australia having recently ratified Kyoto, and announced the key policy initiatives of a carbon pollution reduction framework and 20 per cent renewable energy target, our credibility in this area is now much higher in international markets,” he explains.

So just how valuable is China’s wind market for Australia? Mr Kelleher has no doubt that the opportunities the market presents are substantial, but where there is opportunity, caution must also be taken.

“The sheer scale of the renewable energy market in China offers substantial opportunities for Australian businesses. But the business environment is very different and so companies intending to enter the market need to do their homework thoroughly,” he explains.

Achieving 1,000 EMW and more

Roaring 40s was established in 2005 as a joint venture between Hydro Tasmania and the CLP Group – a major public Hong Kong-based energy utility.

Roaring 40s’ stated vision is to install 1,000 renewable equity megawatts (EMW) by 2010 and the company is well on its way to achieving this. As Mr Kelleher explains, through its fifty-fifty joint venture approach to business in China, its actual installed capacity is significantly higher.1

“We are on target to achieve or better this goal [1,000 EMW], with about 500 EMW of current projects either commissioned or with construction underway, around 240 EMW due to commence shortly and a further 600 EMW of projects in our current pipeline,” he says.

Moreover, with a rapidly growing wind energy market in China and India, and the increasing demand for renewable energy in Australia, Mr Kelleher is confident that the company’s development plans will continue to grow rapidly.

With renewable energy generation targets in all three countries, this confidence is well-founded. China has its 30 GW renewable energy target, India has a renewable energy generation target of 12 per cent by 2020 and then there is the Australian Federal Government’s target of 20 per cent of energy generation from renewable sources by 2020.

Today, Roaring 40s has a significant project portfolio in Australia, with operating projects in Tasmania and South Australia. Currently expanding this portfolio, the company is developing a number of new wind energy projects in Tasmania, Victoria and South Australia. Of these, the 117MW Waterloo wind farm in South Australia and the 129 MW Musselroe wind farm in Tasmania are the most advanced. Both developments have received planning approval and the early stages of construction have begun. The company aims to have both these projects commissioned by 2010.

In addition to these two projects, Roaring 40s is investigating further developments at Sidonia Hills in Victoria, Robertstown and Stoney Gap in South Australia and Spring Hill Tier in Tasmania. In total, the company has approximately 573 MW of projects under construction or in development across these three states, with a total capital cost in the area of $1.4 billion dollars.

Once the 1,000 EMW target has been achieved, Mr Kelleher says the company will implement a further target in line with its growing portfolio. And while it has focussed its portfolio on the wind sector to date, he says that other development renewable development opportunities may be pursued in the future.

Renewables and the CPRS

Looking to the not-so-distant future, Mr Kelleher believes implementing the Federal Government’s proposed Carbon Pollution Reduction Scheme (CPRS) is extremely important.

“While the initial approach appears likely to be geared towards being ‘low impact, it is probably pragmatic and will enable the important framework to be established,” he says.

He adds that this low impact approach means it is crucial to have an expanded renewable energy target (RET) implemented as soon as is practicable. Explaining why, he says that it will have an immediate and significant positive impact on CO2 abatement and the deployment of clean energy generation, along with modest cost impacts.

“Other key measures such as energy efficiency and research and development of clean energy technologies in which Australia has a competitive advantage need to play a major part of the Government’s approach.

“Roaring 40s supports the 2010 CPRS start date and welcomes the inclusion of as many industries as possible, with others added when reliable data becomes available,” he says.

The company also strongly supports the decision to allow the importation of Carbon Development Mechanism credits into the scheme. Mr Kelleher hopes that the government ensures that the proposed importation cap is set at a level that allows for effective compliance cost mitigation while also sending a message of general support for the mechanism to the international negotiating parties.

Mr Kelleher says that after a stall in the renewable energy industry under the previous government, the CPRS is the right major long term approach for dealing with climate change. In the near term, however, he thinks that it is unlikely to provide a sufficient basis for the development of a renewable energy industry and projects. Accordingly, he says that an extended RET is a crucial enabler of the sector.

“The introduction of the extended RET is an immediate priority that will stimulate and regain the initial momentum and enable Australia to establish and build international capabilities across a range of its world class renewable energy resources.

“In addition, attention is needed in relation to the development and rules for transmission infrastructure in Australia that will enable the sector to reach its full potential.”

And the potential for Australia’s renewable energy sector is huge. The Federal Government’s green paper has emphasised the need to promote greenhouse gas abatement and clean energy use in Asia, and China’s carbon emissions have been identified as a major challenge in the global effort to tackle climate change.

Mr Kelleher believes that Australia can play a part in China’s switch to more sustainable energy forms and carbon reduction plans.

“Given the current state of economic development, China has a huge challenge to continue to lift the living standards of its 1.4 billion people while trying to minimise the impact on the environment,” he says. “While the Chinese Government is undertaking many positive activities, Australia has many forms of expertise that can be deployed to assist in this challenge, including expertise in specific technologies as well as expertise in environmental management, energy efficiency and carbon management.

However, the global energy demand and supply situation is a two-way process. China is Australia’s largest overall trading partner, our second largest export market for goods, and our third largest market for services. Mr Kelleher agrees that Australian companies can learn from the China experience. The key, he says, is to think big.

He says that it is great to have seen in China and India what can be done with strong government and community support.

“Within the space of a few short years,” he says, “China has become the world’s most important market for wind power.

“Australia now has the opportunity to become a world leader in many of these new clean energy technologies with the right policy settings and business vision.”

1. An EMW refers to Roaring 40s’ ownership of each project. As most of the company’s projects – and all in China – are 50:50 joint ventures, an EMW refers to the proportion of the project that Roaring 40s actually owns outright. While the company’s target is 1,000 EMW by 2010, the company will actually have been involved with 2,000 real MW of development by this time.