Hydro Tasmania to increase cooperation with China Shenhua Group for wind projects

Hydro Tasmania is considering developing Australian renewable energy projects outside the nation’s island state as the company looks at expanding a partnership with a unit of China’s Shenhua Group Corp.

The Tasmanian state-owned energy company is assessing new wind farms and projects to supply power to remote areas that aren’t connected to the main electricity grid, Chief Executive Officer Roy Adair said yesterday in a phone interview.

Hobart-based Hydro Tasmania, which completed a deal yesterday to sell 75 percent of its Musselroe wind farm to Guohua Energy Investment Co., plans further projects as Australia moves toward a goal of getting at least 20 percent of its power from renewable energy by the end of the decade.

Is the Shenhua unit “keen to participate with us in other deals?” Adair said. “The answer is yes. We have a trusted relationship. We’ll wait to see what projects appeal to both.”

The Australian company is also studying a proposal to build a 600-megawatt wind project on Tasmania’s King Island estimated to cost about A$2 billion ($2.07 billion). The company needs to gain community support for the TasWind venture before talking with potential partners and making funding decisions, Adair said.

Hydro Tasmania’s deal for the A$394 million, 168-megawatt Musselroe wind farm in the northeast of the state follows a 2011 agreement to sell 75 percent of the Bluff Point and Studland Bay wind farms in Tasmania to the Shenhua unit. The company also has 30 hydro-power stations operating in Tasmania.

More Cooperation

“The strategic cooperation between us will create significant long-term value,” Guohua Chairman Xie Jianning said yesterday in a statement released by Hydro Tasmania. “We look forward to continuing to expand our relationship.”

The Tasmanian company is evaluating options on the Australian mainland and views remote area power supply as “very attractive from an economic perspective,” Adair said, declining to discuss any specific projects being considered.

Mining companies are investing in renewable energy faster than other industries to supply power to projects off the grid. Explorers were expected to invest about $5 billion in remote alternative-power projects last year and at least $8.4 billion by 2016, compared with $1.88 billion in 2010, Ernst & Young LLP estimated.

“That’s certainly an area we’re looking at,” the Hydro Tasmania CEO said. “Fundamentally there’s a strong business case there that would attract, I’m sure, potential partners.”