Infigen in Talks to Invest Up to $492 Million a Year Building Wind Farms

Infigen Energy is in talks with potential partners to help fund Australian wind power projects that may cost as much as A$500 million ($492 million) a year to build, Managing Director Miles George said.

Infigen targets adding as much as 200 megawatts of wind power generation each year, George said in an interview in Sydney today after an annual shareholders’ meeting. Construction of the Australian projects depends on funding and whether the company determines they can be developed profitably.

“It’s governed by the availability of capital and secondly, being able to achieve our strict internal rate of return requirements,” he said. Infigen will rely on debt, A$174 million of cash and partners such as institutional investors.

Infigen has fallen 54 percent this year, compared with a 4.7 percent drop for the S&P/ASX 200 Index. The company “faced a challenging environment” in 2010, hurt by poor wind conditions, declining prices for renewable energy certificates and a surging Australian dollar, George said in a statement earlier today.

The stock slumped 12 percent to 64 Australian cents by the 4:10 p.m. close in Sydney today. The benchmark index rose 0.3 percent.

The Sydney-based company has 48 megawatts of wind energy projects under construction, moving toward a 160-megawatt goal for the year ending June 2011, George said. Infigen would seek to operate the projects and keep 50 percent ownership, he said, declining to identify potential partners.

Solar Flagships

Australia has set a target of generating 20 percent of its power from renewable energy sources by 2020. Prime Minister Julia Gillard established a committee in September to study options for introducing a price on carbon emissions in Australia, where coal accounts for more than 80 percent of electricity production.

Infigen and Chinese solar-panel maker Suntech Power Holdings Co. propose building solar energy farms in Australia’s New South Wales state and are vying for funding from the government’s A$1.5 billion Solar Flagships program. The venture is one of four solar photovoltaic ventures selected by the government for final consideration.

“Solar PV is significantly more expensive than wind energy, but the cost is coming down each year,” George said. “At the moment, it’s not competitive with wind energy so it needs an additional incentive. The project economics substantially improve with federal and state grant funding.”

Infigen said today it expects to retire about A$100 million of debt over the next two financial years, compared with its prior target of A$200 million. The company’s Woodlawn wind farm is on schedule to be completed in the second half of 2011.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net.

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.