Ratch-Australia Plans to Spend A$1 Billion on Acquisitions, Wind

Ratch-Australia Corp., 80 percent- owned by Thailand’s Ratchaburi Electricity Generating Holding Pcl (RATCH), plans to spend A$1 billion ($1.1 billion) in the next three years buying power plants and building wind farms.

Ratch-Australia is considering acquisitions of coal- and gas-fired power stations and renewable energy projects as uncertainty about the government’s price on carbon emissions and lower wholesale electricity prices pushes asset values down, Steve Loxton, chief executive officer of the Sydney-based company, said yesterday in a phone interview. The company also may bid on New South Wales-owned power generators when the state government puts the stations up for sale, he said.

“I’d rather be buying now than when times are particularly strong,” Loxton said. “If there are large generation assets for sale, we’d definitely take a look. There don’t appear to be many parties wanting to play in that space.”

While Australia last month started charging polluters a fixed rate of A$23 a metric ton for their carbon emissions, opposition leader Tony Abbott has vowed to scrap the program should his Liberal-National coalition win power in 2013. Australia has set a target of generating 20 percent of its power from renewable energy by 2020 to cut its reliance on coal.

The Australian power producer, 20 percent-owned by Transfield Services Ltd. (TSE), is also seeking New South Wales state approval for the Collector wind farm and expects to complete financing for the venture in the second half of next year, he said. Collector, and the proposed Mt. Emerald and High Road wind farms in Queensland, are the three most advanced of about a dozen potential wind projects for the company, Loxton said.

The Collector wind farm is estimated to cost A$350 million and start in late 2015, said Loxton, whose company owns three wind farms in Australia. If all of Ratch-Australia’s proposed wind projects were built, the investment would climb to more than A$3 billion in the next 10 years, he said.

Collinsville Options

Australia requires retailers to purchase renewable energy certificates from generators, providing an incentive to wind and solar developers. An oversupply of the certificates reduced spot prices to about A$35 this year, compared with a price of more than A$50 needed for most wind farms to be viable, according to a June 29 Bloomberg New Energy Finance report.

“As the industry ramps up to the meet the target, we see the market improving,” Loxton said. “What it’s meant is that developers of wind farms have to more rigorously review their projects and make sure only the best ones get through.”

Ratch-Australia is still in talks with the Australian government to close the Collinsville coal-fired power station in Queensland, he said. The company is studying options to convert Collinsville to a gas-fired station, a hybrid solar thermal plant or a solar photovoltaic plant, while evaluating whether to continue burning coal at the site, Loxton said.

Australia, which relies on coal to generate about 80 percent of its electricity, announced plans last year to pay to shut down as much as 2,000 megawatts of coal-fired capacity by 2020 as part of the legislation to curb emissions.

The government, which expected to sign contracts by June 30, needs more time to reach agreements and will continue discussions with the operators of the Hazelwood, Yallourn, Playford, Energy Brix and Collinsville power stations, Australian Energy Minister Martin Ferguson said June 29.

Among the assets Ratch-Australia is considering buying are the New South Wales state power generators, Loxton said. The state government last month appointed Goldman Sachs Australia Pty as an adviser for the sale, expected to bring in proceeds of about A$3 billion, Treasurer Mike Baird said on May 31.

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

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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