Canegrowers all fired up

THE FUTURE of the region’s government-backed cogeneration plants – the largest renewable baseload energy project in Australia – is in doubt as the local sugar industry battles plummeting renewable energy prices.

While about 600 North Coast canegrowers wait on more than $8 million in late payments for last year’s crops, the NSW Sugar Milling Cooperative has called on the federal government to help protect and boost renewable energy prices before the cogeneration plants become ‘unviable’.

And ongoing problems separating cane from trash mean that the ‘black snow’ will fall again next year as large-scale burning of cane fields continues after sporadic reprieves over the past three years.

“If the government doesn’t do anything about the REC (renewable energy certificate) prices then the basis of the plants being built is totally destroyed and the project will be in a lot of trouble,” NSW Sugar Milling chief executive Chris Connors said.

The Cooperative has been struggling financially this year – partly due to the state government-owned Delta Electricity joint venture $220 million cogeneration plants at Broadwater and Condong, which burn sugar by-products to produce electricity.

The Coop currently owes at least $8 million – 25 per cent of last year’s crop – to growers from across the region, but is promising to pay up by February next year.

“There were a lot of reasons to be concerned,” Mr Connors said.

“But we’ve been able to go through and do some changes ... which have just made the cash flow much better.”

Mr Connors said the cogeneration project was currently losing more than $10 million in revenue because there had been a flood of renewable energy certificates (RECs) – each representing one megawatt-hour of renewable power – onto the market after the federal government decided to heavily subsidise domestic solar energy.

The REC price had dropped from more than $50 to less than $24, he said.

“They underestimated what the result of their schemes was going to be,” Mr Connors said.

The solution, he said, was to increase the existing national renewable energy target, which mandates the production of 45,000 gigawatt hours of renewable energy per year by 2020.

“There’s a very simple answer to this – changing the current target.”

Delta shares the Coop’s concerns, but said it welcomed the commitment by federal Climate Change Minister Penny Wong last week that the government would review the REC market.

“The announcement by the minister recognised that the recent decline in the REC price had prompted concern from some in the renewable energy industry,” a Delta spokeswoman said.

“We understand there was an immediate improvement in REC market price following the minister’s announcement.”

Canegrowers say they are confident the Coop will pay them.

“The issues with the cogeneration and their loan funding has tied up cash flow from the mill to the growers,” Richmond River Canegrowers Association manager Andrew Tickle said.

“Historically they would have already been paid for their 2008 crop. The first of that is scheduled to flow in late November.”