By Jane Cowan

Posted August 22, 2007 21:17:00
Updated August 22, 2007 21:25:00

The world's largest maker of wind turbines has announced it is closing down its Victorian factory and pulling out of Australia at the end of the year.

The news comes just days after another company scrapped plans for a wind farm in Victoria's south-east, saying it was not financially viable.

At a time when the global wind industry is booming, the decision by Danish company Vestas to shut down its blade manufacturing plant at Portland in Victoria's south-west is sounding alarm bells.

In a statement, Vestas says it has no choice.

"The factory is not of a sufficient size to ensure satisfactory profitability and the market outlook for Australia makes it impossible to expand the facility," the statement said.

Apart from the 130 workers who will lose their jobs, the closure is raising serious questions about the viability of the Australian wind industry.

Vestas Asia Pacific's senior vice-president Jorn Hammer would not speak on tape but told ABC Radio's PM program that Australian governments are not doing enough to support wind farms.

Market size

The size of the Australian market will always be a problem, but the wind industry is thriving in countries smaller than Australia.

The home of Vestas - Denmark - is one of the leaders in wind power generation worldwide.

Industry groups like the Business Council for Sustainable Energy (BCSE) and the Wind Energy Association (WEA) say the Federal Government is to blame.

They say the targets for its renewable energy scheme launched in 2001 were largely met by 2005 and investment in wind power has stalled since then.

It has picked up in recent years because of state government incentive schemes.

But now the Commonwealth has introduced more uncertainty into the system by suggesting those schemes be wound back in future.

But federal Industry Minister Ian Macfarlane accepts no responsibility for the Vestas shutdown.

"They've made a decision based on the fact that the technology they were using in their blades is now out of date and that they don't want to invest further upgrades in that plant," he said.

The Australian Government has provided extraordinary support to the wind energy industry and it has seen $3.5 billion invested in that industry.

It is also true that just next door to the Vestas factory in Portland, business is booming for the company Keppel Prince, which manufactures the towers for wind turbines.

Wrong product

General manager Steve Garner says Vestas was simply making the wrong product.

"I guess the long and short of it is the fact that this factory was set up for a 40-metre blade, and today the 40-metre blade is not used as common as they might have thought it would have been back in, what, two-and-a-half-years ago when they set that up," he said.

Technology's moving that rapidly that the size of the blades are getting much, much bigger, but others detect a more widespread malaise.

Professor David Harries from the Research Institute for Sustainable Energy (RISE) at Western Australia's Murdoch University predicts more operators will follow Vestas unless the Federal Government beefs up its support.

"Basically China, India, Europe, the United States are good markets for wind," he said.

"It doesn't make sense to put all your effort and try and beat your head against a brick wall in Australia when the markets are developing elsewhere.

"People will pick up and move to where the markets are. If it's too hard here, they'll move."

Professor Harries says it is probably a bit more of a disaster than some people will realise.

"Some people will say, 'well we don't need wind to mean we've got so much cheap coal, we've got so much cheap gas, we'll be right'.

"The problem with that is that we'll be right provided we can find solutions to the greenhouse gases from those fossil fuels.

"So I think the risk is that we'll be putting all our eggs in one basket, and we'll be crossing our fingers and hoping that we can find all the solutions to fossil fuels without developing our renewable energy industry."

A flagging wind industry could have broader consequences.

Several state governments have committed to powering their desalination plants with renewable energies like wind.

But Professor Harries says if wind power becomes unviable, desalination plants could end up being powered by coal.

"If you don't have a mandated renewable energy target, and a new desal plant is needed in five years, it's going to be much harder for the Government to be able to say, oh, and we'll run this plant off renewable energy," he said.