Spain’s Banco Santander to sell Australian wind farm

Spain’s Banco Santander SA , Europe’s biggest bank, plans to sell its only Australian wind farm partly because of uncertainty about the country’s support for renewable energy, a person familiar with the matter told Reuters on Wednesday.

 

Banco Santander is looking for a buyer for the 106.8-megawatt Taralga wind farm it is developing in New South Wales state, said the person, who was close to the sale but not authorised to comment publicly. Total funding of A$280 million ($214 million) was arranged for the project when Santander bought 90 percent of it two years ago through an Australian unit.

The person said Santander wants to sell for a number of reasons, one of which is political deadlock in Australia over how much of the country’s energy should be renewable by 2020. The person didn’t disclose other reasons for the pullout plan.

A Santander spokesman could not immediately be reached for comment.

Santander would the biggest company to bail out of Australia’s $13 billion wind power industry since the conservative government and centre-left opposition stalled on talks that were meant to re-set an official renewable energy target.

The target – 20 percent of electricity consumption by 2020 – was set according to 2009 forecasts of power demand and determines how much state support clean energy companies get. But the country’s overall energy consumption has fallen, and the government wants to adjust the target in absolute terms.

Since talks broke down in 2014, investment in the Australian wind farm industry has come to a standstill with dozens of projects, half of them overseas-funded, in limbo as foreign backers wait for a resolution.

Australian wind power companies like Infigen and Pacific Hydro have shelved their Australian operations, with Sydney-listed Infigen focusing on the U.S. market.

Santander owns 90 of Taralga through an Australian subsidiary, with an Australian arm of BlueNRGY Group Ltd, formerly known as CBD Energy Ltd, owning the rest. They financed the purchase of the farm with credit from Australian and Danish government agencies, as well as Australia and New Zealand Banking Group Ltd.

A spokeswoman for the Taralga wind farm itself declined to comment on a potential sale, but said the farm expects to finish construction in mid-2015 and have a full quota of 51 turbines up and running. It currently has 30 wind turbines running.