Windlab has secured funding for its far North Queensland wind farm — proving that wind is roaring back despite a lack of government support.

Windlab’s Kennedy Energy Park, about four hours south-west of Townsville, will be financed by a $93.5 million loan from the Clean Energy Finance Corporation (CEFC), and an $18 million grant from the Australian Renewable Energy Agency (ARENA).

Phase one should be ready by the end of 2018.

The park will include a 43.2 megawatt (MW) wind farm and 12MW of solar, backed by a 2MW Tesla battery.

Windlab (ASX:WND) will make $6 million from a milestone payment and construction management fees. Once the project is done Windlab will receive $900,000 a year for 20 years for site management.

“Windlab will re-invest its development fee along with approximately $23.5 million in IPO proceeds to maintain its current 50 per cent equity interest in the project,” the company said.

On the nose

State and federal governments did their best to regulate wind farms out of the market earlier this decade.

Victoria effectively banned wind farms in 2011 and the Abbott government blocked the CEFC from investing in wind energy projects.

Both have been overturned — the latter only a few months later.

However, the Federal Government’s latest energy policy is likely to hurt future investment in wind and solar projects in Australia.

Despite promising an emissions intensity requirement in the National Energy Guarantee, the lack of detail is already having an effect on investment, sources tell Stockhead.

Windlab CFO and COO Rob Fisher told Stockhead they were insulated from the changes.

“We operate at the cutting edge of technology and the one thing we’ve learned in this business is our ability to produce power just keeps getting better and better,” he said.

Globally, wind is the cheapest form of power generation, according to research from organisations including Bloomberg New Energy Finance and Goldman Sachs.

Mr Fisher says when compared with new build generation wind in Australia is significantly cheaper.

When comparing with the wholesale market, prices for which are normally set by gas, “we’re well south of those numbers”.

Blowing onto the market

Windlab’s (ASX:WND) software was developed by CSIRO software, which finds the best spots to build turbines.

It listed in August but hasn’t traded above its $2 listing price yet.

However, in morning trade the news that construction can start on the Kennedy Energy Park pushed shares up 2 per cent to $1.59.

Mr Fisher says the Kennedy financial close is the first big news Windlab has produced since it listed and he hopes the market takes note and recognises that they’re meeting the promises laid out in the prospectus.

When it floated, Windlab had just received a $10 million milestone payment from AGL for work on the Coopers Gap Wind Farm in south east Queensland — a location chosen using its software.

When finished that wind farm will be Australia’s biggest.

Windlab chief Roger Price says securing funding for phase one means they will comfortably meet the $23 million revenue forecast in the prospectus for calendar 2017, and set them up for the bigger phase two.

Windlab has three projects in Australia that are under construction and three that are either seeking approvals, sales deals or financing (including the combined Kennedy Energy Park), two projects in South Africa and two in the US.

In the half year to June, Windlab turned a small profit of $117,000, compared to the $1.2 million loss the year before.

Cash of $7.8 million at the end of June will be bolstered by those two milestone payments totalling $15.7 million.

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