Putting the spin on wind energy : risk management issues associated with wind energy project development in Australia

The debate on global warming is over (Stix, 2006 p24). The global community must now find ways to reduce greenhouse emissions, particularly from energy generation. Wind energy provides one of the potential solutions to generate renewable energy without creating harmful greenhouse gases. Wind energy is the fastest growing energy generation industry globally (‘Operating wind power capacity' 2006a). This rapid growth is being driven by increasing global energy demand, commitment from governments globally to international agreements including the Kyoto Protocol (UNFCCC 1997) to reduce the emission of greenhouse gases, as well as individual country commitments to mandatory renewable energy targets. Australia, whilst being a signatory to the United Nations Framework Convention on Climate Change (UNFCCC) commitment to reduce greenhouse gas emissions, has so far failed to ratify the Kyoto Protocol. In Australia, wind energy development to date has been driven primarily by the development of the Mandatory Renewable Energy Target (MRET) under the Renewable Energy (Electricity) Act 2000. This requires a commitment to 2% of total electricity generation (9,500GW) to be derived from renewable energy sources by the year 2010 (Warwryk, undated). It is now understood, that the current federal obligation to renewable energy is now oversubscribed, and consequently the likelihood of further wind energy projects being developed is highly limited (Brazzale 2005). External to the government commitment to renewable energy, the development of wind energy projects requires a range of inputs including, but not limited to; an understanding of the wind resource, security of land, access to suitable electricity transmission grid, a market for the electricity, access to suitable technology and a level of community support. Whilst the literature related to project management and risk management is extensive, the literature related to the risks associated with wind energy development in Australia is limited. This research then seeks to fill a void that asks the question; How can project managers minimise the risk associated with wind energy developments in Australia? To investigate this research problem, comparative case study analysis was adopted as a methodology utilising a structured interview process of project managers responsible for the development of 8 Australian wind energy projects. This research shows that the greatest risk to Australian projects is the lack of security associated with the current federal legislation and the consequent loss of market value of the power from wind energy projects. A number of additional primary and secondary risks are identified by the interview participants, and the research is able to draw out three common themes of risk management strategies. These three themes were categorised as conservatism, due diligence and proactivism. This study contributes to the research associated with project management, risk management and wind energy development. This insight into the Australian wind energy industry provides policy makers, educators and stakeholders with information to assist in improving the political, economic and social environment for further wind energy development, in order to mitigate against further greenhouse gas emission and combat global warming.