Waiting for a change of view

It should come as no surprise that the boss of a wind farm development company is bullish on wind energy. Windlab executive chairman Roger Price says wind will play an integral role in meeting renewable energy targets. “Wind energy is the only economically viable renewable energy source,” he says. “It is becoming, in a number of markets, cost-competitive with new coal and new gas.”

But not everyone shares his enthusiasm. Critics say the sector is unreliable and inefficient. Wind farms may be relatively cheap to build but they remain incapable of competing with coal-fired power stations in meeting baseload power demand, which is the permanent load on power supplies.

Does the wind industry have a future? While this question is often addressed in theoretical terms, Windlab’s ability to create a thriving business suggests that underlying demand is strong.

Windlab, which was spun out of the CSIRO in 2003, has doubled revenue every year for the past four years, securing the company a place on the BRW Fast 100 since 2008. In calendar 2010, it turned over $10 million and made its first operating profit.

The business uses proprietary technology to identify economically viable wind farm sites. It then secures the land, designs the farm and connects it to the electricity grid before selling it.

Price says that identifying appropriate sites is harder than it may seem. He says it used to be done by “people licking their fingers and sticking them out a window” but Windlab has put more science into finding the best spots.

“Wind farm development is a high-risk business,” Price says. “The general industry has a success rate of less than 20 per cent but due to our unique technology we have a success rate of 80 per cent.”

Windlab operates in five countries (Australia, Canada, New Zealand, South Africa and the United States).

Price says the business has opened offices in multiple locations to help spread the sovereign risk.

Windlab, and other renewable energy businesses, are highly reliant on government targets (such as the federal government’s plan to ensure that at least 20 per cent of Australia’s electricity supply comes from renewable sources
by 2020).

Price says that although some governments are more pro-active than others (he cites the South African government as being one of the most supportive of wind energy), all will have to look closely at wind if they are to meet their own renewable energy targets.

The company has identified more than 150 sites and has 67 under various stages of development. Fifteen have been completed and sold.

It has had two major capital raisings since it was established in 2003; it has raised about $20 million in total. In 2007, Innovation Capital, a venture capital fund of which Price is a partner, invested in Windlab. About $5 million was raised at the time. A further $10 million investment led by listed property group Lend Lease’s venture capital arm, Lend Lease Ventures, was made in 2009.

Long-time chief executive Mark Sinclair recently stood down from the company. Price says he was keen for a change of pace. “Mark did a terrific job of taking the company from five to 40 people,” he says. “He led the company through the two capital raisings but he felt like he needed a break.”

Price says the company can keep growing at the same strong rates for the next three to five years. Although some of the best sites for wind energy in Australia and elsewhere have already been developed, Price believes that this ultimately could boost Windlab’s position in the market. “It is getting harder and harder to find high-quality sites but this is better for us,” he says. “It takes out all the speculators. Once the easy sites are occupied, the people with the better technologies and capabilities will be more likely to succeed [in the industry].”

Price says the idea of selling the company is not at the forefront of his thinking. “If you build a successful company you can always find an exit strategy if you choose to,” he says. “But our focus is on growing a successful renewable energy business. That is what we are probably halfway towards achieving.

“Of all the work that has gone into renewable energy capacity over the last 10 years, it is only a very small amount of what has to occur over the next 10 years if Australia and other countries are going to meet their renewable energy standards.”

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COMPANY

Windlab

FOUNDED

2003

FOUNDER

Mark Sinclair

EXECUTIVE CHAIRMAN

Roger Price

REVENUE 2009-10

$8.34 million

TRACK RECORD

BRW Fast 100: 2010  (ranked 14); 2009 (ranked 41); 2008 (ranked 57)

BRW

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