A Solar Flagship project finally cleared to launch

It has been a long time in the making, but one of the projects developed through the federal government’s Solar Flagships program has at long last secured the final leg of funding necessary to make it a reality. The scheme was created in 2009 under the first Rudd regime in order to foster into existence utility-scale solar projects, the likes of which could compete on at least a conceptual level with conventional electricity generation technology such as coal-fired power plants.

Since the Solar Flagships scheme’s introduction, project developers aiming to take advantage of the incentives promised by the program have encountered numerous delays and setbacks. As with anything groundbreaking and large in scale, the sailing has not been smooth. Most of the problems have arisen from the issue of securing funding; in order to receive the federal government’s financial backing, project developers must first show that they have achieved a certain level backing from elsewhere as well. Securing funding, in turn, has been at least partially hindered by the difficulty of reaching power purchase agreements (PPAs) with utilities or 3rd party energy consumers.

It looks like the long-stalled dream is ready to become a reality, however, with project developer AGL having finally managed to bridge the funding gap for its 155-megawatt (MW) Nyngan Solar Plant. The Nyngan plant will be the largest solar photovoltaic (PV) plant of its kind in the southern hemisphere once construction is completed (anticipated to be by the end of 2015).

Clean Energy Council policy director Russel Marsh welcomed the news in a media release, noting the impact that the project will have on the region of Broken Hill/Nyngan, not to mention more broadly in Australia’s solar industry.

“This project will be the largest Australia has seen to date, and is set to generate enough clean energy to power 50,000 homes and create 450 jobs during construction in the Broken Hill and Nyngan areas,” Marsh said. “It’s great to see that government is playing its role in supporting the deployment of large-scale solar power, with $166.7 million in funding committed to the project by the Australian Renewable Energy Agency (ARENA) and $64.9 million from the NSW Government.”

ARENA kicked in an additional $37 million to the $450 million project in order to add a degree of security for AGL, in light of a national trend of weakening demand for electricity and associated sagging wholesale electricity prices. ARENA will be able to recoup all or a portion of this if wholesale prices recover under a ‘contract for difference’-style agreement, so that AGL will not be able to pocket the extra funds should the tide turn.

The symbolic nature of this milestone in solar’s ascendancy to large-scale power generation viability has not been lost on industry stakeholders and commentators. RenewEconomy’s Giles Parkinson, in an article about these recent developments, interviews several people involved with the project.  Among them was ARENA CEO Ivor Frischknecht, who pointed out the significance of the project for the future of the industry. “This is a first of a kind project in Australia and it will catalyse change in Australia’s energy landscape, showing that we can do it (build large scale solar),” he said. “Solar energy at utility scale is reliable and can provide investors with returns they need.”

Top image: Proposed site for AGL’s Nyngan Solar Farm (via AGL)

© 2013 Solar Choice Pty Ltd

James Martin II