Alinta Energy has revealed it will not replace its ageing brown coal generators at Port Augusta with a solar tower and storage power station, after declaring the idea financially unviable.
In an updated report released, Alinta said it would not proceed with Stage Two of a solar thermal feasibility study co-funded by the Australian Renewable Energy Agency, effectively walking away from the idea.
The Alinta report argues that its most recent – but still highly contested – estimates of the cost of solar thermal with storage at Port Augusta are valid, and it would not deliver a return on investment.
Even on the best case scenario, according to its estimates, the project would deliver an internal rate of return of 3.4 per cent a year. Alinta says it needs an IRR of at least 12 per cent a year.
Outside observers, however, were highly critical of the report, suggesting the use of debt, or project finance, had not been factored in, and Alinta had based its cost estimates on 100 per cent equity in the project.
The critics say this is unrealistic, and such projects would normally use 70 per cent debt. The only people thinking of building or financing a power plant on 100 per cent equity would be a suburban homeowner, and that only for a 3kW or 5kW rooftop solar system costing around $4,000 to $8,000.
Groups lobbying for a solar thermal plant said it was no surprise Alinta was walking away from the idea.
“Obviously we’re disappointed that Alinta are choosing to walk away, but this has been coming for a while,” said Daniel Spencer, from the Repower Port Augusta Alliance.
“Alinta have never had their heart in it. There are other companies seriously interested in making solar thermal happen in the region, and the State Government acting is critical to making it happen.”
© 2015 Solar Choice Pty Ltd