After extended investment drought, Australia poised for large-scale solar farm boom

Australia is poised to experience its biggest ever boom in large-scale solar as a range of international market factors and local policy incentives take hold.

A number of factors point to a major investment push to large-scale solar, including the continued fall in solar manufacturing costs, and an expected surplus of manufacturing capacity in coming years that will force manufacturers to slash margins, driving prices down further.

Locally, the situation is being enhanced by the continued high price of large-scale renewable energy certificates, the imminent results of a major solar tender by the Australian Renewable Energy Agency, and the growing appetite for solar investments by financiers and equity investors.

The ARENA tender, to be announced in the next fortnight, is expected to be a catalyst for more than $1 billion in investment in the next 12 months, and possibly much, much more.

Already, its tender process has elicited significant price reductions, and because the cost of utility-solar has fallen faster than expected, around half of the 20 short-listed projects could get funding from the $100 million pool. Some of those projects will get additional assistance from the Queensland and NSW governments.

That should trigger around 400MW of large-scale solar developments alone. But it will also act as a trigger point for other developments.

Many large-scale solar projects have been on hold pending the outcome of the tender. One of the ironies of the ARENA initiative is that it will give the industry a massive shove forward, but it has meant that in the past year, projects have been on hold as they jockey for funding, and others await the result.

But costs have come down, even without much construction activity (apart from those projects funded by either ARENA or the ACT government’s revere auction series).

© 2016 Solar Choice Pty Ltd

Giles Parkinson