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The Australian Renewable Energy Agency has set plans to invest in new large-scale solar power projects, with the aim of bridging the gap between the cost of large-scale solar plants in Australia and the United States and the rest of the world.

Greg Bourne, Chairman of ARENA made mention of the proposed programme at the New South Wales event in Sydney on Monday, indicating it will be among the general funding scheme which are to be released soon.

The strategy is likely to be accepted by the Abbott government, which is keen to push large-scale solar as hard as it can, to ensure it displaces most welcomed wind generation in the recent RET.

The Abbot government, whose cabinet ministers have characterized wind farm as ugly, inefficient and possibly harmful, is asking the Clean Energy Finance Corp to also direct funding to large-scale solar projects.

Greg Bourne stated that the recent cost of large-scale solar PV projects in Australia is probably around AUD 140 – AUD 170 per MWh.

This compares to just $US40/MWh in the US, equivalent to just over $US50/MWh after a tax credit, and tariffs of under $US60/MWh in the Gulf Region and Middle East.

Bourne says the difference comes down to the cost of finance, and to the “nuts and bolts” and the solar supply chain in Australia.

He indicated that Australian banks were very scared when the funding of large-scale solar was announced, mainlydue to the fact thatvery little large-scale solar plants have been constructed in the country.

So far, only one 10MW has been constructed in Western Australia, a 20MW plant in the ACT, and a 102MW plant (hugelyfinanced by ARENA) at Nyngan. Two other ARENA funded projects; Broken Hill (53MW) and Moree (56MW) are also in the pipeline.

“People say the market should drive everything … but the market here does not supply the capital when it is actually needed. Markets overseas do, but not here. They (the banks) are very, very timid.”

Bourne gave a rough calculation of large- scale solar PV in Australia ranging from AUD 140 and AUD 170 per megawatt-hour, but ARENA was anticipating about $A110 and $A130 per megawatt-hour by 2017.

Longer term, by 2020, it was aiming for “wind parity” of AUD80-AUD100 per megawatt-hour, and then to try and compete the US prices. “We may not get there because of the size of Australian market …. but we need to be able to accelerate our way down there.”

Besides aiming at minimizing the funding cost – by getting more projects built – ARENA will target the supply chain. Bourne says 60% of the cost of a project is local.

“It’s the boring stuff,” Bourne said, such as the solid foundations, the steel bolts, the racking, and the other balance of systems costs.

“We have so much at the distributed level, of PV. In terms of utility-scale, we do lag. Part of it is to do with political history; part of it is to do with financial involvement.

“There is a substantial opportunity to reduce local supply chain and financing costs,” he stated.

Source:

Giles P., 6 July 2015. ARENA plans new large-scale Solar funding to narrow huge cost gap with US.:http://reneweconomy.com.au/2015/arena-plans-new-large-scale-solar-funding-to-narrow-huge-cost-gap-with-us-31907. Accessed July 7, 2015

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