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Campbell Newman backtracks on Solar Dawn funding threat

Giles Parkinson
5

The newly elected Queensland state government has backed down on its threat to pull funding from the $1.2 billion Solar Dawn project, after apparently discovering that it was locked in to the $75 million funding commitment.

Premier Campbell Newman promised to repeal funding for the 250MW solar thermal project near Chinchilla – one of the two Solar Flagships winners – along with a range of other clean energy funding promises made by the previous state government. “If we can exit this project and save, I think it is A$75 million, we will,” Newman said at the time.

On Thursday, the Newman government said it had pulled $5.6 million in funding for a 2.7MW solar PV project at Cloncurry after exercising an option to quit the project, however it seems the government has found no such exit clause in Solar Dawn.

“The government will honour its contract on the Solar Dawn project,” the state minister for Energy and Water Supply Mark McArdle said in an emailed statement reported by Recharge magazine. “The Queensland government is aware of the state’s contractual commitment to the project that was entered into by the previous government. There has been no decision to change existing state commitment.”

The funding, which will sit alongside the $464 million commitment from the Federal Government under its flagships program, will depend on Solar Dawn reaching certain milestones.

The most critical of these will be in securing a power purchase agreement and financing for the project – a task that Solar Dawn, led by the French nuclear giant Areva and Wind Prospect, was unable to complete by the December deadline. It has until June to strike an agreement.

However, its options for a PPA are limited, with only the local energy retailer Ergon thought to have the size to absorb a PPA of that size. Energy market insider say striking a deal that reflects the “daytime” value of solar thermal with a major utility would be hard enough, considering it has not been done before in Australia, let alone with a facility of the size of 250MW.

A $70 million solar research program at the University of Queensland is also dependent on the Solar Dawn project going ahead.

 

 

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5 responses to “Campbell Newman backtracks on Solar Dawn funding threat”

  1. Gary Avatar
    Gary

    The devil is in the detail in this story of poor business and Labor Government management. Business activities and connections in this very significant project don’t seem to have been validated prior to State and Federal Governments using hundreds of millions of our dollars to get this project off the ground. Perhaps some of the complication is inherent in that the primary company, Solar Dawn, is foreign owned, a French nuclear giant Areva and Wind Prospect. Both foreign, wind and nuclear dedicated; perhaps just well practiced at negotiating with Governments to get our dollars, not at initiating and developing solar capacity to be independent. Reliant of power purchasing agreements and monetary manipulation within a distribution network, instead of developing and having local storage capacity. Solar technology must pick this up, or we are left with game playing forever.

    1. Bill Avatar
      Bill

      Gary, I get that you are a liberal who doesn’t like the old Qld government and, by the sounds of it, you don’t like foreigners either, but what is your point exactly?

      This project is a clever way of leveraging exisiting facilities to use a bit more renewable energy. It would have been terrible to lose it because the Newman government simply has a knee-jerk ideological objection.

  2. Arnoo Avatar
    Arnoo

    Gary’s comments are inaccurate in many ways:
    – The State or Commonwealth Governments haven’t spent a cent on this project yet. The two companies are developing this project entirely at their own risk and expense, and grant money would only be paid once the projects reach financial close. This is typical of grant schemes like this, and is a prudent thing for Governments to do.
    – These are exactly the sorts of companies which can get a complex project like this off the ground.
    – The project would connect to the transmission network, not the distribution network.
    – Money manipulation?
    – Energy storage is not yet commercially viable in Australia, where wholesale power prices are so cheap, especially overnight. Why oversize a solar field and incorporate expensive storage technology if you have to virtually give the power away overnight?

    This project has such big benefits for Queensland and for the large scale solar thermal industry – I hope it goes ahead. Solar thermal technology makes good sense in Australia, and especially in the Sunshine State.

  3. David Mills Avatar
    David Mills

    Gary, this does not compute. Granted the Federal and previous State government should have made certain that a state buyer was set up, but compared to the carbon sequestration project debacle there is at least a working technology for sale. For Mr Campbell to try and back out of the deal with $70 million dedicated to U. of Queenland is far worse for his state, scientifically, economically and ethically, not to mention killing hundreds of new regional jobs and a useful clean power station. By the way, you should have mentioned that the collector technology was originated here and is already being applied here for the first time at scale by CS at Kogan Creek.

    Foreign ownership of power facilities and coal mines is common, but Areva has been seeking local partners. Areva is big time nuclear but they are diversifying into wind, solar and biomass. In the wake of Fukushima we should applaud companies like GE and Areva who are embracing change- where is the BHP or Rio giant solar plant? Giles has noted that a similar 250MW plant is now under construction in India by Areva, having overtaken Solar Flagships.

    So our incentive systems appear to be slower than those in India, and our energy utilities like Ergon mentioned by Giles and AGL (buying Loy Yang) are oblivious to the changes needed to become world class clean companies. Saudi Arabia, with about the same population as Australia, is planning 54000 MW of renewable capacity, 25000 MW of CSP, 16000 MW of PV and 9000 MW of wind. I won’t hear the argument that they are rich and we can’t afford it. Credit Suisse calculates that we have the highest median wealth per capita of any major country and the second highest average wealth after Switzerland, a country that has also done great deal for clean energy and energy efficiency. Saudi Arabia has wisely decided to use today’s fossil income to build a sustainable local energy system. We can do the same, but not by cancelling the largest solar plant in the southern hemisphere.

  4. Gary Avatar
    Gary

    Hi all. Thank you for your responses. Apologies for confusion over the thrust of my comment. It is that I see confusion over resolution of the allocation of millions of tax payer dollars, and have suggested that governments run by politicians and administered by public service administrators, not reaching a clear understanding with business before the project is underway, deserves review. Perhaps as part of a process audit undertaken by the Auditor Generals section in Qld and nationally. My suggestion is that everyone would be better disposed if commitments were defined prior to project implementation. There are all sorts of legal precedents in relation to this in business done in the private sector. Politics is mixing this up. It seems that the political parties are able to flip the project around regardless of prior agreement. Indeed this heads the article by Giles. Given this, I feel there is greater potential for independent political challenge. While many see such as introducing instability, I suggest that if dysfunctional political management is stable, it is unsustainable. If the community was to become more self-reliant and less dependent on energy distribution, it would be more sustainable. The same development of independent production and control of energy locally would also negate our need for foreign investment, and indeed make us socially more responsible as individuals and local communities. Remaining with corporate priorities overlooks the importance of local needs.

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