An Australian solar developer is proposing to build a 20MW solar PV plant in central Queensland, the first utility scale solar farm in the country to be constructed without drawing on subsidies or incentives beyond the renewable energy target.
The company, called Solmessis, has made a development application for a 35MW solar farm on the outskirts of the small town of Balcardine, around 520km west of Rockhampton and about 1,000km north-west of Brisbane. The DA is scheduled to go before a council meeting this Thursday.
If approved, the company hopes to build a first stage of 20MW on a 120 hectare property it owns, before adding another two stages of round 30MW each, for a total of 80MW. If completed, it would redefine the assumptions about the commercial readiness of utility scale solar in this country.
“We want to build Australia’s largest solar farm without the requirement of a Government grant,” says Solmessis CEO Hamish Wall. Solmessis is a solar company linked with the Nicholls Group, one of the largest solar integrators in the country, and it features former executives from Abigroup, Lend Lease and Lucent Technologies.
But to get there, Wall’s team at Solmessis still has some work to do. The first is securing a power purchase agreement, and then it needs to get funding. And then he needs to be able to build the solar at a levellised cost of electricity well below $150 a megawatt hour – far less than what most others say is possible in Australia.
So how is Solmessis going to do it? In the failed attempts at obtaining PPAs for the recent Solar Flagships program, PPAs were discussed with utilities, but nothing more than $120-$130/MWh was talked about. That’s higher than wind because solar plants deliver during the day, when the electricity has a higher value.
Even the $186/MWh contract bid by Spanish group FRV in the ACT solar auction has raised eyebrows in some quarters, as this translates into an effective $150/MWh because the 20 year contract is not indexed. But even FRV’s is being built with the assistance of a feed in tariff from the ACT government, the 10MW Greenough River solar farm recently completed in Geraldton was built with the help of a $20 million grant from the WA government, while Infigen/Suntech and FRV/Pacific Hydro are seeking grants from ARENA for their much reduced proposals. Infigen CEO Miles George, who hopes to get funding from ARENA for a 35MW solar PV farm near Canberra, said last week that he did not expect solar PV to compete with wind energy or several years.
Only one other firm, Investec, has publicly spoken about the possibility of building a solar PV farm without subsidies in WA – also near Geraldton – although details are vague. However, RenewEconomy is aware of at least one other advanced plan for a utility scale solar PV plants closer to Perth – a project that will also rely only on renewable energy certificates – and a PPA.
Wall says he can do it for cheaper than FRV’s project near Canberra because his plant is located close to an existing peaking gas plant and a substation, so has lower transmission costs, and it has one of the best solar resources in the country.
He said panels from tier 1 Chinese manufacturers were currently being offered at around 62c/W, and with the Australian dollar well above parity against the US dollar, it was an excellent time to lock in deals.
Wall suggested that the solar farm could be built for around $40 million – less than the cost of the Greenough River solar farm which was half the size. The 159MW that AGL Energy plans to begin building near Broken Hill and Nyngan as the one project from the Solar Flagships program will cost around $450 million, with $195 million coming from federal and state governments.
As for the other costs for the Solmessis project, Wall said it was a matter of “being smart” – this meant modularising inverters and transformers, and keeping a tab on Labor costs. The project has no plans for tracking, although it may trial some techniques for the second and third stages. And as for funding, Wall said there were plenty of people interested in investing in such projects given they could offer an internal rate of return of 12 per cent.
“Our aim to to build this solar farm without subsidies,” Wall told RenewEconomy. “If you can’t build these projects without government support, we wouldn’t pursue them … because all that support could be folded very quickly.
“I’m not saying that we can absolutely do it right now, but gee, we are close.” As Wall says, if Solmessis can pull off a solar energy project of this magnitude, without Government funding, it could prime the pipeline for a new era in solar power in Australia.