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Frydenberg calls for advice on $110m Port Augusta solar thermal funds

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Federal energy minister Josh Frydenberg says he will ask the Australian Renewable Energy Agency, the Clean Energy Finance Corporation and the Infrastructure and Project Financing Agency (IPFA) for advice on the government’s promised $110 million equity investment in a solar thermal plant in Port Augusta.

In a statement late Thursday, Frydenberg said he had written to SolarReserve asking for details about the proposal to spend $650 million building a 150MW solar tower plant with molten salt storage near the shuttered coal plants outside of Port Augusta.

“Solar thermal plants operate in a similar way to traditional fossil fuel power plants with steam spinning a conventional turbine, which means they can contribute to network stability and reliability when coupled with built-in storage,” Frydenberg noted.

A contract signed between SolarReserve and the South Australian government promises a price cap of $78/MWh for all the state government’s electricity needs, but the price is dependent on SolarReserve accessing the cheap equity on offer from the federal government.

That offer – made by both mainstream parties in the lead up to the last election – was reinforced in the federal budget by the Turnbull government as part of a tax policy deal with Senator Nick Xenophon.

However, the funds had yet to be allocated to any project. ARENA was tasked with seeking expressions of interest on the solar thermal funding for Port Augusta, but did not call for detailed proposals.

The South Australian government and SolarReserve appear to be assuming that, as the only viable project, it would get access to the funds, but other solar thermal developers have since suggested they want a slice of the action too.

Frydenberg says the three agencies will now consider the details supplied by SolarReserve and provide the government with advice on the project. There was no word on the timing. SolarReserve hopes to begin construction in February, finishing the project in 2020.

“ARENA and the CEFC have a strong track record in supporting the commercialisation of emerging technologies and will use that expertise to take solar thermal to the next level in Australia,” he said in a statement.

The IPFA advises the Federal government on funding and financing solutions for nationally significant infrastructure across all sectors, including energy.  

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  • Joe

    What is the problem here with Joshie F. quibbling over a paltry $110millions for a game changer energy infrastructure when he and his COALition mates are going to piss away $1Billions on Adani’s …..great big new ‘stranded asset’. And please don’t mention the ease with which the Liberals are pissing away another lazy $122millions on a postal survey about marriage equality. These jokers can’t be serious!

    • MrMauricio

      channeling Trump/Pruitt-with a debate on climate change-green vs red “side”-not so much serious as desperate and under IPA/BCA/MCA direct instructions to obstruct progress and the national interest and continue fossil fuel rent seeking

    • Peter Campbell

      And all those numbers pale into insignificance when you consider $50billion for a dozen submarines.
      Is Frydenburg looking for a way to split up the money so as to be no use to anyone. Then he can say ‘See, renewables are not viable, even with subsidies.’ Let’s hope this lot are out soon.

      • Joe

        ….and don’t they / Libs still have that pot of $Billions flying in the sky for those crocker Jet Fighters. Your political wish may soon come about with the High Court to rule on the ‘Identity Fraud’ that is rampant in Federal parliament at the moment.

  • john

    I read this and realise that Josh Frydenberg wishes to not commit to helping this project.
    So be it.
    Even without the lower part of the Federal Government helping who cares it still will deliver lower cost power than any other method the said Josh Frydenberg
    can deliver.
    If the so called Energy Minister actually read what his advisers told him perhaps he would not make such a stupid statement.
    Then again perhaps he listens to the advisers from the areas of not government in which case i can excuse him and perhaps advise the poor person to read some real information from people who actually do real research not the type of rubbish he reads.

    • Caffined

      John,
      You have been conned like many others, by the much proclaimed $75 /MWh headline number.
      But any simple analysis , ( or reference to reliable sources) , will confirm that its impossible for a 495GWh/yr , $650m+ plant,..to produce power for that cost. It is more like $150/MWh, but the real numbers are hidden in the detail.
      The only people who are going to benefit financially ftom this project are the SA gov, who get a cheap , capped price for electricity to their civic buildings and facilities,…and Solar Reserve who will actually get close to $200/MWh for their power because they will be selling mostly into the peak market at spot prices. !

      • Brian Tehan

        If SA can get peak power for $200 a MWh, isn’t that a bargain compared to what they’re paying now? The net price could still be significantly lower.

        • Caffined

          Brian, The $200 MWh figure was a consevative number i picked to illustrate the financial model that is in play.
          It is representitive as currently daily peak prices are in the $200-$300+ range
          The extreme $1k+ peak prices are rare and you couldnt rely on them for a business model.
          Remember , anything above $150 peak pricing is gold to Solar Reserve (and most likely SA Gov also , who would have a profit share agreement with SR !)
          There is no incentive for either party to want peak pricing to reduce.
          The energy Market, is just that ..a financial market …which the players use to maximise their own profits….and the Gov is happy to encourage as it benifits from the tax revenue from those players.

          • Alastair Leith

            “and most likely SA Gov also , who would have a profit share agreement with SR !”
            Wow keep the speculation coming, Caffined. The SA Govt signed a PPA, not a “profit share agreement” One of the main motivations for the SA govt is to reduce wholesale power prices to get industry off their back. Industrial users who refuse to hedge on energy prices have been hit hard by peak energy prices as the gas cabal manipulates the market.

            “.and the Gov is happy to encourage as it benifits [sic] from the tax revenue from those players.”
            You really don’t get the politics of this situation at all do you?

          • Caffined

            No Alastair, care to explain you interpretation of the “politics” ?
            But i do understand how the gov gains $$ from the low capped price and how SR will profit greatly from the peak market pricing (which they wont make a big impact on).
            What i really dont get, is how this will dramaticaly alter the dynamics of the power market to the benefit of anyone other than the SA gov and SR. ?

          • Alastair Leith

            You have a problem with the Govt having a PPA for 100% RE with a capped price less than the yearly average price?!

          • Caffined

            Yes.
            Because it disguises the true cost to the rest of the consumers.

          • Alastair Leith

            Yeah, it hides the downward pressure it will place on wholesale energy prices but undercutting the gas cabal, who possibly you are sympathetic too because only they would oppose Aurora.

          • Caffined

            Really ?
            Care to show which other recent solar or wind project in SA has helped reduce the energy price ?
            And why this limited capacity and unpredictable, addition will be any different .?

          • Alastair Leith

            Here is a prediction I’m wiling to make in public, in any capital city in Australia if they are having a heat wave PV will be generating during the daytime hours. And there’s a good chance one or more of your major coal or gas plants is going to withdraw from the market citing overheating issue.

            SA has seen a big reduction in peak demand spikes driving the wholesale price to the $14,000 ceiling.

            Here’s some reading from this site for you:
            Wind, solar force energy price cuts in South Australia.

            How wind and solar removed major price spikes in South Australia.

            Wind energy’s biggest month, and how it keeps prices down.

            Wind energy delivers cost effective abatement in South Australia.

            And if you want a reference paper with more thorough analysis here’s one from the Melbourne Energy Institute from Mike Sandiford and Dylan McConnell:
            Winds of change: An analysis of recent changes in the South Australian electricity market

            And an article in the Guardian comparing QLD and SA wholesale market price spikes:
            Queensland’s electricity price spikes far worse than South Australia during ‘crisis’

            Really.

          • Caffined

            But what lead to those high price peak spikes in the first place ?
            And what has helped to bring those down again ?

          • Alastair Leith

            The whole point of CST is the storage! PV is cheaper today.

            Ivanpah is the only tower configured CST i know of without storage and they generate into the afternoon peak of the Las Vegas ‘entertainment’ industry. They were unsubsidised too AFAIK.

            If you read the links I thoughtfully provided you last time, you’ll find out what caused and is causing still those spikes and what brought them down (wind in SA).

          • Caffined

            Ivanpah recieved a us$1.6 bn Federal loan …and have applied to a us$500+m grant….to help pay the loan interest !!
            ..it also has a PPA contract at us$200 /MWh…
            Other Solar Thermal Tower plants in spain also have PPAs that guarantee us$360 /MWh

          • Alastair Leith

            The Gemasolar and other plants in Spain were first of a kind at utility scale. Of course they’re expensive. Nuclear has been developing the technology for four decades and is still getting more expensive.

            What makes you think Port Augusta has far less sunshine than the Spanish locations?

            You’re quoting all these PPAs except the one that matters, an average of $74/MWh in Pt Augusta with a ceiling of $78/MWh over the next 20 years or whatever the length is. Which as I pointed out is less than the average wholesale price of energy in SA by about $25-30/MWh.

            And how did that commission into the nuclear fuel cycle in SA geared to push through a nuclear industry go BTW? More expert testimonial in favor of the nuclear industry could not have been found.

          • Alastair Leith

            Also the difference between Aurora and “other recent solar or wind project[s] in SA” is that, if you missed it, Aurora will have 8-10 hours storage for dispatchable energy into the peak periods when the prices are highest. The entire point of storage from a generator’s perspective is to hit the peak price points as often as possible with as much capacity as possible. That’s some thing PV and Wind cannot do, they are variable and entirely dependent on the weather and the decision of where to locate them geographically.

          • Alastair Leith

            Also this is one of the more illogical anonymous comments I’ve read on reneweconomy. I can understand why you’d be afraid to put your name to it.

          • DogzOwn

            And what a pity that Hazelwood won’t get 30% annual profit from 3 days heat, supplying Portland Alum at $15/MWh when Peak casino pays $1400.00

          • Alastair Leith

            $14,000

  • bedlam bay

    Oily Fryberg, slippery as ever.

  • George Darroch

    Is Frydenberg trying to stop it?? Awful man.

    If he does, Weatherill should look across the border to Victoria and see if Ambrosio is interested.

    • Joe

      Perhaps a breakaway from an Australian Energy Market to a new SA – Vic Energy Market ?

      • Rod

        I like your thinking but let’s include Tasmania and the ACT

      • Joe

        …the more RE doers the better, yes

  • Robert Westinghouse

    Spend the $110 million on PV for the people. Generate energy where it is used….Oh I forgot you are a politican and work for Big Business….what hope does the little person have when the “leaders” are so corrupt.

    • Mike Shackleton

      The thing is, a solar thermal plant like this fulfills a function that normal rooftop PV cannot, and can provide stability services that SA needs.

      As it stands, rooftop PV for residential properties is an economic proposition, no further enticement is needed. You’re better off spending equity accrued in your home on solar panels than any other renovation.

  • Cooma Doug

    The market rules will have a major influence on the operation of these solar thermal plants. If they are commissioned with the rules we have now there will be detailed annalysis done. The weather and load predictions will need to be closely scrutinised to acheive best bidding for that asset. It is not hard to predict some gouging opportunities.

    But if we have a 5 min closure and rewards for FCAS that is appropriately alligned with the renewable transition, profile evolution and load side response….this is a great thing.

  • Grpfast

    SA state govt had to make decisions for its future because LNP was to busy counting their corporate “donations”. Now he wants to have a say!

  • Ron Horgan

    I expected the Coalition would try to deny the money promised and confirmed, on some paltry technical issue.
    I really hope that my low expectations are wrong, and that for once they will do the right thing. If we all did the electoral “rain dance” that may help?

    • George Darroch

      I think they think that if they harm the South Australian Government enough, then the people of South Australia will stop being so silly and voting for the wrong people. It’s petty and spiteful, to be sure.

      • Brian Tehan

        I think that, if they shaft the people of Port Augusta after their long campaign for the solar thermal plant to replace the coal power station, the Coalition will pay dearly in SA.

  • Patrick Comerford

    If Fybro wants to reneg on the government deal no problem it’s the sort of unethical behavior we have seen from this mob. I suggest the shortfall would easily be made up by crowd funding perhaps qualifying with a free pass to view the installation or a tour of the sight. Nice little earner for some agile and nimble innovator.

    • Joe

      …hmm…fibro ….asbestos….not good for human health. Fybro….Coal Booster…not good for human health.

    • Alastair Leith

      Would be a testament to Xenophon’s relevance if Frydenberg does reneg.

  • Chris Jones

    I heard an interview of Kevin Smith (Solar Reserve CEO) who implied not getting the $110 million equity investment would increase the price but “not by a lot”. He also said that the investment/ financing was oversubscribed, so presumably he thinks financing from those sources would cost more, but not a whole lot more.

    In the meantime, John Hewson and Solarstore don’t seem to have given up on their graphite using solar plant, also slated for the Port Augusta region. They WERE surprised at Solar Reserve’s reported cost/MWH.

    As for the coalition’s attitude to the equity investment – perhaps they are right to make sure federal funds are spent appropriately. No doubt they will look at the Adani investment even more carefully.

    • Mike A

      Everybody is surprised at the price. Not true arms length but good example of what can be put together inc $100m

  • Ian

    Wow, not such a slam-dunk for SolarReserve’s project. This is becoming quite a game. Will the SA government recover, and shoot for another basket or will their attack crumble? Giles please keep the commentary going.

  • Mike A

    This is seriously bad news. It sounds like he did not understand what his own department was spending money on and he is going to shut down future grants. I was hoping that this would lead to a similar grants to other states including WA. Now it seems we may miss out because the government in WA has been so much slower than SA.

    • Neville Bott

      Your not being fair the the WA government your expectations are unrealistic. It takes a lot of time to put these plans together the government has only been in power a few months.

      • Mike A

        I am talking about the previous government. Of course Labor has nothing to do with previous 8 years though I note they did not have a renewable policy and did not raise the issue at all so whether they would have done better is debatable.

  • Mirosan

    You raise excellent points Joe and I just want to add my agreeement behind them. Yes the COALition has royally failed their performance review and is in very good running for a major graft and corruption or is it collusion…. against the public interest….. is they can even stay in power that is. Absolutely appalling lot.

  • Caffined

    Advice to Friedboy..
    No need to gift any aussie dollars to this project.
    Solar Reserve would probably pay us to let them install their plant as it will effectively be turning sunshine into cash for them .
    They will not back out of this unless someone wakes up to the folly that it is for SA consumers , and imposes a huge “revenue” tax on their scheme.