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Fund manager bankrolls 19MW solar farm in north-west Victoria

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Construction of a 19MW solar farm in Victoria’s north-west is expected to start within weeks, after the project was underwritten by Australian funds manager Impact Investment Group, in what is expected to become one of the seed assets of a new, separate solar fund.

australia solar farm

IIG – whose renewables portfolio is headed up by former Pacific Hydro chief, Lane Crockett – revealed its intentions, in March, to invest $1 billion in renewable energy generation and infrastructure over the coming three years.

The $32 million Swan Hill Solar Farm was unveiled on Tuesday as the fund’s largest solar investment, to date, and – on completion – is expected to become one of the seed assets in a new IIG solar fund, the details of which the company said would be released in due course.

It will have more than 50,000 solar panels operating on a single axis tracking system, and is expected to produce 37,700MWh in its first year of operation, enough to power the equivalent of around 6,300 Australian homes.

At 19MW, the Swan Hill Solar Farm, which will be developed by Australian Solar Group, is also expected to be one of the highest capacity solar farms in Victoria on completion – although it won’t hold that title for long.

Other projects being developed in the region include the Gannawarra Solar Farm, the first 60MW of which is being co-developed by Solar Choice and Edify Energy on the 220kV transmission line between Swan Hill and Kerang, backed by a PPA from EnergyAustralia.

And in June, battery storage developer Lyon Group unveiled plans for a 250MW large-scale solar plant, paired with 80MW/160MWh of battery storage at Nowingi, also in the state’s north-west.

“It is great to be a prominent part of this new wave of construction and investment in Victoria’s solar energy economy,” said IIG CEO Chris Lock, in comments on Monday.

“This project demonstrates that IIG can create investment opportunities in solar assets even during times of policy uncertainty for Australian energy markets. Many sophisticated investors recognise that the world is shifting to renewable power such as wind and solar.

“Investing in solar power stations can deliver investor returns, create jobs and provide cleaner, safer, healthier energy options,” Lock said.

Mayor of Swan Hill Rural City Council, Les McPhee, said north west Victoria was primed to be a centre for clean energy generation.

“Investments like this one from the Impact Investment Group are game-changers for our move to a renewable energy economy, and Swan Hill is proud to have secured one of the first large-scale solar farms in Victoria,” McPhee said.

“Council has been an early supporter of solar energy and has enjoyed a great relationship with the developers and investors of this solar farm at what is locally known as Blackwire Reserve.”

With funding secured, construction is expected to begin later this month, creating 60 jobs during development, and the same number again through indirect employment in the supply chain.

RCR Tomlinson has been awarded the engineering, procurement, construction and maintenance contract for the project, including associated substations and grid connection works.

Once commissioned, RCR will undertake maintenance services for an initial period of two years.

  

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  • Tom

    The sums here are interesting – they don’t quite make sense.

    Firstly, the capacity factor looks a bit low for SAT. 37,700MWh/ 19MW/ 8760 hours is only 22.6%. You’d just about get this with fixed tilt up at Swan Hill, and Moree Solar Farm’s claimed capacity factor (also SAT) is 29.5% (145GWh pa from 56MW of panels).

    Yes, Moree is almost 6 degrees further north, but the average solar exposure (BOM) is only about 5% more in Moree than in Swan Hill.

    Maybe the “37,700MWh” figure quoted for the first year at Swan Hill is when it is still partly under construction. I’m not sure.

    Secondly, the price is very exciting. $32million for 19MW is $1.68 per Watt. The cost of the Moree Solar Farm was $164 million for 56MW, or $2.93 per Watt.

    If this project comes in on budget, and has a capacity factor in the high 20s rather than the low 20s, then this is a HUGE story. Assuming 28% capacity factor and no maintenance costs over a 20 year life, this deflates to $34/MWh. Even at 22.6% capacity it works out to $42/MWh, which is good, but $34 is better.

    • Eb

      The Moree PV Farm is 70MW DC and 56 MW AC, so care needs to be taken when making comparison to the Swan Hill PV Farm’s 19 MW DC. The tracking PV plant announced by ARENA on 8 September 2016 come in at between $2.13 and $2.52/W AC, which may be similar to Swan Hill’s $/W AC. Anyone know what the size of Swan Hill’s inverters are?

      • Tom

        @Eb – Thanks. I haven’t quite got my head around all that DC/AC stuff yet. Working on it.

        A 20% discount from DC to AC would almost entirely explain the difference in apparent capacity factors between the two plants. $2.10/ Watt AC is unfortunately less exciting than $1.68. Oh well ….

        So it’s $42/MWh then (assuming no maintenance costs for 20 years then the entire thing is a write-off after that). Still pretty good in today’s market.

    • Caffined

      Why do you assume no maintenance costs over a 20 yr life ?
      What large , complex , electrical installation do you know of that has not needed some attention , repair, replacement, over that time scale.?
      Maintenance is mostly about inspection , testing, and checking …preventitive work to avoid failure.
      There may be little mechanical wear etc to worry about, but electical equipment needs maintenance also.
      In addition, i believe PV panels need to be kept clean to maintain efficiency, buildings and property need maintaining ,, fences, drainage etc, and security is a form of maintainting equipment operation.
      So there will be ongoing “operational” costs, including maintenance .

      • Tom

        I assumed no maintenance to make the sums easy, and I also assumed that after 20 years the whole thing is a write-off, again to make the sums easy.

        Those two assumptions would partly balance each other out. I would suggest that with good maintenance it would last for 30 or 40 years, and so the true LCOE would probably be less than I calculated.

        After 20 years the panels might be losing efficiency, and they might all be replaced, but the trackers and wiring might last 50 years or longer. The replacement panels in 20 years time will probably be much cheaper and more efficient than they are now, and only part of the capital cost of the installation, so it might for example become a 38MW DC plant instead of 19MW if the panels convert twice as much sunlight to electricity.

        • Caffined

          Tom,..no facility can operate without maintenance for 20 yrs.
          Maintenance is what is required to “Maintain” the performance and meet the planned life expectancy,.(20 yrs ?)….not significantly extend it. Things like cleaning the panels, repairing damage etc.
          As i said , it would be an “clean, Inspect, lubricate, Test, repair” regime
          i would expect that of all the components, the tracking mechanism would be the most in need of replacement after 20 yrs continuous use,… unless the “Maintenance” plan had a routine replacement schedule included (possible but much more costly)
          Maintenance and operating costs will greatly outweigh the initial capital cost over the lifespan of such an installation.. probably by a factor of 2:1 as a minimum.
          ..and if these are private investor funded facilities ( a Business ?)..they will also need to generate a return on that investment,..not a simple write down .

          • Tom

            I know that – I explained I was making the sums easy.

            Here is an interesting link:https://www.uts.edu.au/sites/default/files/article/downloads/ISF_100%25_Australian_Renewable_Energy_Report.pdf

            Scroll down to Tables 9 & 10 – pages 35-36. Of course, these are assumptions, but it’s an interesting starting point.

            Prices for PV power quoted are $1817/kW to set the thing up, and $38.70/kW/year to keep the thing going. So using these assumptions over a 20 year life you’ve only spent 42% of your total upfront costs on maintenance – not a factor of 2:1 at all.

            And this percentage is predicted in this study to fall to 26% (1.3% of upfront costs pa spent on maintenance) by 2020.

            All assumptions I know, and probably refers to fixed arrays rather than SAT, but I think that the assumption that I made in writing off the whole project after 20 years would more than balance my assumption of zero maintenance, and that the LCOE is actually LESS than what I calculated.

          • Caffined

            I didnt see your LCOE figure ? what was it ?
            That is quite a interesting report but with a lot of speculation included. and some odd points of reference.
            but there are a few points to make from those cost tables also..
            at $38.7 per kW/y for operation and maintenance, you dont get to employ many operators or Maintainers.
            i understand it will be highly automated, but it cannot go unmanned totally..
            24hr security alone would take most of that budget without specialist operators, or anyone checking and cleaning the panels. Maybe they have kept labour costs elseware for some reason ?
            Similar installations have proposed 8 full time employees.
            Also. the investment costs, whilst reasonable , are simply based on “Nameplate capacity” $/kW figures, with no factoring of actual output capacity/efficiency ..IE kWh/year .
            Such that whilst $1817 kW for PV seems quite reasonable and in line with Swan hill, , in reality its more costly in $/kWh than a Nuclear plant ! ..and 10 times more costly than a Gas fueled plant.
            What should be done , is to factor in enough PV capacity AND enough battery storage to provide a 24hr continuous supply profile, and then cost that project out. !

  • Caffined

    Investment group funded !..
    So what return on their investment are they looking for ?…10% pa or more ?
    even at a unlikely minimum of 10% that represents a loading of 8.5 c/kWh generated, …before any other costs.!
    ..and most investors look for much more than 10%