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SREC seeks $200m for Australian solar fund

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Melbourne-based solar power systems developer Sustainable Renewable Energy Company is raising up to $200 million in finance from Chinese suppliers and Australian banks and superannuation funds to invest in commercial-scale solar facilities in Australia.

The fund raising is not yet complete, but will likely be able to fund close to 100MW of solar PV development if the target is met.

SREC CEO Glen Currie says it is the first time that Australian financial institutions have “come to the party” in the solar industry in Australia, and that their interest is a sign that they recognise the compelling case for solar PV. “This is very significant,” Currie told RenewEconomy. “They are really starting to show an appetite for renewables.”

SREC and its joint venture partner, a green-tinged Canberra-based cement company called Elvin Group, will this week formally open a 146kW solar PV facility installed on the roof of the Kamberra winery in Canberra. SREC says it is the largest facility to be installed in Canberra to date.

The system, understood to have cost just under $500,000, was built with assistance from the ACT government’s feed-in tariff for “medium-scale” solar PV plants (the only state or territory to introduce such a tariff), and is one of several projects that SREC has under development in Canberra, including another 140kW plant, a 90kW plant, and two 200kW installations for a shopping centre. The two companies are also developing solar PV installations in remote, off-grid areas in the Northern Territory.

Currie says the economics of solar PV are changing rapidly. The Kamberra facility was built last year at a capital cost of around $3.50/watt, but Currie says the cost has come down since then to around $2.20/watt – courtesy of a dramatic fall in the cost of panels (from more than $2/W to 80c/W) and smaller falls in the price of inverters and frames.

The fund will help lower the cost of capital too. Currently, SREC is financing projects through money from private equity, but that is costing around 15 to 20 per cent. The fund will deliver a much lower cost of capital of around 10 per cent.

The cost of capital is considered crucial in helping solar PV compete with onshore wind, and ultimately peaking gas. Australia’s only large-scale solar PV farm – the 10MW Greenough River facility currently under construction near Geraldton in WA – is being funded by a mixture of equity from General Electric and WA utility Verve Energy, and a grant from the WA government. Bank finance was considered too expensive until a plant could be built and the financiers could understand what they were investing in and the economics of the project.

But banks and super funds are now being tapped by developers looking to establish leasing models for rooftop PV – both residential and commercial – that offer zero-down financing. Private equity and high net worth individuals are expected to provide the initial rounds of finance, but banks and super funds are expected to follow on soon afterwards once the metrics can be established.

The Kamberra Winery facility, which will receive a feed-in tariff of 32c/kWh, comprises 770 Solarfun 190W high-efficiency monocrystalline silicon panels, capable of generating approximately 220MWh of electricity per year.

SREC is also looking to build a “community owned” solar farm near Mildura in Victoria, which will initially be around 100kW but could expand to 1MW, and then more in 1MW to 2MW increments. It is also building projects in the Philippines, including a 1MW plant at Casiguran and a 10MW plant at Cepalco. Elvin Group describes itself as Canberra’s foremost supplier of readymix concrete, and says it introduced Australia’s first zero-waste concrete plant at Mitchell.  

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