$1 billion of big solar to go ahead as developers pay bonds to ARENA

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The developers of 12 big solar projects that won grants from ARENA pay their bonds on time, indicating all projects to go ahead as planned.

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At least 480MW of large-scale solar projects are certain to go ahead in the new year after all 12 winners from the big solar tender held by the Australian Renewable Energy Agency deposited bonds with the federal agency.

RenewEconomy understands that $5.6 million has been deposited by the winning projects, indicating their confidence in obtaining finance for their more than $1 billion in projects by the end of January and beginning construction early in 2017.

The projects will more than treble the amount of big solar in Australia, and will likely be accompanied by other big solar projects that will take advantage of the availability of finance, the falling cost of modules, and high renewable energy certificate prices.

The bidding rules of the funding round required all successful projects to lodge bid bonds in the form of cash or bank guarantees by October 10. The winning bidders had to deposit $20,000 per MW capacity of their proposed projects, or a maximum of $500,000.

If projects do not reach financial close within the required timeframe of 31 January 2017, the bid bonds will be forfeited to ARENA. Projects may be granted an extension of up to 100 days on request and at ARENA’s discretion.

French renewable energy developer Neoen secured three projects – all in NSW – while Canadian Solar had two projects. Other winners were Infigen Energy, Solar Choice, APA Group, Genex, Goldwind and Ratch.

arena solar winners

The largest was Origin Energy’s 110MW Darling Downs project. Talk at the recent All-Energy Australia conference was that Origin is keen to start construction as soon as possible to take advantage of the high LGC price, which has been trading at around $90/MWh.

This is just short of the penalty price. The LGC prices have jumped, ironically, because of the lack of projects built in recent years, partly because the major retailers have been unwilling to offer long-term power purchase agreements, making it difficult for developers to obtain bank finance.

But the dynamics of the market are beginning to change. The ARENA process has been credited with bringing down bids by at least 40 per cent as developers found ways to reduce costs.

But the fall in module prices – with some predicting a 30-40 per cent reduction in the next year – and the high LGC price are inspiring some projects to “go merchant” and rely on the spot price for electricity and LGCs.

One such project has been announced by UK developer Eco Energy World, which recently won approval for a 140MW solar project in Queensland, while Sun Brilliance is proposing to build a 100MW solar plant in Western Australia.

Both those projects, and most of the ARENA winners, will use tracking technology that will maximise the output of the solar farms by following the sun from east to west during the day.

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26 Comments
  1. MrMauricio 3 years ago

    Looks like they are writing themselves-and their shareholders (and our super) OUT of the future.Sunset for the Big and dopey Australian!!

  2. Stewart Rogers 3 years ago

    ARENA is a complete waste of resources. Why can’t we wait for the private sector to invest in it when it’s viable on its own feet.

    • Douglas Hynd 3 years ago

      Good evidence ARENA funding has speeded up the shift of the cost curve – and is pulling in private sector funding more quickly – and that time gain is important in the drive to reduce emissions

    • Ken Dyer 3 years ago

      It is also interesting to note that six of the projects are in Queensland, with 4 in North Queensland. And they have all paid bonds, and will be able to finance their projects. What a difference when one considers the current commitment to the Adani coal project by the Queensland and Federal governments, commitments that will no doubt costs taxpayers millions of dollars for fossil fuelled follies.

      • Stewart Rogers 3 years ago

        I’d rather the government didn’t fund Adani or ARENA.

        • Ken Dyer 3 years ago

          ARENA funding is doing something useful

        • Matt S 3 years ago

          Also, who do you think paid for our existing generators? The vast majority were built well before the National Electricity Market existed (NEM). Seen in this context, the NEM is more a mechanism for efficient dispatch of existing generators, than a mechanism to incent the least cost development of new generators.
          Most generation has been built in this country by State governments. They were able to access cheap financing so required returns are lower. ARENA looks to provide a bridge so that projects can access cheap financing.

          • Stewart Rogers 3 years ago

            Sure but how do you justify renewables competing with incumbent generation when it is subsidised to the hilt. LGC certificates are around $90/MWh and wholesale prices are around $50/MWh. Adding these together gives around $140/MWh and that doesn’t even count the fact that ARENA is putting in EXTRA on top of the RECs and also the fact wind often pushes wholesale prices into the negatives hurting incumbents when they can only afford to do this due to the overly generous LGCs.

    • nakedChimp 3 years ago

      Cause the private sector is risk aware and asks high premiums that those projects can’t generate within the time frames needed.
      You rather pay for sea-walls and other climate change induced problems with your tax dollars?
      Or who do you think is going to pay for all that?
      The ones responsible?
      Ha

    • Chris kime 3 years ago

      Evidence to the contrary.would you prefer to see your grandchildren in an unstable globe.ie weather extemes,
      Food security,meters of sea rise or sit back and let the market decide.we all know how this approach ends up.do you pay for insurance? Well paying a amall premium to safegaurd is no big deal.

      • Stewart Rogers 3 years ago

        Remind me again how many % of emissions Aus contributes to the world? Oh yes, basically nothing. Remind me how expensive it is to abate carbon under the Renewable Energy Target! $100/tonne vs Europe’s $10/tonne. Remember ARENA projects get double funding from ARENA and the RET. This is why some people like myself vote Liberal. I do believe in climate change, I disagree on the way in which we fix it.

        • Chris kime 3 years ago

          You vote liberal AND believe in climate change.thats an oxymoron.there idea to tackle climate change is to stall and deny.that will hurt us economically
          In near futue.come on you can do better.

          • Stewart Rogers 3 years ago

            Thanks for your “wise words” but you have made no valid argument against why ARENA and RET is bad. I will vote for the person that removes subsidies. In senate I vote for Liberal Democrats.

        • trackdaze 3 years ago

          % ? More than its fair share.

          Do you vote liberal irrespective of their policies?

          • Stewart Rogers 3 years ago

            No, I vote Liberal Democrats in senate and Liberals in lower house. I prefer the removal of all subsidies.

          • trackdaze 3 years ago

            On gas and coal too?

          • Stewart Rogers 3 years ago

            Yes. Apart from Adani which I don’t agree with either, coal doesn’t have ‘subsidies’ in real terms. The diesel rebate and depreciation costs are not subsidies. The diesel rebate is meant to cover state road costs and most mines/plants have their own private roads on their property.

        • Giles 3 years ago

          1.6% – which ranks it in the top 10 countries. Europe has a cheap carbon price because it is ahead of its climate targets.

          • Stewart Rogers 3 years ago

            This is an old number Giles. Furthermore China’s emissions are growing and Australia’s electricity usage has decreased with many heavy industries closing down such as smelting and manufacturing. We rank about 16th according to the World Bank’s data.

            If you wish to reduce your emissions then you can subscribe to Green Power and offset your emissions for yourself. Our wholesale electricity prices are around $40-50 MWh and wind power is around $80/MWh. When renewables can get to a cheaper price then we can talk. I’m sure someone will bring up negative externalities but that’s a moot point when many companies risk closing down if electricity prices are sky rocketing due to a minority of Australians worshiping renewables.

          • Giles 3 years ago

            Oh, do tell, what’s the “new” number?
            Externalities are a “moot point”? I don’t think so. The biggest driver in rising electricity prices in australia are network costs and gas. Check it out.

          • Stewart Rogers 3 years ago

            That CO2 data you referenced seems to be from 2011. NEM usage has begun to slow as you’d see from the Pitt & Sherry data that is posted here. As Hazelwood and other plants in Victoria close down and black coal in NSW fires up our overall emissions will come right down.

    • trackdaze 3 years ago

      Think of it as a kickstarter.

      Funny you see it as a waste given it has so far provided a return.

      • Stewart Rogers 3 years ago

        No, Kickstarter is a private company with people VOLUNTARILY giving money for a purpose. If renewables didn’t have the grossly expensive renewable certificates and didn’t get ARENA funding I would be fine with it.

  3. Lindsay 3 years ago

    What has ARENA got to with bringing down the cost of components, given that they are all imported. Its more to do with the fact that there is over production of components and manufacturers have had to become more competitive.

    • trackdaze 3 years ago

      Components are only part of the cost.

  4. Ian 3 years ago

    ‘go merchant’ that’s a classic! Check the definitions for ‘ go nuclear’ , go critical’, ‘go viral’ or ‘go rogue’

    When you get a combination of plenty of sun and land-space, cheap solar panels and plenty of cheap cash it’s not surprising companies will be jostling for a piece of the solar action! Even if this means ‘ going merchant’.

    Our electricity market is not so huge and peak-consumption is not far away so anyone who wants to get in on ‘the large-scale solar’ gold rush had better be quick!

    First in, best dressed.

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