“Amazing:” Origin bowled over by rush of offers from solar and wind projects

Origin Energy says it has been stunned by the number of contracts being offered by the developers of wind and solar projects since it announced last month the early closure of the Eraring power station, the country’s biggest coal generator.

“Since we announced the closure of Eraring it is amazing just how many people have knocked on the door to source new PPAs (power purchase agreements),” Origin’s head of markets Greg Jarvis told analysts during the company’s “Strategy Refresh” presentation on Wednesday.

“It really is quite interesting,” he added.

“It’s various durations and I won’t go into detail, but let’s call it early forties ($40s/MWh) for solar PPAs.”

Jarvis said the cost of wind contracts had increased in recent times, most likely due to the rising costs of steel. “You know, these costs have gone up and, so when PPAs are sort of ticking up into the super 50s ($50s/MWh).”

That is an interesting observation, given that it was widely thought that wind energy was increasingly able to compete with solar on costs thanks to bigger and higher capacity turbines.

The value proposition of solar has also been diminished due to oversupply in the middle of the day, and not enough storage to soak up excess demand.

Jarvis said there was a “lot of movement in the renewables market” but Origin also indicated that it was looking at shorter term contracts with wind and solar farms to avoid being locked into contracts that might find themselves above prevailing market prices.

Origin is looking for “multiple gigawatts’ of new wind and solar capacity to partially replace the capacity at Eraring.

But it shouldn’t be surprised at a surplus of offers from aspiring developers. NSW has already elicited interest from more than 135GW of wind, solar and storage projects from the first four of its planned five renewable energy zones, not counting the emerging potential of offshore wind farms.

See also: Eraring battery to be built in two stages, as Origin targets 2GW virtual power plant