ARENA rejects Solar Dawn funding, trims large scale PV applicants

The newly established Australian Renewable Energy Agency says it will not provide any funding support for the $1.2 billion Solar Dawn solar thermal project in Queensland, effectively ending the last hope of development of what would have been Australia’s biggest solar project.

The decision was announced today as ARENA outlined its funding strategy, and also trimmed down its list of applicants for large sale solar PV installations as it picked up the remnants of the Federal Government’s ill-fated Solar Flagships program.

It rejected a proposal by Energy Australia for a 150MW solar plant in Mildura because it is too similar to the 159MW  AGL-First Solar proposal near Broken Hill and Nyngan in NSW, the one project that did finally get finance.  However, the agency said it was still in discussions with the Moree Solar Farm and the Infigen-Suntech solar PV proposals.

The $623 million Moree project was the original winner of the Solar Flagships program, but after failing to secure finance was forced to resubmit its tender along with the other shortlisted candidates. AGL-First Solar won that process, and Moree and Infigen/Suntech are believed to have filed submissions for smaller plants with ARENA.

The rejection of the 250MW Solar Dawn project was not unexpected, because of the high cost of a first-of-kind project with that technology, the withdrawal of funding support from the Campbell Newman Queensland government, and because it was not easily scaleable.

The original proposal called for two 125MW modules using compact linear Fresnel technology originally developed by Australian-founded Ausra. It is thought that a single module was proposed, but this was still too costly. Consortium spokesman Anthony Wiseman issued a brief statement on Monday, confirming it would not pursue the Solar Dawn project, but saying it remained committed to the development of a large-scale concentrated solar power industry (CSP) in Australia. Areva is currently constructing a 44MW solar boosting plant to the Kogan Creek coal fired power station using the same technology, but Australia now trails South Africa in the development of stand-alone projects.

The decisions were announced as ARENA unveiled its general funding strategy for 2012-15 and its investment plan. It is inheriting $3.2 billion in funds from a range of government schemes, including $1.7 billion that has not yet been allocated – including money from the Solar Flagships program. Included in its strategy, is a commitment to continue with its $126 million Emerging Renewables Program and the $200 million Southern Cross Renewable Energy Fund, both of which have made some small funding agreements. The Solar Institutes’s funding program for research and development projects will also continue, as will the advanced biofuels readiness program.

Bourne, as he flagged in October, said a new Regional Australia’s Renewables program will aim to deliver renewable systems in regional locations where “energy consumption is forecast to increase and where fossil fuel- based generation costs are the greatest.”

“The General Funding Strategy will allow ARENA to be innovative, action-orientated and nimble, which aligns with the advice the industry gave us,” Bourne said.

The strategic initiatives are where ARENA says the bulk of its funding is likely to be allocated, given the costs associated with large scale deployment . The focus on the current set are delivering renewable systems in regional and remote locations, removing roadblocks for regional and remote renewable energy, building Australia’s next generation solar and developing a comprehensive knowledge sharing program.

ARENA says the mining sector is driving growth in power demand in regional and remote areas, and given its high reliance on diesel fuel and its high and unpredictable costs, renewable power is increasingly competitive with diesel generation.

However, it notes that industry and state and territory network operators need more certainty that renewable systems are reliable and cost-effective before they make such investments. So ARENA will launch a “strategic initiative” to demonstrate renewable energy in regional and remote locations with the objective of increasing the deployment of commercially prospective remote renewable energy generation systems. \

These projects would likely include hybrid systems that could be funded in partnership with the mining sector, energy services companies, regional and remote electricity providers and other interested large industry players or network operators, as well as the Clean Energy Finance Corporation and commercial investors.

Another focus would be on solar. It said Australia has “world leading skills and capabilities in solar technologies” and supporting early stage technology investments that draw on this research base offers the best prospects for successful commercialisation.

While Arena has $2.2 billion of uncommitted funding, after repatriating some unused funds, mostly from the Solar Dawn project. It said in July that it had a limited budget with just  $385 million of uncommitted funds to spend over the next three years – for all projects. This comprises $84 million in 2012/13, a similar amount in 2013/14 and $217 million in 2014/15. However, Bourne admitted today that some of those budgets may have grown because of the repatriation of funds, but the new numbers had not been released.