Backflip on flagships, PV reopened for tender

The Federal Government appears to have been panicked into a back-flip under growing media scrutiny about the fate of the $1.5 billion Solar Flagships program.

Federal Energy Minister Ferguson announced on Tuesday afternoon that the PV component of the first round of the program – which was to get a $306 million grant from the government – would effectively be thrown open to the other three shortlisted candidates.

This was a scenario envisaged by RenewEconomy, when we reported on January 25 the departure of CS Energy from the Solar Dawn consortium that won the solar thermal leg of the program. We said then that a re-tender of both legs of the flagships program was likely, although the government has decided to grant the Solar Dawn consortium an extension, and will only reopen te PV component.

Ferguson based his decision on “substantial” changes to the $930 million project proposed by the Moree Solar consortium, which includes Spanish group FRV, BP Solar and Australia’s Pacific Hydro. It is thought this included the panel supplier (which was to have been BP Solar, but had to change after BP withdrew from the solar business), and other technical changes. The size and location of the project remains the same.

The Moree consortium is believed to be very disappointed at the decision, although it remained confident of retaining the funding. The other three short listed consoria – AGL/First Solar, TruEnergy/First Solar and Infigen/Suntech, will be asked to update their tenders in the light of the big slump in PV prices over the past two years, which Ferguson conceded was up to 70 per cent.

Moree has been working on a PPA, but has found it difficult given the surplus of renewable energy certificates in the market. Two likely off-takers, AGL and TruEnergy, were involved in rival bids, and it is understood that negotiations with Origin have also ceased. Moree is now negotiating with smaller retailers.

Ferguson said in his statement that updated applications would be sought from all four consortia “in order to provide the best opportunity for the successful construction of a large-scale, solar photovoltaic (PV) power station in Australia.”

Both flagships projects failed to meet the December 15 deadline for financial close. However, the Solar Dawn consortium, which proposes to build a 250MW solar thermal project, was granted an extension to June 30, even though the state-owned generator CS Energy withdrew from the consortium and handed the O&M contract back to Areva, the lead player in the group along with Wind Prospect CWP.

Ferguson said the decision would provide the Moree project with the opportunity to demonstrate whether it is still the most meritorious project.
 
“The Government is committed to the deployment of large-scale renewable energy technologies in Australia. However, we must also ensure that taxpayer money is spent prudently,”  Ferguson said.
 
“That is why we have put in place a staged and gated approach to funding grants under the Solar Flagships program.
 The updated bids would be reviewed in the second quarter.

Solar Dawn project director Anthony Wiseman said the consortium welcomed the extension as a confirmation of the progress being made on the proposed solar thermal plant. “Like all major infrastructure projects, finalising the design, approvals, financial and commercial aspects takes time, and we appreciate the continued support of the Commonwealth and Queensland Governments,” Wiseman said in a statement.

“Recently we signed a conditional agreement with the Queensland Government for $75 million in project assistance and received Development Approval from Western Downs Regional Council for the construction of the solar thermal plant. “Finalising this work took considerable time and discussion, and demonstrates the progress being made by the Solar Dawn Consortium and the continued commitment of all parties involved. We don’t expect the time extension to impact our project’s longer-term goals. What’s important is that Australia has a commercially operational, large-scale solar thermal power plant by December 2015.”