It has been revealed that output from the newly-sold Beryl solar project west of Gulgong will be used to power the NSW government’s new north-west rail line in Sydney, and may add battery storage as an extra revenue source.
Beryl reached financial close in May, as we reported at the time, but while the financing was built around a 15-year power purchase agreement with the NSW government to offset the entire operational electricity of the new Sydney Metro Northwest railway, that detail was not released at the time.
RenewEconomy only received official confirmation when New Energy Solar announced on Monday it would buy the 87MW solar farm, although it appears the NSW quietly released details two weeks ago, with no media publicity.
Just why the NSW government should be so bashful about the project is not clear, although one could speculate it has something to do with the internal dynamics of the state conservative government and their federal counterparts – none of whom have ever been seen at the opening of a wind or solar farm.
The New Energy Solar documents provide some interesting insight into the solar farm (see details above), and says it will have a yield of 8.2 per cent – much higher than its 6.8 per cent average from its mostly US-based portfolio, and also the recently purchased Manildra solar farm – also bought from First Solar.
The $187 million solar farm – that’s the cost of construction, not the sale price, which is not disclosed – is underpinned by the 15-year contract with the NSW train project, which will account for 134,000MWh, or 69 per cent of the output.
Without a confirmed sale price, it is difficult to analyse exactly what sort of price that equates to. Morgan Stanley analysts suggest a PPA price of $78/MWh, including the LGCs (large scale certificates), and an overall return of around $90/MWh.
That premium will be delivered either through the merchant market – where wholesale electricity prices remain high, and the LGC spot market could stay high for another two years before contracting sharply – or other PPA contracts.
New Energy’s head of investment Liam Thomas says battery storage also remains an option – presumably to time shift the output of the solar farm, and sell in evening peaks rather than the anticipated price troughs in the middle of the day, and/or to provide market services.
“The project provides stable $A cashflow under the long-term PPA with TfNSW (Transport NSW),” he said in a statement. “The PPA structure, under which the majority of the off take is contracted, is consistent with our strategy to secure predictable, low-risk returns for investors.”
New Energy Solar will buy 49 per cent of the Beryl project from First Solar now, and the rest on completion of the project, expected in mid 2019. The project is being built by Downer Group.