Giant solar tower to provide all S.A. government electricity needs

The South Australia government has contracted the US company SolarReserve to deliver all its power needs, which will be supplied by a 150MW solar tower and molten salt storage facility to be built in the former coal town of Port Augusta.

The announcement, following several years of lobbing by the community and an oft-delayed tendering process from the government, will see the first major deployment in Australia of a technology that combines both solar power and storage in the one facility, and the largest such facility in the world.

Amazingly, the contract will deliver power at just $78/MWh – which is around one-half of previous estimates – and significantly cheaper than the gas generation fleet that currently dominates the state’s power needs.

The combination of solar and storage and at such a price is likely to help redefine energy markets in Australia. It will add a new competitor in the local market, and facilitate even more solar PV and wind power in the state because of its storage capacity.

“A shiver has just gone up the coal generation’s industry spine. Solar thermal just won a competitive tender for base-load generation in South Australia,” state treasurer and energy minister Tom Koutsantonis tweeted.

Indeed the implications are not just for “baseload” generators like coal and gas, it may cause battery storage developers, to reconsider their needs, beyond the need for fast response like the Tesla big battery.

What it will do is reinforce South Australia’s global leadership in the transition to renewable energy.

SolarReserve will build the $650 million facility near Port Augusta, employing some 650 people during construction and 50 ongoing jobs. The government says it will put downward pressure on power prices.

Other contenders had expressed an interest in the tender, including a company led by John Hewson, and various gas projects, but it was always clear that SolarReserve had the edge, because it had actually constructed projects of this scale.

Its Crescent Dunes facility has been operating for more than a year, although it was offline for a few months to deal with some technology hiccups. The 110MW facility is providing power to Las Vegas.

It is also building a similar size plant in South Africa, is bidding for a large facility in South America, and has canvassed a 1,000MW facility – a series of six plants – across the south-west of US.

In Australia, SolarReserve has suggested that six plants could be built in S.A. and surrounding states. It is looking at studies in Queensland as well.

The Port Augusta facility, known as Aurora, will produce synchronous renewable energy that can be dispatched into the grid when needed – even when the sun isn’t shining.

This will have the added benefits of improving grid security and stability, and allowing for greater levels of renewables to be integrated into the system. It will be built by 2020.

The facility has effectively won both tenders offered by the government for its services – one that called for a tender to procure 75 per cent of its long-term power supply and another to provide 25 per cent of its electricity load from dispatchable renewable energy providers.

“As a large, dispatchable renewable energy generator, SolarReserve provides a single solution that delivers on the goals of both those initiatives,” the government said in a statement.

The facility will have net capacity of about 135MW, with the ability to increase that output in favourable conditions, such as in the evening. Peak government load is 125MW but lower for most of the day. It has written a 20-year contract for the facility.

The operation of the contract will improve competition by adding more capacity to the system from a new market participant. In particular SolarReserve will have a strong incentive to ensure its capacity is running at peak times, which will put downward pressure on peak prices for all consumers.

The government will pay an expected levelised price of $75/MWh, and no more than $78/MWh.

This price, however, appears predicated on the company winning a $110 million financing from the federal government, which has been promised by Canberra before last year’s election and reinforced in a tax deal with Nick Xenophon earlier this year.

The funding has yet to be allocated, but given it was specifically for a solar thermal facility around this size in this location, it is hard to imagine any other company being in a position to deliver a rival candidate, given no other company has actually build one.

The cheaper equity provided by the government means that the cost of generation will have been cut sufficiently to meet that price negotiated by the state government.

“We are supporting this nation-leading renewable energy project because it will deliver more competition into our energy market and put downward pressure on power prices for households and businesses,” premier Jay Weatherill said in a statement.

“The Port Augusta story is a stark example of the transition of the South Australian economy, with the closure of a dirty coal fired power station, and now the commissioning of this world leading renewable energy project.

“The Aurora Solar Energy Project will enhance South Australia’s reputation as a leader in clean, cheap renewable energy,” Koutsantonis added.

SolarReserve CEO Kevin Smith said the company’’s energy storage technology is an excellent fit for the South Australian electricity system.

“Aurora will provide much needed capacity and firm energy delivery into the South Australian market to reduce price volatility,” he said.

“SolarReserve looks forward to continuing to work with the South Australian government and stakeholders, including the Port Augusta community where the project is located, to support Federal and State renewable energy targets, stimulate long-term economic development, and create new jobs and businesses.”

SolarReserve’s concentrated solar power technology uses thousands of mirrors (heliostats) to reflect and concentrate sunlight onto a central receiver on top of a tower. The process heats molten salt, pumped to the top of the 220 metre tower and flowing through the receiver, to 565°C.

The molten salt provides a stored heat source which is used to generate steam to drive a single turbine that generates electricity. The facility can generate power at full load for up to eight hours after sunset.

SolarReserve CEO Kevin Smith said the company’’s energy storage technology is an excellent fit for the South Australian electricity system.

“Aurora will provide much needed capacity and firm energy delivery into the South Australian market to reduce price volatility,” he said.