Large scale solar PV projects at lowest level for seven years. Will contractors stay the course?

Last week Renew Economy noted that the energisation of the Wellington North solar project in NSW, and of the Crookwell 3 wind farm, were the first projects to enter the market operator’s grid management system for nearly six months.

That news seemed depressing enough, given it comes at a time when Australia needs to be accelerating its roll out of wind and solar projects to meet the federal government’s 82 per cent renewable energy target for 2030. But it’s actually worse than that.

According to analysts at Rystad Energy, the energisation of the 330 megawatt (MW) Wellington North solar farms means there are now just nine utility PV assets under construction in Australia’s National Electricity Market (NEM) – the lowest level since 2017 when the industry was still in its infancy.

“With a combined 2.1 GW of capacity under construction, the market could be forgiven for thinking the industry is progressing well,” Rystad’s David Dixon writes in a market commentary.

“However, without a healthy pipeline of follow-on projects, engineering, procurement and construction (EPCs) companies could begin exiting the Australian solar market if further work does not emerge,” he writes.

(It should be noted that while the number of projects is the lowest since 2017, the capacity of projects under construction is back to 2020/21 levels, reflecting the fact that project sizes are getting bigger).

Of course, the situation may change quickly if the federal government’s Capacity Investment Scheme, which formally opened its first 6 GW tender for new wind and solar on Friday, delivers as promised through this and subsequent auctions.

Of the top utility solar EPCs, PCL is currently building Stubbo (400 MWAC) and Gunsynd (91 MWAC), with Bouygues constructing Culcairn (350 MWAC), and Gransolar building Walla Walla (300 MWAC).

Among those EPCs that Dixon cites are without major solar construction projects at the moment are Sterling & Wilson, Beon, Downer, and Elecnor.

Indeed Sterling & Wilson – which while building the 400 MW Western Downs solar project in Queensland could claim to be the biggest solar EPC in the country following the dramatic shake-up in the local market – has flagged that its priorities are now elsewhere.

Asked in late April by analysts why the country was no longer focusing on the Australian and US markets, Sterling & Wilson CEO Amit Jain said there were better contracts and better margins in India, the Middle East, Africa and Europe.

“So we have decided for the time being in the short term to focus on these markets,” he said.

PCL, which is building the 400 MW Stubbo and 91 MW Gunsynd solar projects, currently ranks as the top solar EPC contractor in the country, according to Rystad, followed by Bouygues and Gransolar.

Another interesting observation from the Rystad analysis is that the energisation of Wellington North means Chinese company BJEI Australia has overtaken French renewable energy developer Neoen – which is currently in the headlines following a takeover bid from Brookfield – as the biggest owner of operating solar assets in Australia.

Most of these projects came from its purchase of five solar farms from Lightsource bp in last 2023, and it is also building the 280 MW Wollar solar farm in NSW and the 75 MW Wunghnu solar farm in Victoria, which will take its total to more than 1.1 gigawatts (GW).