Origin cancels two solar projects due to rising costs and “unfavourable conditions”

Origin Energy has quietly revealed that it has cancelled two of its small number of potential solar project developments, citing increased costs and “unfavourable conditions” in the market.

The two solar projects affected are the 74 MW Carisbrook project in central Victoria and the 130 MW Morgans project in South Australia, which was slated to be built with an accompanying battery.

“Due to unfavourable conditions, we are no longer pursuing the Morgan solar farm and the Carisbrook solar development project has been impaired as it is considered unlikely that it can earn a suitable return on investment,” the company says in its 2024 sustainability report released late last week.

The detailed annual accounts – also released late last week – reveal that Origin took a $16 million write down on the Carisbrook project, which was only purchased two years ago, in early 2022, and which Origin had originally hoped to be operating in 2023.

The annual report cites “increased costs” for the impairment, which presumably refers to civil and construction works given that the price of solar modules has fallen to record lows in recent months.

Carisbrook was cited as one of the company’s five planned solar projects in an investor presentation as recently as June, just weeks after the company landed a potential $450 million underwriting agreement with the NSW state government to keep its Eraring coal generator open for at least another two years.

Rising construction costs – despite the record low prices for PV modules – has affected all technologies and civil construction projects, and is one reason why many developers are now favouring much larger projects because of the economies of scale.

The cancellation of Morgans in South Australia is possibly less surprising given that Origin has first hand knowledge of the solar market in South Australia, where it has an long-term off-take agreement with the state’s biggest solar farm at Bungala (pictured above).

It will be very aware of the economic constraints on that market because of repeatedly low and often negative daytime wholesale prices, and it has more recently chosen to focus on a different battery project in that state, the 200 MW, four hour battery at Templers, east of Adelaide.

Still, the cancellation of the two projects extends a poor record for Origin in the development of large scale wind and solar, having added no new projects since announcing in early 2022 the planned early closure in 2025 of Eraring, the country’s biggest coal fired generator.

But that closure was recently pushed back at least another two years – to August, 2027 and possibly to mid 2029 – because not enough new wind, solar and storage had been built in its place.

The state government cited concerns about reliability when agreeing to the $450 million underwriting agreement, but a report it released last month made clear that it was the risk of high prices leading into the next state election that was its chief concern.

But given the lack of competition in the market, there is no guarantee prices will be much lower with Eraring still on line, with the company admitting last week that the 2.88 GW facility is prone to “trips” when needed most.

Origin is now focused on large scale renewable energy projects, such as the 1.5 GW Yanco Delta wind project in the south-west of NSW, which may come with a small solar project and battery. But that project is competing for space on the grid with a number of other gigawatt scale projects.

Origin has also built a portfolio of possible large scale renewable projects in New England, including the 870 MW Ruby Hills and 500 MW Northern Tablelands winds projects, and the 450 MW Salisbury solar project.

However, fierce opposition in that region is being led by local member Barnaby Joyce, who attacks wind turbines as “swindle machines, and other less polite language. Origin has hired former NSW state Nationals member Adam Marshall to help win local support.

Other large scale renewable energy projects in the Origin portfolio include the 450 MW Yarrabee solar project in south-west NSW, and the Dapper solar and battery project in the central west of NSW.

All told, it has about 4-5 GW of renewables and storage projects planned, a fraction of the 12-14 GW planned by its now spurned suitor Brookfield, which has since announced an agreed bid for Australia’s most successful developer Neoen to further its ambitions.

The cancellation