Origin signs first offtake agreement with Degrussa solar and storage plant

The owners of Australia’s largest integrated off-grid solar and battery storage plant, installed at the DeGrussa copper and gold mine in remote WA, have signed a power purchase agreement with major utility Origin Energy.

The PPA will see Origin buy Large-scale Generation Certificates (LGCs) produced by the 10.6MW solar farm from its owner-manager Neoen, as part of Origin’s commitment under the federal renewable energy target.

For France-based Neoen, the deal has been described as a “valuable achievement” for the company, but more broadly as a vote of confidence in Australia’s large-scale renewables sector.

Neoen Australia managing director Franck Woitiez said the PPA was a mark of confidence in the DeGrussa project, and a sign that butilities are prepared to contract more projects to meet their 2020 renewable energy target.

Degrussa, which is believed to be the largest integrated off-grid solar and storage facility on a mine site in the world, is expected to generate more than 20,000 LGCs a year for more than five years (the minimum expected mine life).

The $40 million project installed 34,080 single-axis tracking PV panels and a 6MW Samsung lithium-ion battery storage facility alongside the mine’s existing 19MW diesel-fired power station.

For Origin, it is third solar farm it has contracted to help meet its renewable energy target. In May this year, it signed a contract to buy the output from the already contracted Moree Solar Farm in NSW, over a 15-year period.

It has also signed a 13-year PPA with Spanish group FRV for the construction of a new 100MW Clare solar farm in north Queensland.

Origin CEO Grant King said the cost of both wind and solar was falling rapidly, but the cost of solar was also falling more quickly. Added to this, he said solar plants produced electricity at a more “useful” time of the day.

In its results presentation,  Origin indicated it predicts the cost of solar will fall below that of wind energy within a year or two.

However, it also intends to contract more wind, specifically from its undeveloped 500MW Stockyard Hill project in Australia, which will rival the country’s biggest wind farm if it goes ahead.

Origin is currently seeking tenders for the project. It will sell the undeveloped project to whichever developer offers the most attractive long term off take agreement. It will not invest any of its own money.

Origin, over the next 12 months, will continue to tap into its bank of stocked LGCs to meet its obligations under the renewable energy target, but will then have to rely on new wind and solar farms to meet the target.

As the graph above shows, Stockyard Hill, in grey, will account for a significant portion of its obligations for its “mass market” customers.