Proposed solar farms could meet the RET single-handed

What’s the upshot of all of this?

Solar Power could meet the 33,000 GWh RET on its own.

If every PV project proposed were to proceed, they would generate a combined 34.5GWh or more per year. Considering that the RET is for 33,000 GWh, therefore solar power could meet the RET on its own.

Of course, this wouldn’t happen in reality.

There were 20.8 GWh worth of LGCs registered in 2017, so if every proposed solar farm was developed then there would actually be 55.3 GWh of RET-eligible renewable generation, putting aside the wind farms and other renewable technologies currently under development.

The CER advised us that the RET was already met by projects under advanced stages of development, but all of this points to the RET potentially being dramatically oversubscribed. Which raises the question:

1. What will happen to the LGC price when the RET is met? The banks and other financiers need to keep a close eye on the development pipeline, as once the RET is ‘met’, any surplus LGC supply could send the LGC price to the floor.
2. Which projects will be the ones that get financed and therefore proceed? Project developers need to keep an eye on their competitors’ progress, so they’re not left holding ‘dud’ projects.
3. How will post-2020 C&I installations affect solar farms in operation, and the development pipeline? ‘Behind the meter’ C&I projects larger than 100kW are eligible for LGCs but shielded from the merit-order-effect that will depress wholesale electricity prices during sunlight hours. And the high electricity prices paid by C&I customers are likely to justify investment in PV even without LGC revenue, from 2020. All of which will dampen the power and LGC prices solar farms could expect to get, whether by PPA or on the spot market (merchant).
4. What will happen to the rest of the projects in the development pipeline? Its possible that they could turn to corporate PPAs, a strategy that Infigen has recently announced and Telstra is a clear example of a large corporate counterparty willing to contract energy via PPA. However, there will be significant challenges to tackling this market

Whatever happens, this space is moving quickly, its critical to remain abreast and informed about market developments. SunWiz and RenewEconomy’s Large Scale Lookout subscription provides access to solar farm market analysis, news summary, the full details of each individual project, and much much more.

Visit https://reneweconomy.com.au/large-scale-lookout-australian-solar-database/ for more information.

Warwick Johnston is the managing director of SunWiz, a board director of the Clean Energy Council, and an Australian representative to the IEA.