Solar farms pocket eye-watering returns as fossil fuels drive power prices higher

The first evidence has emerged that some wind and solar farms – at least those not locked into long term contracts at fixed prices for the bulk of their output – are benefitting from the huge surge in wholesale electricity prices over the last quarter.

Genex Power – the company under new takeover bid led by Atlassian billionaire Scott Farquhar – on Monday revealed that its two operating solar farms had earned an average of around $200/MWh in the last quarter.

Farquhar and his wife Kim Jackson on Monday revealed their private company Skip Capital had bought a 9 per cent stake in Genex after the close of the market on Friday, and now holds a relevant interest of 19.99 per cent stake, and has launched an indicative but non binding bid at 23c a share

In its latest quarterly report reveals that the 50MW Kidston solar farm in Queensland secured an average price of $184/MWh in the June quarter, from spot prices but not including the sales of renewable energy certificates (LGCs), which Kidston gives to the Queensland government as part of an underwriting deal.

In total, the solar farm earned $4.8 million from the production of 26,344GWh.

The 50MW Jemalong solar farm in NSW did even better, pulling in average of $217/MWh, although this figure included both spot sales of electricity and LGCs. In all, it earned $3.8 million from the sale of 17,044MWh, a rise of 109 per cent over the same period a year earlier.

Genex received an average $198/MWh from its two operating solar farms, which is even more than the generous fixed tariffs offered by the ACT government more than eight years ago to kick-start the first large scale solar farms in the country.

Most wind and solar projects in Australia lock in fixed term contracts, at least for part of their output, because it delivers revenue certainty and makes it easier to lock in cheaper finance.

Those solar farms like Kidston and Jemalong, however, which are run mostly on a “merchant” basis can pocked big gains when electricity prices surge, as they have done in the last six months and the last quarter in particular.

Genex, meanwhile, confirmed it has signed a joint development agreement for the proposed 200MW Kidston wind project that it would like to build near the Kidston solar farm and the massive pumped hydro project that is being constructed in the adjacent abandoned open pit gold mine.

It says that project is being built on time and on budget, and should be producing by the middle of 2025. It says the 50MW/100MWh Bouldercombe battery, also in Queensland, is on track to be completed by the middle of 2023.