Solar power proposal for Melbourne trams challenges coal generators | RenewEconomy

Solar power proposal for Melbourne trams challenges coal generators

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Ground-breaking proposal to power Melbourne tram network with solar energy generated by 2x20MW PV plants seeks govt PPA.

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A ground-breaking proposal to power Melbourne’s entire network of electric trams with locally generated solar energy could be underway within the year, pending the approval of the Victorian Labor government.

The company behind the bid, the Australian Solar Group, told RenewEconomy the fully-financed $70 million project – which would involve the construction of two 20MW single-axis tracking solar plants – was “literally” ready to go on one of the sites, but was awaiting final government approval, which it had failed to receive under the previous Coalition government.

This final go-ahead was needed to pave the way for a crucial Power Purchase Agreement with the government-owned Public Transport Victoria (PTV), which pays Yarra Trams electricity bills.

The two solar farms would generate 80 gigawatt-hours of electricity a year, about the same amount used by Melbourne’s tram network – which would be a big chunk of supply lost to the state’s coal-fired generators.

Artist’s impression of the planned Swan Hill solar farm

Whether this was factored into the Baillieu/Napthine government’s decision making process is unclear, but a correspondence from the former transport minister, cited by Fairfax Newspapers on Tuesday, suggests some loyalty to the state’s energy incumbents.

The Age reports that State Coalition Minister Terry Mulder sent a letter to the city council last October saying the government-owned PTV was interested in the project, but that it had to be “measured against the availability of brown coal and natural gas that for many years have given Victoria a relatively cheap source of energy.”

But Dave Holland, a co-founder of the Australia Solar Group, told RenewEconomy there was no suggestion that fossil fuel favouritism would be a factor under the current Andrews government.

“We haven’t felt it to date,” he said. “Based on what the new government are saying, I don’t expect that to be an issue… that’s certainly not the feeling that we get.”

More importantly, Holland says the renewable solar power generated by the two 20MW farms could match coal power on cost.

“It was a condition given to us as part of the mission that we couldn’t increase the cost of commuting,” he told RE. “We modelled historical contracted and future prices … and (the result of) this has been one of the driving forces behind the project.”tramworks

Australian Solar says the two farms would span across 80 hectares on sites in Swan Hill and Mildura – the latter being were Holland’s former company, Solar Systems, was building a large solar project when it went into financial collapse in 2009.

Permit processes are still underway for the Mildura site, but the Swan Hill site is good to go, says Holland, with planning and grid connection approvals secured.

“The first site is ready to go, we could literally start site works immediately… within the week,” he told RE, adding that the company expected the works on each solar farm to take around six months to complete.

Holland said the company had already spent around $3 million on the project to date, and would spend a further $70 million – which it had already secured – if it got the go-ahead.

He told RenewEconomy that the equity component of the finance had been secured through Lighthouse Infrastructure. He was not able to discuss the project’s debt arrangements, however.

Holland also confirmed that the suppliers of the technology for the single-axis PV tracking plant had been decided, but were currently the subject of a confidentiality clause.

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  1. barrie harrop 5 years ago

    Go all the way and use the new Siemens solar powered light rail, no poles/wires.

  2. Warwick 5 years ago

    Given that Public Transport Victoria is a statutory authority and not an electricity market participant nor hold a retail licence, this proposal has plenty more blue sky before this is realised…

    • Ken Dyer 5 years ago

      Given that Lily D’Ambrosio is really keen on renewables, I do not see a problem

      • Warwick 5 years ago

        You need to understand the complexity of this arrangement and the need to create an entity to manage price and volume risk. Lots needs to happen before this can ever work..

        • Ken Dyer 5 years ago

          The only criteria is that Australian Solar Group can deliver solar cheaper than brown coal, and everything flows from there.

          • Warwick 5 years ago

            Well then we have a problem…until the externality of pollution is recognised, you’re going to need to beat 3c/kWh at present.

          • Ken Dyer 5 years ago
          • Warwick 5 years ago

            I think you mean 7c/kWh and that is far cheaper than prices achieved in Australia, but still more than 3c/kWh….You still have a problem…

          • Ken Dyer 5 years ago

            What do you base your assertion of 3c/kWh on?

            Does it include any of the government subsidies, including the ISES reimbursement?
            Does it include a fee for the sum of emissions?
            Does it include the Government cost of construction all those years ago?
            Does it include the cost of remediating the coal mine when the fossil fuel burner closes down?

            The fossil fuel burners have enjoyed, and still enjoy a free ride on the taxpayer; tram rides cost a bit more than people think.

            It is expected that solar will reach grid parity by about 2017, which is just enough time to bring those new solar farms on line, get all the bureaucracy out of the way, and provide cheaper tram travel.

          • Warwick 5 years ago

            Fact not assertion, Victorian 2015 and 2016 Wholesale contracts trade just above 3c/kWh. Go and look at ASX market prices… You’re also not reading my comment regarding the cost of pollution. The capital cost has been written off years ago, so generation costs are simply the cost of digging up black mud in the Latrobe Valley and burning it….so ignoring the real cost of pollution as we do now, it’s the cheapest fuel source. There’s other hidden subsidies like off-peak hot water and the subsidies to aluminium costing Victorians about $100m a year (yes, more than they pay for the RET!) keeping coal alive. Using the ACT solar auction as a guide, the cost today of solar is around 15c/kWH maybe cheaper, so there’s still a way to go before PV competes with coal in today’s market.

            Nonetheless, you’ve still not understood the difficulty in making this arrangement work outside the issue of price, particularly balancing electricity market purchases when the solar PV is not running, exposing the proposal to huge financial risks. Go and research the AEMO website, and ponder the challenges…

          • Ken Dyer 5 years ago

            Of course there are challenges, but the fact remains that, if you remove subsidies from brown coal mining (e.g. fuel tax credits @ $1.67 average per tonne), and factor in the rapid downward pricing changes of solar, and its rapid uptake, 3c/kWh is starting to look a bit shaky.
            Incidentally, that cost of 15c/kWh in the ACT relates to capital expenditure for the build, as marginal costs are virtually NIL. The Australian Solar Group is also actively addressing the capital cost of construction, so again the price is under attack.
            We will just have to wait and see if the Victorian Government is going to go for the tactical solution (burn more coal), or put in place a strategic solution the will see the end of brown coal generation, at least for trams.

      • Jacob 5 years ago

        Lily should be trying to get Gigafactory 2 built here in Victoria rather than waste time on tinkering with the edges.

  3. Saptarishi 5 years ago

    The dependency of coal energy should be reduced in the future and solar power should be promoted to take over the peaking power demands. In densely-populated countries like India, Ratul Puri and his company Hindustan Power Projects Private Limited are taking great efforts in generating solar power in India and bringing light to many places that lack the infrastructure to get electricity. Read what Ratul Puri has to say about India’s targets and how solar power is of utmost importance :

  4. Alan S 5 years ago

    Whatever happened to triple bottom line accounting where not only economic but also environmental and social effects were evaluated? I got a warm and fuzzy feeling when politicians bandied the term around – pity it was all too hard for them.

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