SolarReserve abandons huge solar tower and storage plant near Port Augusta

Hopes for the construction of what would have been the world’s biggest solar tower and molten salt storage plant near Port Augusta have been dashed after the company behind the project, the US-based SolarReserve, said it was unable to raise finance.

The South Australia government made the announcement on Friday, ending a two year search by SolarReserve, which failed to find the funds despite a commitment of $110 million from the federal government, and a long-term power pricing agreement from the state government.

The government said it had already extended the deadline for financial close from February 1, 2018, to May 31 this year, but had been told by SolarReserve that it would not be able to make this target.

“Yesterday, I received a response which confirmed how SolarReserve proposes to sell the project to a third party who may take the project or an alternative project forward at the site,” said energy minister Dan van Holst Pellekaan, whose electorate includes Port Augusta and who has been a keen supporter of the project.

The state government says it will now issue another tender for its electricity needs. Currently, it has a contract with Simec Zen Energy until 2020 – a contract signed to fill in the gap while the Aurora project was built – and it has an option to extend that contract if needed.

The $750 million Aurora project would see a solar tower combined with molten salt storage, delivering 150MW of capacity and eight hours of storage – similar to the groundbreaking Crescent Dunes project in Nevada.

In 2017, it beat out competing tenders – mostly from gas plants – to deliver electricity to the South Australia government at no more than $78/MWh. This was below the actual costs of the plant but it was reasoned that the storage would enable it to sell electricity at the peaks and deliver an average price at the tendered number.

But despite having everything else in place – approvals, contractors, and off-takes, and even MOUs with mining groups such as Oz Minerals – it proved hard to convince financiers.

A proposed addition of a 70MW solar PV last year in an effort to reduce the cost of supply didn’t convince potential lenders, who were also concerned about the performance of the Crescent Dunes facility, where a tank leak bedevilled operations, reduced output and caused some shut-downs.

“The South Australian Government has provided SolarReserve with every opportunity to deliver on the terms of the contract it signed with the former State Government, in August 2017,” van Holst Pellekaan said in his statement.

“Both the current and former State Government modified and extended the terms of the contract to assist SolarReserve to meet its commitments under the Agreement.” (A federal government spokesman confirmed that the funding – secured by former Senator Nick Xenophon – remained in the federal budget delivered this week).

“Since the election in March 2018, the Government has worked hard to provide every reasonable assistance to the project, including additional time, finalisation of the project lease, approval of identified engineering, procurement and construction contractors, and introduction to potential financiers and investors,” van Holst Pellekaan said.

“I have long been a supporter of developing solar thermal technology in the Upper Spencer Gulf and this has not changed, but unfortunately SolarReserve has confirmed that it cannot be the company to do this.” 

Repower Port Augusta, a local lobby group that pushed for the closure of the Northern coal fired generator and supported the Aurora project, said they were devastated by the news, and wanted to know if the state and federal governments had done all they could to keep it going.

It is yet another frustrating set-back for supporters of solar tower technology in Australia. Plans for such projects under former prime minister Kevin Rudd’s Solar Flagships program launched nearly a decade ago came to nought in a much criticised tender, which sought to build grandiose projects without a pilot plant.

Two winning tenders were abandoned, and a small pilot plant attached to the Liddell coal plant in Queensland was also not continued. Vast Solar has been operating a small pilot plant near Forbes, but is now looking for markets overseas.

The only success has been a solar tower built at Sundrop Farms in South Australia, but this is mostly used for providing heat and desalinating water, and some electricity for the tomato crops.

Overseas, however, plants are progressing. SolarReserve is building one plant in South Africa and has a contract for another, and had grand plans for more projects in Chile and the US.

In Morocco, Sener has recently completed what is now the large solar tower plant (150MW) at the Noor facility, while a 100MW solar tower is undergoing commissioning in China.

Still, solar thermal technology trails solar PV on costs, and although its storage capability adds great value to the technology, financing projects of such scale and cost is difficult, particularly when the technology is new.

Ironically, RenewEconomy received an email a few days ago from energy expert Keith Lovegrove, who visited the 100MW, 10 hours storage Crescent Dunes facility a few weeks ago.

“It was running very well the day we were there. Achieving design point thermal output from the receiver of 565MW-thermal, with capacity to spare in the solar field,” he wrote.

“This is good news, as the plant has suffered from some extended periods offline with commissioning problems that have included a tank leak. Not surprising for the first ever large commercial molten salt tower plant. No doubt there are still other bugs to be ironed out.”

SolarReserve has been approached for comment.