Swan Hill solar farm secures debt funding to go "merchant" | RenewEconomy

Swan Hill solar farm secures debt funding to go “merchant”

Impact Investment Group secures $16.5m from specialist outfit Infradebt for 19MW merchant solar farm in northern Victoria.



One of Victoria’s first large-scale solar PV farms – and one of a growing number of renewable energy projects in Australia that is being developed on a merchant basis, and without a power purchase agreement – has secured $16.5 million in debt funding.

Impact Investment Group, which is bankrolling the 19MW (DC), $32 million Swan Hill Solar Farm, currently under consrtuction in northern Victoria, said on Thursday that it had closed the senior debt facility with specialist fund manager Infradebt.

IIG – whose renewables portfolio is headed up by former Pacific Hydro chief, Lane Crockett – revealed its intentions, in March, to invest $1 billion in renewable energy generation and infrastructure over the coming three years.

In October, it celebrated the formal opening of the 11MW Williamsdale solar farm in the ACT, one of three solar farms contracted by the ACT government at the start of its goal to source the equivalent of 100 per cent of its electricity from renewable energy by 2020.

For Infradebt, the loan represents the first investment for its new Ethical Fund, which was launched in September, backed by a $50 million cornerstone commitment from Future Super, to cater for renewables projects being developed on the merchant market.

The growing number of merchant funded projects appearing in Australia’s large-scale renewables development pipeline reflects the rapidly improving economics of solar and wind energy generation, and a changing of the guard in energy markets. Even as energy policy remains volatile.

As IIG’s Crockett noted in an interview with RenewEconomy in March, this has been particularly the case for large-scale solar projects.

“Solar continues to defy expectations as it continues to fall in cost,” Crockett said. “Not only are equipment costs continuing to fall but the construction market in Australia has become more competitive as contractors become more confident in their delivery methods and costs.”

In comments on Thursday, Crockett said that the new “piece of financing” from Infradebt was a welcome addition to the Swan Hill project, with construction well underway, and completion slated for the second quarter of 2018.

“Swan Hill is another excellent solar asset that will complement our existing portfolio, with a number of other projects expected to complete through calendar 2018,” he said.

Infradebt, meanwhile, says it expects to close further such transactions before the year’s end.

“We have worked closely with IIG to provide a highly customised facility that complements the unique attributes of the (Swan Hill) project,” said Infradebt CEO Alexander Austin.

“We look forward to working with IIG in the future and assisting them with their future development pipeline.”

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  1. Tom 3 years ago

    With energy prices bumping between $70 and $90 for most of this spring – usually the sedate time of year for the energy market, this solar farm should do much better than with a PPA for between $50 and $60/MWh. They might even make money out of selling their LCGs too if there’s not enough to go around.

    Methane’s price is around $6-$7/GJ, and I can’t see it getting much lower given that we are now linked to the global methane market via Curtis Island, and it’s generally the methane-fired generators setting the price day and night. A combined cycle methane-fired generator uses about 6.5GJ/MWh, and open cycle methane-fired generator uses about 10GJ/MWh, so at $6/MWh that’s $39/MWh and $60/MWh respectively in fuel costs alone before they even start thinking about employing people or trying to pay off the generator that they bought.

    The only time that prices fall much below $60/MWh is when there’s heaps of wind energy, and I guess in the future this will apply to solar energy too.

    So their biggest long-term risk is that lots more solar gets installed and floods the market when it’s sunny, driving prices down when they’re producing power.

    I guess they could always retrofit a battery.

    I think this is great news though. I’m really looking forward to more energy being bought and sold through the spot market rather than through contracts and derivatives. What the hell is a “Baseload Future” anyway?

    • Geoff Roberts 3 years ago

      Spot market might suit some.

      For many others the price that matters is the “firmed” price including backup.

      And how much firming does one need?

      The statistical (forecast) vs actual (what actually transpired)capacity profile and the load profile, including whether the user is able to provide demand response, will continue to mean optimally buying power is more complex than many would like you to think.

      At a household level I enjoy the simplicity of a flat tariff. I have small solar PV but the FIT is negligible, and I don’t want to tie my spouse up in rules and real time calculations about when to run various appliances.

      “If you are hot and opening the windows won’t cool you, run the AC. If you are cold, and there is no sun to warm the room you are in, run the heater.”

      I saw a comment recently stating that if you are on the grid you don’t need as much storage as if you are off the grid. In large part that is because being on the grid, others share in the true cost of providing your power.

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