The biggest solar farm in Victoria has finally landed finance from a group of Australian and European banks, months after construction began, in what shapes as a ground-breaking project – both for the way it has had to solve connection and finance issues and for a potential huge battery that could be added at a later date.
The 256MW Kiamal solar farm is being developed by Total Eren, a Paris-based renewable energy independent power producer and a sure sign that big oil companies – in this case Total – are looking to the switch to electrification and renewables.
The project, which has already begun construction, could be nearly doubled with a 216MW second stage that is believed to have landed a major off take agreement with Snowy Hydro, one of the eight projects that formed part of that company’s boast that it had secured “firm” wind and solar for well below the current price of wholesale power in Australia.
It now emerges that Total Eren is also looking at adding a huge battery – in this case a 270MW / 1,080 MWh energy storage system that would dwarf the 100MW/129MWh Tesla big battery at Hornsdale – currently the biggest lithium-ion battery in the world – both in terms of power and storage.
The Kiamal solar farm is also a groundbreaker as it is the first, yet of one many, that will be required to install a “synchronous condenser” to ease connection challenges and assure the grid operator that it is “doing no harm” to the grid.
As we have reported, the synchronous condenser (a sort of spinning turbine that doesn’t burn fuel) was required because Kiamal was situated in the dubbed “rhombus of regret”, a region of north-west Victoria where the number of wind and solar projects is beyond the capacity of the grid to absorb it.
Siemens and contractor Vinci/Electrix will install a 190MVAr synchronous condenser as part of the generating system that will facilitate a timely connection to the Victorian grid, substantially strengthen it and make it possible to connect even more renewables in the area in the near future.
It was the additional requirement of the synchronous condenser that caused the delay in financing, with the equipment accounting for around 10 per cent of the project’s total capital expenditure.
Kiamal has also landed a series of key power purchase agreements, which include Mars Australia (which is going 100 per cent renewables), Flow Power, Alinta Energy, and 13 state water corporations under the banner Zero Emissions Water. Origin is buying some of the renewable energy certificates.
A final decision on the second stage could be made within the next 12 months.
The financing deal will provide $250 million of debt from ANZ (Australia), ING (Netherlands) and Natixis (France). As well as this, the Clean Energy Finance Corporation has paid around $51 million for a minority equity stake in the project, presumably to help the finance get over the line, and possibly with the syncon requirement in mind.
David Corchia, CEO of Total Eren, noted it was the company’s first solar project in the country, and one of its largest in the world, and the successful financial close market an important milestone.
“We are excited to be able to contribute to the shift towards renewable energy in Australia and to local development in Victoria,” he said in a statement.
Ian Learmonth, CEO of CEFC, said the project’s new power purchase model was an important demonstration of how a diverse range of customers can hedge their energy costs through offtake agreements.
Michiel de Haan, global head of energy at ING, said it is ING’s second ‘green’ transaction in less than six months with Total Eren, having recently supported the financing of a solar farm in Brazil.
“This latest deal further strengthens our relationship with Total Eren and contributes towards ING’s ambition to align the wholesale banking’s lending portfolio with our Paris Agreements goals. Our dedicated Energy team in Sydney has proven to be critical in our ambition to grow ING’s energy.”
The first stage of the project is expected to reach commercial operations later this year. It will be made up of over 718,000 PV panels with single-axis trackers covering over 500 hectares.
The construction is led by a turnkey Consortium jointly led by Biosar Australia (“Biosar”), part of the Greek infrastructure group Aktor S.A., and Canadian Solar. Total Eren was advised by Ironstone Capital (Financial), Herbert Smith Freehills (Legal) and PWC (Tax and Accounting).