Origin Energy says it has signed a 13-year power purchase agreement with Spanish group FRV for a soon to be built 100MW solar farm in north Queensland.
The deal is the first ever struck in Australia between a retailer and a private developer of a solar project, and heralds a step change in the large scale renewable energy sector, with signs that new contracts are being signed for the first time in years, and technology shifting from mostly wind to a balance of wind and solar.
More significantly, the Clare solar farm was not one of the 22 projects short-listed for grant funding assistance from the Australian Renewable Energy Agency under its $100 million funding round.
Origin says that it has an option over a further 35MW for the Clare project, located 35kms west of Ayr, which would make it the biggest in Australia. The 100MW facility will produce more electricity than the 102MW Nyngan solar farm because of its superior solar resource and because it will use single axis tracking technology.
FRV, which earlier this week won a tender for a Dubai solar project at a record low price of US2.99c/kWh, says it will begin construction later in 2016, with production to begin in 2017. FRV has also built the Royalla solar farm in Canberra, and the 57MW Moree solar farm in NSW (pictured above).
Origin last month signed a 15-year PPA with FRV for the output from Moree, although that plant had already been built with considerable support from the Australian Renewable Energy Agency and the Clean Energy Finance Corporation.
“The cost of solar is falling rapidly compared to other renewable resources and Origin is well-placed to capture opportunities towards our aspiration to be Australia’s number one renewables company,” Origin’s head of energy markets Frank Calabria said in a statement.
“Now is the ideal time to invest in solar and we have been actively looking for opportunities to diversify and add more renewable energy to our portfolio.”
Calabria said the Clare solar farm is close to existing transmission infrastructure, as is Origin’s approved Darling Downs proposal in south-east Queensland.
FRV CEO Rafael Benjumea said the Clare PPA was “another significant step in achieving FRV’s strategy to develop and build renewable power generation assets across Australia and globally”.
“The agreement is yet another Australian market first for FRV and, building upon the successful delivery of the Royalla and Moree solar farms, is a strong vote of confidence in FRV’s ability to deliver large scale solar projects in Australia,” Benjumea said in a statement.
Australia has a 33,000GWh target for 2020. The lack of investment in recent years due to policy uncertainty means that 5,000MW needs to be built within the next four years, with estimates that more than 3,000MW needs to be committed in the next 12 months to avoid penalty prices.
Green Energy Markets CEO Ric Brazzale told the SolarExpo conference in Melbourne on Wednesday that the market was facing a major shortfall, although penalty prices are not paid by utilities, but by customers directly to the government.
“We are talking potentially billions of dollars,” he said, adding that that money could be directed to funding agencies such as ARENA, with both the Coalition and Labor indicating they will pull the remaining legislated funding.
Brazzale said the market was difficult for large scale developers to meet the required capacity because of the continuing lack of certainty, and because the scheme does not extend beyond 2020. “We don’t need any more stuffing around with the target,” he said.
Origin also said it is is building Australia’s largest solar canopy at Westfield Marion in Adelaide, a 263 kilowatt solar array on the roof of the Royal Australian Mint in Canberra and is planning to build a 3 MW system on the roof of the new Tonsley technological precinct in Adelaide.
Giles Parkinson is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the former editor of Climate Spectator.