Senator Nick Xenophon expects the deal he struck to pass the federal Coalition’s tax cuts on Friday should guarantee that Australia’s first large-scale solar thermal plant begins construction before the next election.
Xenophon got the Coalition government to deliver on its pre-election promise of facilitating solar thermal by agreeing to “fast-track” the tender process and commit $110 million of concessional finance – over and above any funding from CEFC or ARENA.
“The agreement is to help accelerate the development of a solar thermal plant or large-scale solar project at Port Augusta,” energy minister Josh Frydenberg said in a statement to RenewEconomy.
“The government will ask the CEFC and ARENA to formally call for proposals and assess those proposals for funding under their normal rules. An additional $110 million concessional loan will be available from the government if required to accelerate and secure delivery the project.”
The move was welcomed by S.A. premier Jay Weatherill, who confirmed that solar thermal was still in the running for the state government’s long running electricity tender, and could be helped by this initiative.
“Solar thermal firms are bidding for that contract … and that contract, together with the loan that they will get (from the federal government), puts them right in the running to win that contract,” Weatherill told ABC Radio
Finance minister Senator Mathias Cormann told the Senate late on Friday that the money would be delivered at a rate of 3 per cent – that is government bond rate plus 1 per cent.
“This now locks in a process to ensure it happens more quickly,” Cormann said.
“I have spelled out our commitment to accelerate and secure delivery of the solar thermal project in Port Augusta through a formal call for proposals through the Australian Renewable Energy Agency and the Clean Energy Finance Corporation.”
Although the actual policy is no different to that stated before the election – and largely ignored since – advocates of large-scale solar towers with molten salt storage say it is a significant step forward because it finally has a dollar figure.
Xenophon likes solar thermal, firstly because it is not wind energy (which he doesn’t like), but mostly because it is dispatchable – able to provide power at night, or 24/7, and to provide “inertia” and “synchronous” energy through its steam turbines.
“The solar thermal plant – a demonstration plant – effectively provides baseload power or, at the very least, intermediate and peaking power,” Xenophon said. (In fact, it can do all three, depending on its set-up).
“It will be a world-class demonstration in South Australia that will create a thousand jobs in its construction phase,” he told the Senate.
“These are all important issues and will show the rest of Australia that you can build baseload renewables, which are fundamental to dealing with issues of inertia and security of supply.”
Senator Xenophon said Prime Minister Malcolm Turnbull had assured him the project “was a goer”, but there are a few hurdles to get across before then.
Firstly, the delivery is effectively out of the government’s hands as the final call will emerge from a tender process, and presumably more support from either the CEFC or ARENA, or both, but most importantly, a power purchase agreement with the South Australian government.
This appears to narrow the choice down to a single proposal –110MW solar tower and storage project in Port Augusta, proposed by SolarReserve.
The advantage it has over its other two rivals – the John Hewson-connected Solastor, now known as Port Augusta Graphite Energy, and Vast Solar – is that it has already built a project of this size, Crescent Dunes in Nevada, and is currently building another similar sized project in South Africa.
It is also speculated to be the only solar thermal project to have made the South Australian government’s shortlist to deliver 75 per cent of its electricity needs – something seemingly confirmed by Weatherill’s comments.
SolarReserve’s Daniel Thompson said on Friday that a long-term power purchase agreement was essential to make a first-of-its-type project work. PPAs were obtained for both the Nevada and South Africa projects.
On Monday, Thompson said: “The funding support announced by the Federal Government for a solar thermal project at Port Augusta is an incredible step in positioning this transformative project and technology to move forward.
“The funding contemplated will have a significant impact on reducing the power price from the project which will help to secure a long-term power contract, critical to the project moving forward.”
Thompson told the Large-Scale Solar 2017 conference co-hosted by RenewEconomy and Informa in Sydney on Monday that costs for the technology were coming down, and that while he couldn’t disclose the per MWh number SolarReserve was currently bidding for its Port Augusta project, he did confirm it was well “south of $150/MWh.”
Port Augusta solar advocates, who have been pushing for a solar power station to replace the two coal-fired generators that closed in the last few years, welcomed the news.
“For five years the community has put solar thermal in Port Augusta on the agenda and we hope last night’s deal acts as a circuit breaker to finally make on-demand solar thermal happen,” said Lisa Lumsden, spokesperson for Repower Port Augusta
It is calling for the federal and state governments to work together to deliver the solar thermal with storage in Port Augusta.
Mayor Sam Johnson agreed: “There was certainly a buzz around town because it’s no secret we’ve had a few bad shots in the arm in the last 18 months,’’ he told the Adelaide Advertiser.
“We’re looking for that positivity and we know we can deliver the next chapter.”
Labor, however, was not impressed, saying that all Xenophon had achieved was to get the government to “restate a promise” that both the Coalition and Labor had made pre-election.
They were also angry that Xenophon had backed down on his promise to insist on an emission intensity scheme – Labor’s prefered policy – before agreeing on any tax deal.
“Yet again Nick Xenophon has talked a big game and delivered bugger all for South Australia,” Labor energy spokesman Mark Butler told reporters.
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.