SOLAR energy developers of all shape, sizes and systems are converging on Canberra this week to lodge their applications — they must be hand-delivered — for the first round of selection trials for the federal government’s $1.4 billion Solar Flagships program.
The Solar Flagships is being built up to be one of the key planks of the government’s commitment to renewable energy, and looks to have attracted most, if not all, of the major global players in the large-scale solar market.
The flagship program has been redesigned and some of the more fanciful ambitions have been modified, but it still proposes to have 400MW of large-scale solar up and running by 2015, some 250MW in solar thermal (which heats either oil or water to create energy) and a further 150MW in solar photovoltaic (which provides direct energy).
The solar thermal mandate promises to be a fascinating battle between two technologies struggling for ascendancy: the “parabolic trough” proponents such as Germany’s Solar Millennium (teamed up with Leighton’s JB Holland), Siemens, and Spain’s Acciona; and the solar tower group headed by US companies eSolar and BrightSource (teamed up with Bilfinger/Abigroup, Worley-Parsons and Macquarie), and Spain’s Abengoa.
It seems likely that only one or two proponents of each technology might make it through the first round. If previous government decisions in the renewable energy space are anything to go by, the key criteria will also include geographic location and the quality of the local partners, as well as technical promise.
The PV component is destined to be spread over five states, each with a 30MW component, but the solar thermal requirements are for areas that are relatively flat, cloudless and near the grid.
Several areas west of the divide in Queensland and NSW are considered most likely, although the massive Olympic Dam project in South Australia may also emerge as a likely location.
Interestingly, some local farming communities are also pressing their credentials as potential sites. In Hay, local businessman Peter Oataway has already attracted the support of 500 of the 3000- strong population, as well as the local council, green and National Party politicians, in his bid to attract the interest of the major solar players. “The sheep industry is in decline. Irrigation crops are under pressure. We need a growth industry,” he says.
The first-round applications due on February 15 are likely to focus on location, partners and technology, while details about size, financing and pricing are unlikely to be resolved until the second rate later this year. That could pose a potential issue for the government, as two of the mechanisms it was hoping to have in place to bridge the funding gap — a carbon price through an emissions trading scheme, and a renewable energy booster through the mandated renewable energy target — are either not in place or proving ineffective.
Still, the solar people are confident that over time they can compete with fossil fuels, gas, at least without subsidies. Merrick Kerr, the CFO of eSolar, says parity with gas prices should be achievable in Australia by 2020. This, however, will require high temperatures, — nearly double what is achieved now — and higher efficiency.
“I think we can do it (grid parity) against natural gas in Australia, but it’s hard to beat coal,” Kerr says. He says energy storage also will be critical. The aim, he says, is not so much to be “base-load” but to predictable and dispatchable, two key elements for grid operators.
Climate change funds growing
AUSTRALIA is about to have a second specialist climate change fund after two of the principals of the first fund, Arkx, quit to create a new vehicle called Change Investment Management.
Change has been founded by Lisa Wade and Nikki Ashton, both former Citigroup directors and Arkx principals.
Its first offering, the Carbon Opportunities Fund, has received commitments of $5 million, mostly from high net worth individuals.
Its first investment will be a patriotic one — Australia-based wind farm developer and operator Infigen Energy — but 98 per cent of its investments will be made overseas in companies such as China car group BYD and Spain’s Iberdrola Renouvables.
Wade says the Australian component would remain tiny until there was policy certainty to underpin growth in the renewable energy and clean-tech industries. “Unfortunately it’s much easier to invest in liquid, offshore stocks than it is to invest in Australia,” Wade says. But she says high net worth individuals and superannuation funds are recognising the opportunity in investing in the transition to a low-carbon economy. “Once we get the policy certainty, money will be put to work.”
While such low carbon-climate change funds appear to have only novelty value in Australia, they are growing in importance overseas. Two of the largest are funds run by Al Gore’s Generation Investment Management and BlackRock, whose global new energy fund is now worth $4bn.
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