Australia Solar Flagships: Moree Solar Farm Rebids

The Moree Solar farm is a proposed 150-MW solar photovoltaic installation that was chosen in June 2011 as the ‘winner’ of government funding under the Australian Federal Government’s Solar Flagships Program. If installed, the farm will be the largest solar PV project in Australia, and among the largest in the world. Until recently a joint venture between Australian renewable energy developer Pacific Hydro, Spain’s Fotowatio Renewable Ventures, and BP Solar, the Moree Solar Farm Consortium underwent a restructuring after the rejection of its project proposal.

The Solar Flagships Program is Australia’s most high-profile solar power support scheme, designed to aid in the commercialization of large-scale, grid-connect solar technologies in order to move Australia closer to taking advantage of one of the continent’s most abundant resources. The program is to provide AUD$1.5b towards deployment of both concentrating solar power (CSP) and solar photovoltaic (PV) technologies. Funding recipients are selected through a competitive vetting process; one of the basic requirements is for applicants to first secure funding from private organizations.

Round 1 of Solar Flagships has thus far gone off with only a slight hiccough for the CSP project winner—the Solar Dawn Consortium’s proposed plant in Chinchilla, Queensland—which was granted a deadline extension in order to allow it to make its private funding requirements. The Moree Solar Farm Consortium’s project, on the other hand, failing to secure funding by the the deadline and having been ‘significantly altered’ from its original form, was thrown back into the pool with the competitors it had originally bested.

Theories have been flying around as to exactly what happened to Moree, but it seems to be growing increasingly clear that the major factors were BP Solar’s withdrawal from the solar PV industry (but nevertheless lingering as a partner in the Moree Solar Farm), and the difficulty of securing Power Purchase Agreements with the 3 quasi-government utilities that dominate the electricity market. The Moree Consortium was competing against projects backed by 2 of these 3 utilities, and Origin, the only utility not submitting a bid for a project had, according to Greens Senator Christine Milne, ‘torn up’ the PPA contract with Moree just before the deadline, leaving the consortium’s project with essentially no financial assurances to speak of. If they don’t have a buyer for the electricity, the project bears no promise of making money, scaring off investors and making it impossible to meet private funding targets.

The Moree Consortium resubmitted its bid along with its competitors’, but with changes to overcome both the issues of BP’s withdrawal and the problem of PPAs. To fix the first problem, the two remaining stakeholders of the project have increased their respective shares and enlisted Spain’s Acciona to handle engineering, procurement, and construction. As for the second issue, in a dramatic move that could have a potentially significant impact on uptake of grid-connected renewable energy in New South Wales and across Australia, Pacific Hydro has decided to establish its own retail energy license, thereby avoiding the need to negotiate PPAs with any of NSW’s ‘Big 3′ utilities. This also makes Pacific Hydro NSW’s only electricity retailer devoted solely to renewable energy.

Pacific Hydro’s move is expected to pave the way for further large-scale renewable energy developments in the state, and more broadly across the country—even if the Moree consortium does not re-win the bid. The state’s Big 3—Origin Energy, AGL Energy, and TRUenergy—are in effect the ‘gatekeepers’ of the electricity grid, and aside from requirements to create/purchase Renewable Energy Certificates to meet obligations under Australia’s Renewables Portfolio Standard (the Enhanced Renewable Energy Target or eRET), they have little interest in facilitating the spread of large-scale, grid-connected renewable energy generation. This problem has even been acknowledged by the secretary of the Federal Department of Energy.

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