Australia: Carbon tax vital for PV power plant viability

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While retail electricity rates in Australia continue to rise, as state-based subsidies are wound back, wholesale electricity prices in Australia remain at levels that make if difficult for large-scale PV power plants to compete on price. The residential retail price is roughly AUD20 cents (15 euro cents) per kilowatt-hour in Australia, while on the wholesale market it is four cents Australian (3 euro cents).

Describing the situation as "challenging" for potential developers of large-scale PV projects, the report’s authors added that the Federal Government’s recently passed carbon tax will have a profound influence on the point at which PV power plants become competitive producers of electricity on the wholesale market.

The report found, using a model for a 50 percent debt-equity split, large-scale projects could compete on the wholesale market at some point between 2019 and 2027 with the carbon tax. Without it, projects will not become competitive until 2031.

The cost of financing was also found to be a major factor in PV power plant competitiveness in Australia. Low-cost finance, APVA found, could result in competitiveness as soon as 2013. As such, the report advocates government debt guarantees as an effective support model.

At present the Australian Federal Government is supporting large-scale projects through its AUD $750 million (€571 million) Solar Flagships initiative, which will include a 150-megawatt PV plant in Moree, New South Wales.