The future of Australian large-scale PV

What are the positives to take out of the 10 MW Greenough River Solar Farm’s (GRSF) completion?
The GRSF has been in operation for approximately two months now. It was completed on time and on budget. While it is at the relatively small end of the utility-scale solar spectrum at 10 MW, it is the first utility scale solar project to be successfully deployed in Australia. Similar to other markets we’ve participated in, we expect that this first plant will create a snowball effect of adoption within the broader power sector and institutional financing community in Australia.
What do you predict for a utility-scale market in Australia in 2015 and then 2020, in terms of annual installed capacity?
We believe that 2015/2016 will be the trigger for a large expansion of the utility-scale solar market. This is due to a crossover between the cost of solar reaching a competitive price point without incentives, and the over-hang of Renewable Energy Credits (REC) created by the (federal government subsidized) small-scale solar multiplier dissipating. We are predicting that liable entities under the Renewable Energy Target (RET) will need to be aggressively adding renewable capacity from 2015 – 2020 and solar will be a natural choice. We believe that 3 – 5 GW of utility-scale solar is achievable.
How will that happen, if PV is predicted not to reach "generation competitiveness" with coal/gas until 2016?
My comments in terms of the RECs and the RETs address this. We believe 2012 to 2015 will be a platform building period for utility-scale solar, which may not result in GW of demand, but will drive a much needed familiarity with large-scale solar as an asset class amongst traditional power sector participants. It is critical that (new federal government) programs such as ARENA and the CEFC are leveraged to ensure that those entities that will be responsible for developing, funding and owning renewable power plants post 2016 (i.e. energy retailers and large institutional banks) are encouraged to adopt now.
What, in the interim, needs to be in place to foster a utility-scale market until then?
It is critical that ARENA and the CEFC is not exploited for opportunistic profiteering by entities that will have no role in Australia’s power market in the future. In addition to ensure that local utilities and energy retailers are participating in ARENA and the CEFC, it is also crucial that strict viability criteria is incorporated in any funding assessment process. Australia has had enough false starts as a function of failed projects and near-term support needs to be allocated to those entities/consortiums that can actually deliver. It is also important to encourage geographic diversity such that local supply chains and sub-contractor experience is not concentrated in one location.
First Solar’s CFO, Mark Widmar was in Australia for the opening of the GRSF. I understand he had discussions with Australian banks while in the country. How did he judge these banks willingness to invest in utility-scale PV?
It is clear that Australia’s institutional banks have a strong appetite to fund viable projects. The constraint to date has not been a reluctance on the banks’ part to fund solar projects, it has been the lack of viable projects that meet a credible bank’s funding criteria. This relates to the previous point about ensuring only viable projects are selected for funding. The easiest way to determine whether a project should receive Government support is to ask a large institutional bank whether they would fund it and an investment-grade rated energy retailer whether they would purchase the power from it. They are the two binary requirements for a project to be supported.
With the AGL "Solar Flagships" projects – to which First Solar will supply 159 MW of modules and provide EPC services – not to commence until 2014, what is First Solar’s interim pipeline in Australia?
First Solar currently has no additionally announced pipeline. (NB: There are reports that talks underway for the GRSF to be expanded to 40 MW in the future).
What prospects are there for the commercial rooftop (or ground mount) market in Australia and for First Solar in particular?
We believe that the commercial and industrial market has a lot of potential in Australia, and to date it has been over-shadowed by the residential market, which has benefitted (until recently) from generous feed-in tariff programs.
What impediments are in place for that market to be realized?
There needs to be a better understanding of how much of the retail electricity price that distributed commercial and industrial (C&I) solar can off-set. There is often confusion that just because a distributed system can deliver solar electricity at a X c/kWh and it is connected behind the meter, then that system will off-set the equivalent retail price value. The fact is that retail pricing comprises both a variable energy cost (which can be offset by C&I solar) and a fixed transmission and distribution cost (which cannot be offset by C&I solar). For C&I solar to offset more of the retail price, the utility and grid infrastructure needs to evolve to enable the benefits it can provide. That currently does not exist.
The November edition of pv magazine will feature the Australian photovoltaic market.