Australia: 450 MW of utility scale solar deals forecast for 2016

While it will not see significant new large scale solar capacity added to Australia’s grids in 2016, deals to deliver a promising pipeline of PV power plant projects is likely to be signed in the country in 2016. Green Energy Markets published the findings in its Quarterly Renewables Report Q4 2015 today, noting that both large distributed and PV power plant projects will move forward.

The primary drivers for the growth in utility-scale solar projects in 2016 are the complimentary Australian Renewable Energy Agency (ARENA) and Clean Energy Finance Corporation (CEFC) large scale solar programs, along with project procurements from state government-owned utilities. Based on the capacity of projects shortlisted under the ARENA program, pv magazine expects some 250 MW of projects to be developed by the ARENA auction alone.

“Our [Green Energy Markets’] detailed assessment of these state government procurement initiatives, alongside ARENA’s large-scale solar auction, indicate 1100 MWs [of large scale wind and solar] could be committed this year,” wrote Green Energy Market’s Analysis and Advisory Director Tristan Edis. “Coupled with some large behind the meter rooftop solar installations, it’s realistic to expect a break-out year for large-scale solar of more than 450MW in project commitments.”

Green Energy Markets figures reveal that around 714 MW of small scale solar was installed in Australia in 2015, along with 142 MW of PV power plants. The standout solar farm projects were the 102 MW Nyngan Solar Plant and the 53 MW Broken Hill Solar Plant.

Green Energy Markets’ Edis notes that 1.1 GW of new large scale renewable project deals is a positive development, “that will finally allow the renewables industry to regain their feet and rebuild their confidence.” However, Edis notes the new capacity will be insufficient to meet Australia’s mandatory Renewable Energy Target. The RET shortfall will result in utilities having to pay penalties and high prices for Large-scale Renewable Energy Certificates (LGCs), which will be passed onto electricity consumers.

“It is no doubt deeply disappointing for everyone that Australia will fall short of the target, incurring unnecessarily high LGC prices and penalties when it could have been easily avoided,” writes Edis. “The current high LGC prices are acting to lure investors and power retailers out of their bunkers in spite of their wounds. Investment grade large power consumers are also wising up to the fact they’re paying too much for LGCs and could instead contract directly to support new projects.”

Edis argues that the current prices at which LGCs are being traded are significantly beyond the cost of generating LGCs through the development of new large scale renewable projects.

Under Australia’s RET legislation large electricity consumers and retailers are required to procure LGCs. Procurement can occur in the spot market, on which there has been a surge of LGC prices in recent months, or through developing large scale renewable energy projects, including PV power plants.