The Australian Renewable Energy Agency recently congratulated the developers of recently commissioned Moree Solar Farm (MSF) for reaching a landmark power purchase agreement.Under the agreement with developer Fotowatio Renewable Ventures (FRV), Origin Energy will purchase 100 per cent of the electricity and large-scale generation certificates (LGCs) generated by MSF for the next 15 years.
This partnership brings to fruition the project’s commercial potential, made possible by FRV taking the project risk with support provided by ARENA and the Clean Energy Finance Corporation (CEFC).
ARENA CEO Ivor Frischknecht noted FRV reached financial close on MSF in July 2014 by being willing to sell electricity and LGCs in the spot market, instead of obtaining a power purchase agreement first. “In doing so FRV has pioneered an alternate PPA pathway for project developers in the development and construction phase of large-scale solar PV projects. This could encourage other renewable developers to consider taking on market risk, and therefore result in more large-scale renewables being developed.”
ARENA and the CEFC have a long history of successfully working together, having provided complementary grant funding support and debt financing for a range of projects since June 2014. All such co-investments supported later-stage projects that were not yet fully commercially competitive.
The roles of ARENA and CEFC are uniquely distinct but complementary. Through the provision of innovative grant funding coupled with deep commercial and technical expertise, ARENA provides the support needed to accelerate the development of promising new solutions towards commercialisation. The CEFC provides finance to de-risk and demonstrate bankability, which helps to bring near-commercial and commercial projects to reality.
Most notably, ARENA and the CEFC have been working together on a funding round for large-scale solar projects, with ARENA making $100 million available in grants and the CEFC $250 million in loans for eligible projects.
“ARENA’s large-scale solar funding round was made possible through the experience we gained in supporting MSF and other large-scale solar projects such as those located in Nyngan and Broken Hill,” Mr Frischknecht said. “The commercial success of these first-of-a-kind projects for Australia provided ARENA with confidence that the $100M funding round could result in large-scale solar reaching commercial viability in Australia in the next five years.”
ARENA has invited 22 high merit large-scale solar project proposals, with a total project value of $1.68 billion, to proceed to the full application stage of the competitive round. The projects are seeking approximately $332 million in grant funding, are located in all mainland states and have a total capacity of 766 megawatts (MW). None of the projects would proceed in the near future without the provision of grant funding from ARENA.