CarbonSignal

There is a high likelihood that Western Australia, the State with the best solar resource in the nation, will completely miss the boat on the Commonwealth’s $1.6 billion Solar Flagships Program.  The goal of the program is to build 1000 MW of solar generation capacity, across four projects.  The first round of the program opened on December 11.  The Government is seeking two projects for the first round, one PV and one solar thermal, providing a combined generation capacity of 400 MW.  The second round will be held around 2013-14.

To be eligible for Solar Flagships the project must supply power to the NEM or the SWIS.  There are several barriers which project developers must overcome, and many of these are particularly troublesome for project developers in Western Australia, including:

• Network connection uncertainty. The project developer cannot connect 150 MW of solar generation capacity to the SWIS without going through Western Power’s lengthy queuing process, and there is a real risk that the grid may not be able to cope, at least without significant network upgrades.
• Land access. Project developers must secure land access agreements, and may need to negotiate through complications such as mining tenements or pastoral leases.
• Income uncertainty. Synergy has issued an EOI to purchase power at commercial rates, but this does not do much for solar project developers, who need to cover expensive upfront capital costs and high risk premiums.  Policy mechanisms that could close the commercial gap, ie. the Renewable Energy Target and the Carbon Pollution Reduction Scheme, are ineffective at this stage.  The price of Renewable Energy Certificates (RECs) is depressed and volatile, and the emissions trading scheme is still being debated.  It is highly unlikely that large-scale solar projects could offer commercially-competitive rates, and in addition, the Synergy EOI does not guarantee power purchase for the life of the project.
• Environmental planning approvals. Solar plants require a large area. Impacts on flora and fauna could pose a significant environmental approval risk.

Other jurisdictions have made large-scale solar a government priority to entice project developers.  If the Western Australian State Government is genuinely concerned about the State missing out on Solar Flagships then some aggressive action is required.  What’s at stake is not just the Flagships projects, but the industrial foundations of Australia’s large-scale solar industry.

The State Government needs to make WA an attactive location for a proponent to deploy their development resources.  Pre-selection of project locations with suitable environmental and planning conditions, and nodal access to the grid, would significantly simplify the process.  Long-term bilateral contracts would provide the revenue security that financiers require to bank a project.

Round one of Solar Flagships closes on February 15, 2010.  Time is running.