Australia's first large scale solar photovoltaic energy plant will start producing electricity from its Moree facility in 2013. If all goes to plan, and solar PV costs become competitive with wind as predicted in the next five years, some several dozen such projects will be likely be scattered across Australia by the end of the decade, adding a capacity of more than 4.5 gigawatts of emissions-free energy to the country's electricity grid.
Construction by BP Solar and its consortium partners Pacific Hydro and Spain's Fotowatio Renewable Ventures (FRV) will be done in stages, with about 30MW coming on line in 2013, and the rest by 2015. By the time it is complete the 150MW facility will be unlike anything seen in Australia to date.
The 645,000 panels will stretch over an area 3.4km long by 3km wide, or around 600 football stadiums. The next biggest installation in Australia is a 1.2MW array on a garage roof at the University of Queensland. And unlike rooftop panels, these arrays will be able to follow the sun, lifting their capacity factor to around 28 per cent (from about 15 per cent), and extending the duration of dispatchable energy earlier into the morning and later in the afternoon.
However, despite receiving some $306 million in funds from the federal government through its flagship program, and $120 million from the state government, the consortium still faces a couple of serious hurdles to the project underway.
The first is obtaining a power purchase agreement which, given the problems of the wind industry in the past 18 months, will not be easy. However, the consortium partners believe that the ability of solar PV's to follow demand could make it a premium product for energy retailers.
Once this is in place, the partners then need to lock in a banking syndicate, which currently comprises a couple of local banks and several international institutions. The presence of the international banks was deemed critical because the locals had no experience of this technology tod date.
Climate Spectator interviewed representatives from each of the consortium partners on Saturday. Below, BP Solar's regional head Tony Stocken outlines the project parameters and hit outlook for the industry below, while FRV's Javier Huergo and Pacific Hydro's Lane Crockett explain in a separate item their companies' attraction to the Australian solar industry.
Giles Parkinson: Tony, so congratulations on the win. The Minister talked about the project being complete by 2015. Do you think that's reasonable or will you building it in stages or just one big lump?
Tony Stocken: We've got some development activity to complete to get what we call financial close, and we expect to break earth in the middle of 2012. Then we've got a phased construction that takes us to the end of 2015.
GP: So, you'll be producing from what year?
TS: We'll be producing from the first phase from the start of 2013.
GP: How does this compare with other BP solar activities around the world? Presumably this will be the biggest?
TS: In terms of 150MW megawatts, that is big and as the Minister had stated it's double what is out there today. In terms of the phases, the first phase will be 20MW to 30MW …BP Solar is actually constructing a 37MW plant in New York with Long Island Power Authority, so it's in the same league as that,Full color plastic card printing and manufacturing services. but in terms of the total capacity, then it is very big.
GP: How quickly do you think solar PV can reach grid parity and be giving coal or gas a run for their money?
TS: To be clear on that, we think that it will start to compete with premium renewables such as wind between 2015 and 2020. And why are we saying that? Because we think in the next two or three years the technology will drive down the cost with more deployment not only on projects like this, but a raft of projects internationally, so we are seeing economies of scale reduction which will drive down the cost and if you look at the intersection of that with premium and coal based technologies, then we think 2015 onwards we will see that start to intersect.
GP: There were some projections at Clean Energy Week saying that solar PV would actually come through and possibly dominate the last couple of years of the build out to the Renewable Energy Target. Do you think that's going to happen?
TS: I think the key at the moment is projects like this which enable us to get planting,Free DIY Wholesale pet supplies Resource! to get learnings, to jump the hurdles, get comfort with stakeholders and by doing that we will drive down the costs for technology, so I think it's hard to predict the extent of take up in the back end of the next five, ten years, but certainly I think we will see that happen. It really also depends on the raft of other technologies that are also being developed at the same time.
But what we can say about solar is it's a very flexible technology and in the case of Australia we've got the best solar regime of any country in the world and not only can we use it on residential roofs, we can use it on commercial roofs as well as large power plants such as this, so I think it's definitely has a future. The extent that it will meet or fill the future energy mix, time will tell, but definitely it will be a significant player.
GP: Tell us about Moree then. What are some statistics you can tell us about this plant?
TS: So, when the plant is fully installed, by 2015, it will be 150MW AC and it will basically be able to power a town the size of Darwin or around about 45,Detailed information on the causes of dstti,000 households. The site will be around about three kilometres times three kilometres of solar panels comprising over 650,000 solar panels and over 5000 kilometres of cable, so a very significant plant and each year it would displace 400,000 tonnes of CO2.
GP: Ok. And what sort of capacity is it working at?
TS: Because we're using single access trackers we will actually get about 28 per cent capacity factor and I think that's quite very important in terms of the value to which we can get from the off taker in terms of the generation of solar. With trackers we manage to get more power at the start of the day and at the end of the day where it costs retailers more money to generate, so we think there's a premium for peaking capacity from this sort of plant.
GP: And you'll be going how late into the day. Will it still be producing at 5pm or 6pm?
TS: Look, to be fair, I don't know exactly those details, but certainly it will generate a reasonable proportion in late afternoons and that is key to the peaking power prices that we're seeing.
GP: Ok. So, you talked about the 28 per cent capacity factor then. Is that something that you're looking to increase? What's the next step development for the cost? Is it reduction in the cost of the panels? Is it increasing the capacity? Is it finding a sunnier place?
TS: Look, I think it's a whole mix of factors and it's a mix of optimising those. I think using trackers obviously increases capacity factor. I think that probably the next stage for solar panels is obviously keep driving down the cost, but also get greater efficiencies. At the moment we're seeing 15 per cent efficiencies, but I think we need to get up to 18, 20 per cent, get that sort of efficiency, couple it with trackers, couple it with high solar radiation areas…
GP: So, this is 15 per cent efficiency, but the trackers take it to 28 per cent capacity factor. Is that roughly how it works?
TS: Yes, basically. I think the other thing to point out is there are also a lot of economies of scale in the non solar panel aspects and this project in Moree will help us understand where we can make economies of scale on the construction, on the materials that are used. As the cost of panels is going down, the other part of the cost of the installation is going up and often we neglect those aspects and that will be key, so we need to learn from that and keep driving down those costs as well.
GP: And a large part of that will be the cost of capital too. How are Australian banks looking and Australian purchasers of power looking at actually getting their minds around the risks and other factors?
TS: We've engaged the banks obviously fairly extensively on this project and we are actually oversubscribed in terms of interest from the banks. We will need five plus banks to put this deal together in terms of the debt side. We've got a lot of interest. They are getting a high degree of comfort with the risk profile of this project and I think that's because our strategy has been to mix international banks with local banks. Local banks don't so much have comfort with solar at this point. They have more comfort with wind. The international banks that we are looking at have had a lot of experience with large scale solar in Europe and hence are keen to work on these projects and give us very competitive rates.
GP: Who are the banks?
TS: I'd rather not say at this point in time.
GP: What about getting a power purchase agreement then, because that's the other challenge, isn't it, in this environment?
TS: Absolutely. The power purchase agreement from day one has always been challenging for us given that we had two other participants in the Flagships Program who were our competitors. We have quite advanced negotiations with a party. We're very confident that we will close out.
GP: The deal could still fall over if you don't get a decent enough power purchase agreement?
TS: Yes. Absolutely. Yes. This is a first of kind development. At the end of the day there are many hurdles to jump. We've just jumped the huge hurdle with the funding and there are still more hurdles to jump.
GP: There's $400 million plus coming from the government, about another $500 million needs to be funded. How much will be debt and how much equity?
TS: Look, that's commercial in confidence. On this type of project the structuring is fairly typical. We obviously do have the mix of funds and have, you know, a nice… a very nice proportion from government which we're very appreciative of, but I can't divulge to you the percentage of debt.
GP: Ok. Were you cheaper than the other… than your competitors? Is that why you won?
TS: Look Giles, I honestly don't know. We believe the process from our side was extremely rigorous, transparent and competitive. I'm not party to the other proposals or offers. All I can say is we felt our offer was extremely compelling, not just on the competitiveness side, but we have partnerships. Our partnerships are all pioneers in their respective fields. We have a lot of solar expertise.uy sculpture direct from us at low prices FRV is unique in that they are a pure solar asset owner and Pacific Hydro who is well known to people in Australia are also pioneers in their respective fields. So look,This is interesting cube puzzle and logical game. I don't think it's all about cost. I think it's a whole mixture of things.
GP: Is it a one third, one third ownership of this project …?
TS: Again, that's commercially confidential, but what I can tell you is FRV is the majority owner and ourselves and Pacific Hydro are minority shareholders.
GP: Ok. And will you be building the panels in Australia?
TS: Unfortunately not. The panels will come from overseas like, unfortunately, 90 per cent of the panels in the world, but…
GP: What would it take for BP Solar to redeploy a manufacturing facility in Australia?
TS: Look, I think the simple answer to that is materiality. We would need to have more than one project, one big project, to make it viable. The other point I would make is that the other 50 or 60 per cent of costs of the project are outside the panels and we are certainly looking at localising them and ensuring that Australian industry and businesses are able to supply those things.
GP: Thank you very much, Tony.
Construction by BP Solar and its consortium partners Pacific Hydro and Spain's Fotowatio Renewable Ventures (FRV) will be done in stages, with about 30MW coming on line in 2013, and the rest by 2015. By the time it is complete the 150MW facility will be unlike anything seen in Australia to date.
The 645,000 panels will stretch over an area 3.4km long by 3km wide, or around 600 football stadiums. The next biggest installation in Australia is a 1.2MW array on a garage roof at the University of Queensland. And unlike rooftop panels, these arrays will be able to follow the sun, lifting their capacity factor to around 28 per cent (from about 15 per cent), and extending the duration of dispatchable energy earlier into the morning and later in the afternoon.
However, despite receiving some $306 million in funds from the federal government through its flagship program, and $120 million from the state government, the consortium still faces a couple of serious hurdles to the project underway.
The first is obtaining a power purchase agreement which, given the problems of the wind industry in the past 18 months, will not be easy. However, the consortium partners believe that the ability of solar PV's to follow demand could make it a premium product for energy retailers.
Once this is in place, the partners then need to lock in a banking syndicate, which currently comprises a couple of local banks and several international institutions. The presence of the international banks was deemed critical because the locals had no experience of this technology tod date.
Climate Spectator interviewed representatives from each of the consortium partners on Saturday. Below, BP Solar's regional head Tony Stocken outlines the project parameters and hit outlook for the industry below, while FRV's Javier Huergo and Pacific Hydro's Lane Crockett explain in a separate item their companies' attraction to the Australian solar industry.
Giles Parkinson: Tony, so congratulations on the win. The Minister talked about the project being complete by 2015. Do you think that's reasonable or will you building it in stages or just one big lump?
Tony Stocken: We've got some development activity to complete to get what we call financial close, and we expect to break earth in the middle of 2012. Then we've got a phased construction that takes us to the end of 2015.
GP: So, you'll be producing from what year?
TS: We'll be producing from the first phase from the start of 2013.
GP: How does this compare with other BP solar activities around the world? Presumably this will be the biggest?
TS: In terms of 150MW megawatts, that is big and as the Minister had stated it's double what is out there today. In terms of the phases, the first phase will be 20MW to 30MW …BP Solar is actually constructing a 37MW plant in New York with Long Island Power Authority, so it's in the same league as that,Full color plastic card printing and manufacturing services. but in terms of the total capacity, then it is very big.
GP: How quickly do you think solar PV can reach grid parity and be giving coal or gas a run for their money?
TS: To be clear on that, we think that it will start to compete with premium renewables such as wind between 2015 and 2020. And why are we saying that? Because we think in the next two or three years the technology will drive down the cost with more deployment not only on projects like this, but a raft of projects internationally, so we are seeing economies of scale reduction which will drive down the cost and if you look at the intersection of that with premium and coal based technologies, then we think 2015 onwards we will see that start to intersect.
GP: There were some projections at Clean Energy Week saying that solar PV would actually come through and possibly dominate the last couple of years of the build out to the Renewable Energy Target. Do you think that's going to happen?
TS: I think the key at the moment is projects like this which enable us to get planting,Free DIY Wholesale pet supplies Resource! to get learnings, to jump the hurdles, get comfort with stakeholders and by doing that we will drive down the costs for technology, so I think it's hard to predict the extent of take up in the back end of the next five, ten years, but certainly I think we will see that happen. It really also depends on the raft of other technologies that are also being developed at the same time.
But what we can say about solar is it's a very flexible technology and in the case of Australia we've got the best solar regime of any country in the world and not only can we use it on residential roofs, we can use it on commercial roofs as well as large power plants such as this, so I think it's definitely has a future. The extent that it will meet or fill the future energy mix, time will tell, but definitely it will be a significant player.
GP: Tell us about Moree then. What are some statistics you can tell us about this plant?
TS: So, when the plant is fully installed, by 2015, it will be 150MW AC and it will basically be able to power a town the size of Darwin or around about 45,Detailed information on the causes of dstti,000 households. The site will be around about three kilometres times three kilometres of solar panels comprising over 650,000 solar panels and over 5000 kilometres of cable, so a very significant plant and each year it would displace 400,000 tonnes of CO2.
GP: Ok. And what sort of capacity is it working at?
TS: Because we're using single access trackers we will actually get about 28 per cent capacity factor and I think that's quite very important in terms of the value to which we can get from the off taker in terms of the generation of solar. With trackers we manage to get more power at the start of the day and at the end of the day where it costs retailers more money to generate, so we think there's a premium for peaking capacity from this sort of plant.
GP: And you'll be going how late into the day. Will it still be producing at 5pm or 6pm?
TS: Look, to be fair, I don't know exactly those details, but certainly it will generate a reasonable proportion in late afternoons and that is key to the peaking power prices that we're seeing.
GP: Ok. So, you talked about the 28 per cent capacity factor then. Is that something that you're looking to increase? What's the next step development for the cost? Is it reduction in the cost of the panels? Is it increasing the capacity? Is it finding a sunnier place?
TS: Look, I think it's a whole mix of factors and it's a mix of optimising those. I think using trackers obviously increases capacity factor. I think that probably the next stage for solar panels is obviously keep driving down the cost, but also get greater efficiencies. At the moment we're seeing 15 per cent efficiencies, but I think we need to get up to 18, 20 per cent, get that sort of efficiency, couple it with trackers, couple it with high solar radiation areas…
GP: So, this is 15 per cent efficiency, but the trackers take it to 28 per cent capacity factor. Is that roughly how it works?
TS: Yes, basically. I think the other thing to point out is there are also a lot of economies of scale in the non solar panel aspects and this project in Moree will help us understand where we can make economies of scale on the construction, on the materials that are used. As the cost of panels is going down, the other part of the cost of the installation is going up and often we neglect those aspects and that will be key, so we need to learn from that and keep driving down those costs as well.
GP: And a large part of that will be the cost of capital too. How are Australian banks looking and Australian purchasers of power looking at actually getting their minds around the risks and other factors?
TS: We've engaged the banks obviously fairly extensively on this project and we are actually oversubscribed in terms of interest from the banks. We will need five plus banks to put this deal together in terms of the debt side. We've got a lot of interest. They are getting a high degree of comfort with the risk profile of this project and I think that's because our strategy has been to mix international banks with local banks. Local banks don't so much have comfort with solar at this point. They have more comfort with wind. The international banks that we are looking at have had a lot of experience with large scale solar in Europe and hence are keen to work on these projects and give us very competitive rates.
GP: Who are the banks?
TS: I'd rather not say at this point in time.
GP: What about getting a power purchase agreement then, because that's the other challenge, isn't it, in this environment?
TS: Absolutely. The power purchase agreement from day one has always been challenging for us given that we had two other participants in the Flagships Program who were our competitors. We have quite advanced negotiations with a party. We're very confident that we will close out.
GP: The deal could still fall over if you don't get a decent enough power purchase agreement?
TS: Yes. Absolutely. Yes. This is a first of kind development. At the end of the day there are many hurdles to jump. We've just jumped the huge hurdle with the funding and there are still more hurdles to jump.
GP: There's $400 million plus coming from the government, about another $500 million needs to be funded. How much will be debt and how much equity?
TS: Look, that's commercial in confidence. On this type of project the structuring is fairly typical. We obviously do have the mix of funds and have, you know, a nice… a very nice proportion from government which we're very appreciative of, but I can't divulge to you the percentage of debt.
GP: Ok. Were you cheaper than the other… than your competitors? Is that why you won?
TS: Look Giles, I honestly don't know. We believe the process from our side was extremely rigorous, transparent and competitive. I'm not party to the other proposals or offers. All I can say is we felt our offer was extremely compelling, not just on the competitiveness side, but we have partnerships. Our partnerships are all pioneers in their respective fields. We have a lot of solar expertise.uy sculpture direct from us at low prices FRV is unique in that they are a pure solar asset owner and Pacific Hydro who is well known to people in Australia are also pioneers in their respective fields. So look,This is interesting cube puzzle and logical game. I don't think it's all about cost. I think it's a whole mixture of things.
GP: Is it a one third, one third ownership of this project …?
TS: Again, that's commercially confidential, but what I can tell you is FRV is the majority owner and ourselves and Pacific Hydro are minority shareholders.
GP: Ok. And will you be building the panels in Australia?
TS: Unfortunately not. The panels will come from overseas like, unfortunately, 90 per cent of the panels in the world, but…
GP: What would it take for BP Solar to redeploy a manufacturing facility in Australia?
TS: Look, I think the simple answer to that is materiality. We would need to have more than one project, one big project, to make it viable. The other point I would make is that the other 50 or 60 per cent of costs of the project are outside the panels and we are certainly looking at localising them and ensuring that Australian industry and businesses are able to supply those things.
GP: Thank you very much, Tony.
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