Friday, June 7, 2013

ARENA pulls funding from Australia’s largest solar project

The plug has been pulled from what would have been the largest stand-alone solar installation in Australia after the Australian Renewable Energy Agency decided to terminate the funding deed for the $230 million Whyalla Solar Oasis project because of repeated delays.
Solar Oasis, which proposed to build a 40MW solar thermal plant using “big dish” technology originally developed at the Australian National University, was relying on a $60 million grant that was administered by ARENA, and awarded in 2009 under the Renewable Energy Development Program.
ARENA, which last year promised to review funding for projects which had made little progress, said the funding deed for Solar Oasis was terminated because of the failure of the project backers to meet the conditions precedent.
“When projects fail to meet conditions precedent, ARENA cannot sit idle. ARENA has a responsibility to drive Australia’s clean energy agenda forward,” ARENA CEO Ivor Frishcknecht said in a statement.
“ARENA continues to critically review projects it has committed to and inherited to ensure they are progressing in line with their objectives. We worked with the proponent to pursue a range of options to make this project work but there comes a point when tough decisions must be made.”
“This decision is project-specific. ARENA is technology-neutral and location-neutral – we consider every project on its merits. ARENA’s door is still open to Whyalla.”
However, the Solar Oasis consortium involved in the project said it was stunned by the decision, which was made two weeks ago. The owner of the technology, Wizard Power, has since been placed in administration. “We’re gobsmacked by this,” Wizard Power chairman Tony Robey told RenewEconomy.
“It’s very hard to see how it’s justified. Even if it the project was delayed, given the current environment for new projects, the fact that the developers got a power take off arrangement, they got a major Chinese partner with background in solar projects and big enough to do anything they want … if I was a government agency, I would be clapping.
“Why did the REDP exist – it was to help technologies like ours to build commercial projects. If someone can explain why they did what they did, I’d appreciate it. They haven’t contacted us. It seems very unreasonable and more than a tad depressing.”
Robey said the technology was solid, and had achieved significant cost reductions in recent years. “Our hope is that we will find a way out of this. And hopefully try and keep this technology in Australia. If it has to be sold it will go the way of other Australian technologies, and that is overseas.”
The Whyalla council is also angry, with councillor and ALP candidate Eddie Hughes saying there had not been any consultation or discussion with Whyalla before the decision was made. “The decision means that 15 years of hard work to establish in Whyalla a major world first concentrating solar thermal power station using Australian technology has been flushed down the drain,” Hughes told the local newspaper.
This is not the first major project to fall victim of the grants funding process, which some have accused of being cumbersome. The $1.2 billion 250MW Solar Dawn solar thermal project in Queensland failed to seal finance and had its Solar Flagship funding pulled, and the solar PV component of that program also had to be re-tendered. The nearly created Clean Energy Finance Corporation focuses on loans rather than grants.
Solar Oasis was one of a handful of large projects using new technologies chosen from more than 60 applicants that were awarded $335 million in grants by the REDP program, which was criticised by the Federal Auditor General in a report last year.
Only two however, are close to the original timetable, with the $104 million, 44MW solar booster project at the Kogan Creek power station in Queensland expected to be completed later this year, and a King Island project integrating renewables and battery storage (grant of $15.25 million) also progressing well.
The Kogan Creek project, with a federal grant of $34 million, is using another Australian developed solar thermal technology developed in Australia – compact linear Fresnel. The technology is now owned by French energy giant AREVA.
Of the other projects, Geodynamics’ hot rock geothermal projects, which was awarded a $90 million grant to build a 23MW facility , is making slow progress, with a 1MW pilot plant just beginning operations. A customer needs to b found for the 23MW project, or a smaller version, to go ahead.
Two other projects, the VicWave project that proposed to build a 19MW wave energy farm near Portland with the help of a $66 million grant, and another hot rock project to be built by Petratherm (and a grant of $63 million), have made little progress, although ARENA said there was no intention to terminate those funding deeds at this stage.
It should be noted that the grants for projects terminated or not yet built have not been spent, so it is not money lost.
Solar Oasis signed its funding deed in March last year and said later that it was looking at innovative financing deals in China, where it was also looking at supply arrangements.
Apart from the Kogan Creek project, there are currently no other confirmed plans for solar thermal projects in Australia. The Solar Dawn project in Queensland, using the same AREVA technology, fell over because it could not agree a power purchase agreement, despite the offer of funding through the Solar Flagships program.
However, Ratch Australia is proposing to use a solar thermal element in the proposed replacement of the Collinsville solar thermal station in Queensland, and Alinta Energy is contemplating several different solar thermal technologies for the possible replacement of the coal fired power station in Port Augusta.