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Solar to fill coal void in Australia?

Large-scale solar power will inevitably catch up in cost competitiveness with conventional electricity generation in Australia and will “fill the void” as dirty, ageing coal-fired plants are shut down, according to the regional head of the country’s biggest solar developer, First Solar.

Jack Curtis, Asia Pacific manager for First Solar, AGL Energy’s partner at two major new solar ventures in western NSW, said the company had set up a low-cost local supply chain for key equipment, which would drive down the cost of future projects.

Speaking after the formal opening of the Nyngan and Broken Hill solar plants on Wednesday, Mr Curtis said costs for large-scale solar had already fallen about 30 per cent from 3-4 years ago, to about $120 per megawatt-hour on the back of only a few projects.
He forecast that costs would fall towards $70-$80 a megawatt-hour, without subsidies, within a similar time again, as the industry scale built up, improvements in the supply chain, and a reduction in the cost of funding as lenders became more familiar with the sector.

“There’s no reason why Australia can’t achieve financing levels that we see in the United States,” Mr Curtis said.

The two new plants, with a combined 155 megawatts of capacity and including more than 2 million solar panels, have more than doubled the country’s capacity for large-scale solar to 245 MW.

First Solar, which has built 165 MW of the total capacity, built the two plants and owns a 10 per cent stake in them. They will operate for 30 years and will pour an estimated $222 million or more into the rural regions through employment and maintenance servicing needs, according to federal environment minister Greg Hunt.

For AGL, the two plants “add to AGL’s credentials” as the country’s largest non-government owner and developer of renewable power generation, chief executive Andy Vesey said. They will help reposition the utility as it moves to “decarbonise” its generation fleet.

AGL, the country’s biggest producer of greenhouse gases from huge coal-fired power stations in Victoria and NSW, has pledged to halt fossil fuel energy generation by 2050.

Mr Vesey has on several occasions noted the challenge ahead for Australia to shift away from coal-based generation, particularly the difficulty of how to encourage closure of older plants to make room for cleaner power to help reduce emissions.

The 102 MW Nyngan venture and the 53 MW Broken Hill plant, which received $231.6 million of government funding, started up last year and are expected to power more than 50,000 average homes.

The Australian Renewable Energy Agency, which provided $166.7 million funding for the plants, has another round of funding underway for large-scale solar and last week announced a short-list of 22 projects vying for $100 million of funds.

First Solar is involved in Infigen Energy’s proposed Manildra solar project in NSW with a direct equity stake and through a funding deal. It also has looser links with two of the other projects applying for funding.

ARENA acting chief executive Ian Kay said the opening of the AGL/First Solar plants “will mark the moment big solar started to become a major contributor to Australia’s energy supply”.
The NSW government contributed $64.9 million of funding for the Nyngan and Broken Hill plants.

Mr Curtis said solar power costs would in 3-4 years time be cheaper than most wind power, and, along with gas-fired power, would be important to replace old coal-fired plants.

“As ageing coal power plants are decommissioned, there is an enormous potential for renewable energy – and utility-scale PV in particular – to fill the void and provide clean and affordable electricity,” he said.

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