Here comes the sun
By Gerald Arends and Swati Johri
Last week the Australian Renewable Energy Agency (ARENA) announced a short-list of 22 projects that will be eligible to apply for grant funding from ARENA under ARENA’s $100 million large scale solar photovoltaic (PV) competitive round.
Projects that have made the short-list range in size from 10 MW to 106 MW. The successful applicants will each be eligible to apply for up to $30 million for their projects. We are pleased to see that many of our clients were successful in their applications or are involved in these projects.
The 77 eligible expressions of interest received by ARENA demonstrate there is a significant appetite for the development of large scale solar projects in Australia despite the recently challenging political landscape.
Furthering new investment in large scale solar photovoltaics has been identified as a key investment priority area for ARENA.
In addition to enabling new investment in the industry, the large scale solar photovoltaic competitive round aims to:
- make solar power commercially competitive with other forms of power generation by reducing costs in the industry;
- provide information (on an anonymised basis) on the cost structure of large scale solar PV by sharing forecast and actual project costs for both successful and unsuccessful projects; and
- demonstrate that solar PV can deliver electricity at a cost below the benchmark level of $135 MWh.
Around the same time that ARENA announced its large scale solar photovoltaic (PV) competitive round, the Clean Energy Finance Corporation (CEFC) announced its $250 million large solar programme.
The CEFC’s large scale solar programme is designed to support projects in the ARENA round that may also require debt funding. The CEFC large scale solar programme will provide debt finance of $15 million or more to a solar photovoltaic project of a size of 10 MW or greater.
Commercial banks and other financial institutions have so far been reluctant to provide financing for large scale solar projects. By providing debt funding to such projects on commercial terms, the CEFC aims to not only to provide the debt funding necessary to make the development of large-scale solar projects commercially viable, but to also encourage other banks and financial institutions to lend to such projects.
ARENA and the CEFC have, in concert, been instrumental in getting a number of market-leading projects off the ground by providing funding to projects that otherwise would have been unable to raise the required capital.
Projects that have benefitted from both ARENA grant funding and CEFC debt funding include the 10.6 MW and 6 MW battery storage facility currently under construction by our client juwi Renewable Energy at the DeGrussa Copper-Gold Mine in Western Australia, a project we have been intimately involved from inception through to financial close.
It is pleasing to see that the current ARENA funding round is expressly designed to spread support across several projects, a major lesson learnt from the previous Solar Flagship programme. We hope these ARENA and CEFC funding programs help to develop an industry for large-scale solar projects in Australia.
Full applications by the short-listed bidders for ARENA’s large scale solar photovoltaic (PV) competitive round are due by 15 June 2016.
Pegasus Legal is a boutique law firm with an exceptional level of expertise in the renewable energy sector. Our lawyers have worked on large number of solar, biomass and wind projects in a range of countries. For further information please contact our directors Gerald Arends or Swati Johri.